Document And Entity Information
Document And Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2022 | Jun. 12, 2023 | Jun. 30, 2022 | |
Document Information Line Items | |||
Entity Registrant Name | Sysorex, Inc. | ||
Trading Symbol | N/A | ||
Document Type | 10-K | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 2,484,426,501 | ||
Entity Public Float | $ 17,309,026 | ||
Amendment Flag | false | ||
Entity Central Index Key | 0001737372 | ||
Entity Current Reporting Status | No | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Well-known Seasoned Issuer | No | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | true | ||
Entity Shell Company | false | ||
Entity Ex Transition Period | false | ||
ICFR Auditor Attestation Flag | false | ||
Document Annual 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 | ||
City Area Code | (800) | ||
Local Phone Number | 680-7412 | ||
Title of 12(b) Security | N/A | ||
Security Exchange Name | NONE | ||
Entity Interactive Data Current | No | ||
Auditor Name | Friedman LLP | ||
Auditor Location | New York, New York | ||
Auditor Firm ID | 711 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Cash and cash equivalents | $ 29 | $ 659 |
Digital assets, net | 5,202 | |
Accounts receivable, net | 4,052 | 3,023 |
Prepaid expenses and other current assets | 638 | 1,402 |
Assets held for sale | 4,663 | 10,148 |
Equity investment in Ostendo | 1,397 | |
Total Current Assets | 10,779 | 20,434 |
Intangible assets, net | 1,979 | 2,553 |
Goodwill | 1,634 | |
Operating lease right-of-use asset, net | 409 | 558 |
Other assets | 73 | 103 |
Total Assets | 13,240 | 25,282 |
Current Liabilities | ||
Accounts payable | 4,236 | 6,724 |
Accrued liabilities | 4,450 | 2,382 |
Short Term Convertible Debt | 15,272 | 19,439 |
Conversion feature derivative liability | 3,472 | 8,355 |
Operating lease obligation, current | 216 | 49 |
Common Stock Derivative Liability | 273 | |
Deferred Revenue | 931 | 932 |
Total Current Liabilities | 28,850 | 37,881 |
Operating lease obligation – noncurrent | 271 | 509 |
Total Liabilities | 29,121 | 38,390 |
Commitments and Contingencies | ||
Stockholders’ Deficit | ||
Common stock, par value $0.00001 per share, 3,000,000,000 shares authorized; 2,484,501,880 shares issued as of December 31, 2022, and 145,713,591 shares issued as of December 31, 2021, 2,484,426,501 shares outstanding as of December 31, 2022, and 145,638,212 shares outstanding as of December 31, 2021 | 24 | 1 |
Treasury stock, at cost, 75,379 shares as of December 31, 2022, and as of December 31, 2021 | ||
Additional paid-in-capital | 45,553 | 36,156 |
Accumulated Deficit | (61,458) | (49,265) |
Total Stockholders’ Deficit | (15,881) | (13,108) |
Total Liabilities and Stockholders’ Deficit | $ 13,240 | $ 25,282 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 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 | 2,484,501,880 | 145,713,591 |
Common stock, shares outstanding | 2,484,426,501 | 145,638,212 |
Treasury stock, shares | 75,379 | 75,379 |
Consolidated Statement of Opera
Consolidated Statement of Operations - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | ||
Product revenue | $ 14,431 | $ 6,516 |
Services revenue | 2,882 | 1,756 |
Total Revenues | 17,313 | 8,272 |
Operating costs and expenses | ||
Product cost | 10,258 | 6,036 |
Services cost | 1,805 | 868 |
Sales and marketing | 1,181 | 954 |
General and administrative | 8,135 | 9,672 |
Management fees | 321 | |
Realized gain on sale of digital assets | (1,751) | (106) |
Impairment of digital assets | 2,748 | 704 |
Impairment of goodwill | 1,634 | |
Amortization of intangibles | 573 | 407 |
Total Operating Costs and Expenses | 24,583 | 18,856 |
Loss from Continuing Operations | (7,270) | (10,584) |
Other Income (Expense) | ||
Merger charges | (22,004) | |
Debt restructuring fee | (2,000) | |
Interest expense | (3,370) | (3,841) |
Revaluation of conversion feature derivative liability | 1,962 | (6,278) |
Loss contingency on debt default | (7,821) | |
Loss on extinguishment of debt | (249) | |
Change in fair value of common stock derivative liability | 570 | |
Loss contingency on equity issuance | (136) | |
Impairment of investments | (203) | |
Other income, net | 87 | 11 |
Total Other Income (Expense) | (1,339) | (41,933) |
Loss from continuing operations before Income taxes | (8,609) | (52,517) |
Income tax expense | (47) | |
Loss from continuing operations | (8,656) | (52,517) |
(Loss) Gain from discontinued operations, net of tax | (3,537) | 3,387 |
Net Loss | $ (12,193) | $ (49,130) |
Net Loss per share – basic and diluted – continuing operations (in Dollars per share) | $ (0.01) | $ (0.38) |
Net (Loss) Income per share – basic and diluted – discontinued operations (in Dollars per share) | $ (0.004) | $ 0.02 |
Weighted Average Shares Outstanding – basic and diluted (in Shares) | 843,858,474 | 139,061,084 |
Consolidated Statement of Ope_2
Consolidated Statement of Operations (Parentheticals) - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Statement [Abstract] | ||
Net loss per share - basic and diluted – continuing operations | $ (0.010) | $ (0.38) |
Net (loss) income per share – basic and diluted – discontinued operations | $ (0.004) | $ 0.02 |
Weighted Average Shares Outstanding - basic and diluted (in Shares) | 843,858,474 | 139,061,084 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' Equity (Deficit) - 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 | |||||
Payment of subscription receivable | 100 | 100 | ||||
Distributions to shareholders | (1,521) | (1,521) | ||||
Exercise of Moon warrants | ||||||
Exercise of Moon warrants (in Shares) | 14,607,980 | |||||
Shares issued: | ||||||
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 | 2,577 | 2,577 | ||||
Professional services (in Shares) | 1,529,820 | |||||
Up North/Bitworks transaction | 400 | 400 | ||||
Up North/Bitworks transaction (in Shares) | 1,000,000 | |||||
Convertible debt warrants | 896 | 896 | ||||
Stock based compensation | 63 | 63 | ||||
Net Loss | (49,130) | (49,130) | ||||
Balance at Dec. 31, 2021 | $ 1 | 36,156 | (49,265) | (13,108) | ||
Balance (in Shares) at Dec. 31, 2021 | 145,638,212 | 75,379 | ||||
Shares issued: | ||||||
Convertible debt conversions | $ 18 | 9,355 | 9,373 | |||
Convertible debt conversions (in Shares) | 1,819,105,913 | |||||
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 | 5 | 5 | ||||
Vesting of restricted stock (in Shares) | 1,100,000 | |||||
Issuance of common stock | $ 5 | $ 5 | ||||
Issuance of common stock (in Shares) | 500,000,000 | 124,218,268 | ||||
Net Loss | (12,193) | $ (12,193) | ||||
Balance at Dec. 31, 2022 | $ 24 | $ 45,553 | $ (61,458) | $ (15,881) | ||
Balance (in Shares) at Dec. 31, 2022 | 2,484,426,501 | 75,379 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net loss from continuing operations | $ (8,656) | $ (52,520) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 576 | 407 |
Stock based compensation expense | 111 | 113 |
Amortization of right of use asset | 149 | |
Amortization of debt discount and debt issuance costs | 2,173 | |
Realized gain on sale of digital assets | (1,751) | (106) |
Gain on settlement of vendor liabilities | (1,998) | (145) |
Impairment of digital assets | 2,748 | 704 |
Impairment of investments | 203 | |
Impairment of goodwill | 1,634 | |
Loss contingency on debt default | 7,821 | |
Loss on extinguishment of debt | 249 | |
Change in fair value of debt conversion feature | (1,962) | 6,278 |
Change in fair value of common stock derivative liability | (570) | |
Issuance of shares in exchange for services | 240 | 2,577 |
Loss on excess fair value of liability classified warrant | 137 | |
Merger charges | 22,004 | |
Debt restructuring fee | 2,000 | |
Changes in assets and liabilities: | ||
Digital assets–- management fees | 321 | |
Prepaid assets and other current assets | 792 | (173) |
Accounts receivable and other receivables | (1,029) | 1,650 |
Accounts payable | (490) | 8,729 |
Accrued liabilities and other current liabilities | 4,108 | 2,859 |
Operating lease liability | (71) | |
Net cash (used in) provided by operating activities- continuing operations | (5,580) | 4,692 |
Net cash used in operating activities – discontinued operations | (1,966) | (13,165) |
Net cash used in operating activities | (7,546) | (8,473) |
Cash Flows from Investing Activities | ||
Proceeds from sale of digital assets | 8,119 | 3,670 |
Equity investment in Ostendo | (1,600) | |
Reverse acquisition of Sysorex business | 28 | |
Net cash provided by investing activities -continuing operations | 6,519 | 3,698 |
Net cash used in investing activities – discontinued operations | (1,520) | |
Net cash provided by (used in) investing activities | 6,519 | 2,178 |
Cash Flows from Financing Activities | ||
Repayment of loans | (4,349) | |
Payments for convertible debt transaction costs | (1,279) | |
Issuance of Members Interest | 100 | |
Proceeds received from issuance of common stock, net of fees | 397 | |
Proceeds received from issuance of convertible debt | 12,415 | |
Net cash provided by financing activities- continuing operations | 397 | 6,887 |
Net cash provided by financing activities – discontinued operations | ||
Net cash provided by financing activities | 397 | 6,887 |
Net increase in cash and cash equivalents | (630) | 592 |
Cash and cash equivalents at beginning of period | 659 | 67 |
Cash and cash equivalents at end of period | 29 | 659 |
Cash paid for: | ||
Interest | 1,009 | 344 |
Income taxes | ||
Supplemental disclosure of noncash investing and financing activities: | ||
Sysorex recapitalization | 19,401 | |
Debt discount attributed to the fair value of the warrants | 896 | |
Debt discount attributed to the fair value of the conversion option | 2,077 | |
Equipment exchanged for equity | 7,620 | |
Equipment acquired through lease purchase arrangement | 2,130 | |
Distributions of digital assets to members | 1,521 | |
Payments of short-term borrowing with digital assets | 1,091 | |
Right of use assets exchanged for lease obligation | 558 | |
Conversion of debt to equity | 9,360 | |
Reclassification of equity contracts to liabilities | 314 | |
Issuance of warrant derivative liability | 534 | |
Issuance of restricted stock | $ 5 |
Nature and Description of Busin
Nature and Description of Business | 12 Months Ended |
Dec. 31, 2022 | |
Nature and Description of Business [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”), provides information technology solutions primarily to the public sector. These solutions include cybersecurity, professional services, engineering support, IT consulting, enterprise level technology, networking, wireless, help desk and custom IT solutions. In addition to SGS, the Company has another wholly owned subsidiary, TTM Digital Assets &Technologies, Inc. (“TTM Digital”). TTM Digital is a digital asset technology company that previously operated 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 a Proof of Stake model and as a result, the Company is no longer mining Ethereum or any other cryptocurrency. TTM Digital no longer holds any Ethereum or other crypto tokens or crypto assets at this time and does not conduct any mining activities and does not have any plans to mine crypto tokens in the future. TTM Digital is currently exploring sales opportunities for its Graphics Processing Units (“GPU”) assets and datacenter located in Lockport, NY. The Company had previously been in discussions with a third party to sell its mining assets and certain associated real property. The Company is headquartered in Virginia. Note 1A — Restatement of Previously Issued Financial Statements Background Subsequent to the filing of the Original Form 10-K, on May 17, 2022, the Company’s management determined that its prior conclusion that the “conversion feature” of the Company’s 12.5% senior secured convertible debentures (the “Debentures”) qualified for equity classification and, therefore, qualified for the application of the guidance in the Financial Accounting Standards Board’s (the “FASB”) Accounting Standards Update (ASU) 2020-06 was incorrect. Management has determined that the conversion feature was a liability classified derivative under the FASB’s Accounting Standards Codification (ASC) 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity from the inception requiring recognition at fair value for each reporting period. The Company’s management and in agreement with the audit committee have determined that the previously issued financial statements for the year ended December 31, 2021, and the unaudited interim financial information for the three- and nine-month period ended September 30, 2021 “the Affected period should no longer be relied upon due to this error and require restatement. The correction of this error is included in the accompanying Consolidated Financial Statements in this Amended 10-K, the financial effect of this error from previously reported information for the year ended December 31, 2021, has resulted in an increase in net loss of $8.4 million, primarily as a result of a $6.3 million in fair value expense on the derivative conversion liability, interest expense increase of $0.9 million and an increase in the loss contingency on debt default of $1.2 million. |
Going Concern
Going Concern | 12 Months Ended |
Dec. 31, 2022 | |
Going Concern [Abstract] | |
Going Concern | Note 2 — Going Concern As of December 31, 2022, the Company had an approximate cash balance of $0.03 million, working capital deficit of approximately $18.1 million, and an accumulated deficit of approximately $61.4 million. In an effort to raise capital, on October 18, 2022, the Company completed a $.5 million private placement, and subsequent to December 31, 2022, the Company sold investments in certain preferred shares held for approximately $0.18 million to a related party. Despite these efforts to raise capital, 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 consolidated financial statements. The accompanying 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 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 consolidated financial statements are issued. The Company does not believe that its capital resources as of December 31, 2022, its ability to settle a portion of existing convertible debt obligations through issuance of the Company’s shares, availability on the SouthStar facility to finance cash advances to suppliers, purchase orders and invoices, reauthorization of key vendors and credit limitation improvements will be sufficient to fund planned operations during the next twelve months. Additionally, the Company is in default on the aforementioned convertible debt, which was due to be repaid in July 2022, and is accruing related interest, late fees and other penalties. As a result of the above factors, the Company will need additional funds to fulfil its obligations. On September 22, 2022, the shareholders of the Company approved the authorization of 3 billion shares of common stock, however, all of the Company’s authorized shares have been issued or reserved since October 21, 2022, resulting in unfilled conversion notices and an inability to fill potential future conversion notices from convertible debt holders. In order for the Company to fulfil any further conversion obligations, the Company would need to receive approval from the Financial Industry Regulatory Authority (“FINRA”) for a reverse stock-split and obtain shareholder approval for an increase in authorized shares. Existing unfilled conversion notices received in excess of available and authorized shares as of June 12, 2023, total 1,159,494,989. In order to satisfy all possible conversion obligations from existing debtholders as of December 31, 2022, the Company estimates a share deficit of approximately 43.4 billion shares based on the 3 billion currently authorized. Given these circumstances, it is improbable that the Company will be able to satisfactorily fulfil such obligations, even if the above steps are successfully taken. 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 as these contracts can provide the Company with 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 utilizes SouthStar to finance purchase orders and it also can factor its receivables if needed to fund operations.. 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. |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2022 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | Note 3 — Basis of Presentation TTM Digital Reverse Merger and Sysorex Recapitalization On April 8, 2021, the Company, TTM Digital, and TTM Acquisition Corp., a Nevada corporation, 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. Due to 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 presented in Form 10K/A, (Amendment No. 1) filed on May 23, 2022 and Form 10K/A (Amendment No. 2) filed June 1, 2022, the following reclassifications were made to the prior year; mining revenue of $4.4 million, mining costs of $0.4 million, depreciation of $2.5 million and impairment of fixed assets of $3.3 million from continuing operations were reclassified to discontinued operations. The net effect for the year ended December 31, 2021, was a $1.8 million change. The net loss from operations as reported in the form 10K/A was $5.2 million, resulting in a restated change of net income from discontinued operations for the year ended December 31, 2021, to $3.4 million as noted above. The Company reclassified in 2021, $4.0 million from mining equipment to assets held for sale, on the consolidated balance sheets. In the fall of 2021, the Company made the decision to divest certain 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 certain 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. 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 consolidated balance sheets and to gain (loss) from discontinued operations on the consolidated statements of operations for the periods presented. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 4 — Summary of Significant Accounting Policies Principles of Consolidation The 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. Up until November 2, 2021, the Company’s wholly owned subsidiary, TTM Digital had a 50% interest in Up North Hosting, LLC (“UNH”) which was accounted for as an equity method investment. On November 2, 2021, the Company acquired the remaining 50% interest in UNH making it a wholly owned subsidiary of the Company. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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 stock ● Expected useful lives and valuation of long-lived assets ● Fair value of derivative liabilities Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from the date of purchase of years or less to be cash equivalents. Concentrations of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of cash. The Company’s cash is deposited with commercial banks in the United States and may exceed federally insured limits from time to time. The recorded carrying amount of cash and cash equivalents approximates their fair value. The Company uses a digital asset exchange to custody and liquidate its digital assets. If demand for digital assets decline the Exchange could be negatively impacted. The Company’s digital assets are not insured under the third-party custody provider or exchanges. Mining Equipment Mining Equipment is stated at cost. Depreciation is computed using the straight-line method regardless of the category of asset. In the fall of 2021, the Company made the decision to divest certain mining equipment and the data center of the TTM Digital reporting unit. As a result, the Company reports these assets as held for sale in discontinued operations and no longer depreciates these assets. Prior to this classification, The Company had determined that the useful life of graphics processing units (“GPUs”) is 3-years and remaining mining equipment (primarily chassis, power supply units, computer memory, motherboards, risers, and fans) is depreciated over the estimated useful life of 5-years. Expenditures for repairs and maintenance are charged to expense as incurred. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in the statement of operations. The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by several factors including the following: - The complexity of the transaction verification process which is driven by the algorithms contained within the Ethereum open-source software; - The general availability of appropriate computer processing capacity on a global basis (commonly referred to in the industry as hashing capacity which is measured in Terahash units); and - Technological obsolescence reflecting rapid development in the transaction verification server industry such that more recently developed hardware is more economically efficient to run in terms of digital assets generated as a function of operating costs, primarily power costs. i.e., the speed of hardware evolution in the industry is such that later hardware models generally have faster processing capacity combined with lower operating costs and on average a lower cost of purchase. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives and values of specialized equipment. Management will review this estimate quarterly and will revise such estimates as and when data becomes available. To the extent that any of the assumptions underlying management’s estimate of useful life or values of its mining equipment are subject to revision in a future reporting period either because of changes in circumstances or through the availability of greater quantities of data then the estimated useful life or value could change and have a prospective impact on the carrying amounts of these 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. An impairment loss of $4.1 million and $3.3 million was recorded for long-lived assets for the years ended December 31, 2022, and 2021. As of September 15, 2022, Ethereum switched from a Proof of Work model to a Proof of Stake model, The Company is no longer mining Ethereum or any other cryptocurrency. TTM Digital no longer holds any Ethereum or other crypto tokens or crypto assets at this time and does not conduct any mining activities and does not have any plans to mine crypto tokens in the future. TTM Digital is currently exploring sales opportunities for its Graphics Processing Unit (GPU) assets and datacenter located in Lockport, NY. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation. Mining Revenue TTM Digital has entered into a mining pool with the operator to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s arrangement with mining pool operators. The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date earned, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. The fair value of the digital asset award received is determined using the quoted price of the related digital asset at the time earned. The Company monitors the market and when an identical digital asset is bought and sold at a price below the Company’s carrying value, often an indicator that impairment is more likely than not, the Company will follow ASC 820, Fair Value Measurement Hardware and Software Revenue Recognition SGS is a primary resale channel for a large group of vendors and suppliers, including original equipment manufacturers (“OEMs”), software publishers and wholesale distributors. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified product or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides a direct warranty to the customer with the Company’s own personnel as the customer requires a warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross basis over time. License and Maintenance Services Revenue Recognition SGS provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer’s needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company’s performance obligation to provide the overall systems solution is satisfied at that time. The Company’s customers generally pay within 30 to 60 days of the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis. SGS’s professional services include fixed fee contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Anticipated losses are recognized as soon as they become known. For the year ended December 31, 2022, SGS did not incur any such losses. These amounts are based on known and estimated factors. Revenues from time and material or firm fixed price long-term and short-term contracts are derived principally with various United States government agencies. Contract Balances The timing of revenue recognition may differ from the timing of payment by customers. The Company records receivables when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The following table details the contract balances presented (in thousands): Deferred Revenue: Balance as Additions Revenue Deletions Balance as Customer A $ 246 $ 639 $ 476 $ - $ 409 Customer B 725 15 236 - 504 Various - 43 25 - 18 Valuation Adjustment (39 ) - - 39 - $ 932 $ 697 $ 737 $ 39 $ 931 Accounts Receivable, Net Account receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for doubtful accounts to ensure accounts receivables are not overstated due to un-collectability. Bad debt reserves are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for doubtful accounts was $0.05 million as of December 31, 2022, and $0.05 million as of December 31, 2021. Digital Assets Digital assets (predominantly Ethereum) are included in current assets in the accompanying consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. ASC-350-35-19 requires an impairment at any time the fair value of the digital asset is below its carrying value. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The Company recorded a $2.7 million and $0.7 million impairment charge during the years ended December 31, 2022, and 2021, respectively. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows and it’s mining activities are disclosed in Note 5-Discontinued Operations. The sales of digital assets are included within investing activities in the accompanying consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company recognized realized gains (losses) through the sale and disbursement of digital assets during the year ended December 31, 2022, and 2021 of $1.7 million and $0.1 million, respectively. Goodwill and Intangible Assets The Company accounts for intangible assets under ASC 350-30, Intangibles-Goodwill and Other Intangible assets with finite lives are comprised of customer contracts, and trademarks that are amortized on a straight-line basis over their expected useful lives. The carrying value of finite-lived assets and the remaining useful lives are reviewed at least annually to determine if circumstances exist which may indicate a potential impairment or revision to the amortization period. Investments in Equity The Company’s investment in Ostendo include an investment in an equity instruments, accounted for under ASC 321 Investments – Equity Securities, where the Company (1) holds less than 20% ownership in the entity, and (2) does not exercise significant influence. These are recorded at cost and adjusted for observable transactions for same or similar investments of the same issuer (referred to as the measurement alternative) or impairment. Fair Value The Company follows the accounting guidance under FASB’s Accounting Standards Codification 820, Fair Value Measurements, for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. Certain nonfinancial assets such as property and equipment, land and intangible assets are subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. For the year ended December 31, 2022, the Company recorded impairment charges related to assets measured on a non-recurring basis of $4.1 million for graphics processing units in Note 5 – Discontinued Operations and $2.7 million for digital assets in the Consolidated Statement of Operations. The Company utilized a market approach as of December 31, 2022, to determine fair value. The Company evaluated its equity investment in Ostendo of $1.6 million and its Style Hunter investment and recorded an impairment of approximately $0.2 million, reported in the Consolidated Statement of Operations and $0.5 million, reported in Note 5 – Discontinued Operations, respectively The Company utilized inputs of market data and trends of peer group companies to determine the fair value of the equity investment. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable, are of approximate fair value due to the short-term nature of these instruments. Held for Sale Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy. An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset shall not be depreciated or amortized while it is classified as held for sale. Stock Based Compensation The Company accounts for its stock-based compensation awards to employees and directors in accordance with FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all stock-based compensation to employees, including grants of employee stock options, and restricted stock, to be recognized in the consolidated statements of operations based on their grant date fair values. The fair value of stock options is estimated as of the date of grant using the Monte Carlo Simulation option pricing model. The fair value of restricted stock is calculated as the fair value of the Company’s common stock as of the date of the grant. The expense is recognized on a straight-line basis over the requisite service period Pre-funded Warrants / Rights to Shares The Company has certain forward sale contracts for equity issuances (“Forward Contracts”) where the Holder has provided all funding towards the equity issuance and additional consideration is not required for equity issuance. The Forward Contracts are referred to as Pre-funded Warrants or Rights to Shares. Shares will be issued upon the contractual terms of the Forward Contracts. The Company includes the proceeds of the Forward Contracts in equity in Additional paid-in-capital. In accordance with ASC 260, Earnings Per Share, the underlying shares to be issued are included in the number of outstanding shares used for Basic earnings per share. Income Taxes The Company accounts for income taxes under the asset and liability method, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is required to the extent any deferred tax assets may not be realizable. ASC 740-10, Accounting for Uncertainty in Income Taxes, defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely than-not threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The Company had no uncertain tax positions as of December 31, 2022, and 2021. 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 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 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. Leases The right of use asset (“ROU”) on the Company’s consolidated balance sheet represents a lessee’s right to use an asset over the life of a lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received. The amortization period for the right of use asset is from the lease commencement date to the earlier of the end of the lease term or the end of the useful life of the asset. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected to exclude all short-term leases (i.e., leases with a term of 12 months or less) from recognition on the balance sheet. The Company’s lease liabilities are determined by calculating the present value of all future lease payments using the rate implicit in the lease if it can be readily determined, or the lessee’s incremental borrowing rate. The Company uses its incremental borrowing rate at the inception of the lease to determine the present value of future lease payments as the rate implicit in its leases could not be readily determined. 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 years ended December 31, 2022 and 2021, 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: December 31, 2022 2021 Weighted-average common shares outstanding 840,858,474 128,603,982 Weighted-average potential common shares considered outstanding 3,000,000 10,457,102 Weig |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Dec. 31, 2022 | |
Discontinued Operations [Abstract] | |
Discontinued Operations | Note 5 — Discontinued Operations In the fall of 2021, the Company made the decision to divest certain mining equipment and the data center of the TTM Digital reporting unit and commenced discussions with a third party to execute an asset sale in the spring of 2022. On March 24, 2022, the Company executed Heads of Terms (“Heads of Terms”) with Ostendo Technologies, Inc. (“Ostendo”). 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. The Company agreed to make a non-refundable deposit of $1,600,000 (“Deposit”) to be credited toward the purchase of an additional 166,667 shares of Ostendo’s preferred stock. 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 2022 that the transaction will not proceed. In November 2022, the Company received a certificate, dated November 14, 2022, for the shares, and thereafter, the Company received confirmation that the Certificate of Designations for the preferred stock had been filed and accepted by the California Secretary of State on November 14, 2022. Subsequent to the Ostendo transaction not proceeding, TTM Digital explored alternate long-term uses for its assets and concluded that mining other coins was not a feasible path forward due to the volatility in crypto prices, and repurposing its assets was not a viable path forward as it would require significant upfront investments to its datacenter infrastructure. TTM Digital is currently exploring sales opportunities for its GPU assets and datacenter located in Lockport, NY. As a result of the decision to divest certain operating assets of the TTM Digital reporting unit, the Company has determined that subject assets met the definition of assets held for sale as defined by ASC 205-20 – Presentation of Financial Statements – Discontinued Operations. 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 consolidated balance sheets and to loss from discontinued operations on the consolidated statements of operations for the periods presented. The carrying value of the TTM Digital asset disposal group was $4.7 million as of December 31, 2022, and the Company recorded approximately $4.1 million of impairment of fixed assets in its discontinued operations. 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): 2022 2021 Current Assets Mining facilities, net 1,083 1,083 Mining equipment, net 3,491 8,476 Investment in Style Hunter - 500 Intangible assets, net 89 89 Total Assets associated with discontinued operations $ 4,663 $ 10,148 The following table presents the TTM Digital assets statement of operations line items classified as discontinued operations included within loss from discontinued operations for the years ended December 31, 2022, and 2021 (in thousands): 2022 2021 Revenues Mining income $ 4,094 $ 12,534 Other revenue 96 38 Total Revenues 4,190 12,572 Operating costs and expenses Mining cost 1,457 1,273 General and administrative 785 294 Impairment of investments 500 - Impairment of fixed assets 4,061 3,274 Depreciation 910 4,144 Total Operating Costs and Expenses 7,713 8,985 (Loss) Gain from Discontinued Operations (3,523 ) 3,587 Other Income (Expenses) Gain (loss) on sale of fixed assets (14 ) (146 ) Fair value loss on previously held equity interest - (18 ) Other income (expenses), net - 58 Total Other Income (14 ) (106 ) (Loss) Income before net loss of equity method investee (3,537 ) 3,481 Share of net loss of equity method investee - (94 ) Net (loss) income from discontinued operations $ (3,537 ) $ 3,387 The following table summarizes the net cash flows from discontinued operations of TTM Digital for years ended December 31, 2022, and 2021 (in thousands): For the Year Ended 2022 2021 Net cash used in operating activities – discontinued operations (1,966 ) (13,165 ) Net cash used in investing activities – discontinued operations - (1,520 ) Net cash provided by financing activities – discontinued operations - - |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
Intangible Assets | Note 6 — Intangible Assets Intangible assets as of December 31, 2022, consist of the following: Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (179 ) $ 881 Customer Relationships 1,900 (802 ) 1,098 Total intangible assets $ 2,960 $ (981 ) $ 1,979 Calendar Years ending December 31, Amount 2023 573 2024 573 2025 266 Thereafter 567 Total $ 1,979 Up North Business Combination / Bitworks Asset Acquisition On November 2, 2021, the Company through a wholly owned subsidiary of TTM Digital executed a Membership Interest Purchase Agreement (“Up North Agreement”) with BWP Holdings, LLC (“BWP”) whereby the Company acquired the remaining 50.0% membership interest (“Transferred Membership Interest”) in Up North Hosting LLC (“Up North”) that it did not already own to bring its ownership in Up North to 100.0% (“UNH Acquisition”). In addition to the Transferred membership Interest the Company acquired certain data mining equipment BWP (“Bitworks Equipment” and collectively the “Acquisition”) that was resident in the Up North data center facility. The BWP transaction was accounted for as an asset acquisition. Total transaction consideration paid for the acquired interests of Up North and the Bitworks Equipment were $1.0 million and the issuance of 1.0 million shares of restricted common stock, $0.00001 par value of the Company. The total transaction consideration paid for the Acquisition was valued at $1.4 million. The transaction consideration was allocated to the UNH Acquisition and the Bitworks Equipment in the amounts of $705,900 and $694,100, respectively. The UNH Acquisition was accounted for as a business combination using the acquisition method in accordance with Accounting Standards Codification 805, Business Combinations. In accounting for the UNH Acquisition the purchase consideration consisted of the fair value of the Up North membership interest previously owned by the Company and accounted for as an equity method investment of $631,500 and the transaction consideration allocated of $705,900 and reduced by the effective settlement of intercompany transactions of $104,285 for net purchase consideration of $1,233,115. The previous membership interest in Up North had a carrying value of $649,462 resulting in the recognition of a loss on the conversion of the equity method investment of $17,962. Up North’s primary asset consists of a data center facility located in New York used for the hosting of cryptocurrency data mining operations. The value of the data center facility building, and improvements installed for the data center operations are approximately $1.1 million. The data center facility is located in an industrial redevelopment area which has a property tax abatement and pays certain fees in lieu of property taxes under an agreement with the Industrial Development Agency. Proforma financial information was not required as the acquisition was deemed not to have a material impact. All assets associated with this acquisition have been classified as held for sale, and any income or loss has been reported as discontinued operations. |
Credit Risk and Concentrations
Credit Risk and Concentrations | 12 Months Ended |
Dec. 31, 2022 | |
Credit Risk and Concentrations [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 SGS from those customers that accounted for at least 10% of sales for the years ended December 31, 2022, and 2021 (in thousands of dollars): The Years Ended December 31, 2022 December 31, 2021 $ % $ % Customer A 4,388 26 % 4,826 44 % Customer B 10,421 61 % 2,946 27 % As of December 31, 2022, Customer A and Customer B represented approximately 61% and 30% of total accounts receivable, respectively. As of December 31, 2021, Customer A represented approximately 72% of total accounts receivable. One other customer represented approximately 11% of total accounts receivable. For the year ended December 31, 2022, three vendors represented approximately 41%, 35%, and 12% of total purchases. Purchases from these vendors during the year ended December 31, 2022, were $9.5 million, $8.1 million, and $2.9 million respectively. For the year ended December 31, 2021, three vendors represented approximately 36%, 25%, and 25% of total purchases. Purchases from these vendors during the year ended December 31, 2021, were $3.8 million, $2.6 million, and $2.6 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. After 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. On September 15, 2022, the Ethereum blockchain transitioned to proof-of-stake which adversely affected our business and our ability to generate revenues. The Company is no longer able to mine Ethereum. . |
Short Term Convertible Debt
Short Term Convertible Debt | 12 Months Ended |
Dec. 31, 2022 | |
Short Term Debt [Abstract] | |
Short Term Convertible Debt | Note 8 — Short Term Convertible Debt Short term convertible debt as of December 31, 2022, and December 31, 2021, consisted of the following (in thousands): December 31, December 31, 2022 2021 Convertible Debentures, including interest payable to the Convertible Debenture Holders $ 15,272 $ 19,439 Total Short-Term Convertible Debt $ 15,272 $ 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 $15.2 million 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 3.5 million shares of common stock of the Company. The Company received total gross proceeds of $8.9 million taking into account the 12.5% discount before deducting placement agent fees and expenses of approximately $0.9 million. The convertible debt is collateralized by the assets of the Company. The Debentures matured on July 7, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder, as a result, the 2021 convertible debentures are in default. 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 $3.4 million and (ii) warrants to purchase up to 1,862,279 shares of common stock of the Company. The Company received a total of $3.5 million in gross proceeds following the second closing taking into account the 12 % discount before deducting placement agent fees and expenses of approximately $0.3 million. The Debentures matured on August 13, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder, as a result, the 2021 convertible debentures are in default. In conjunction with the Convertible Debentures, the Company entered into a Warrant Purchase Agreement (the “Agreement”) providing investors the right to purchase common stock of Sysorex. The exercise price will be either 1) the Qualified Offering Price, in the event of a Qualified Offering or 2) in the event of no Qualified Offering, the lower of a) $18.00 and b) an amount equal to 80% of the average of VWAP (as defined therein) for the common stock. The term of the warrant is five years. The warrants issued in connection with the debt were equity classified at issuance and were allocated a value of approximately $896,000 on a relative fair value basis. The Company recorded the debt net of the 12.5% discount, of which totaled $1.5 million, the placement agent fees and expenses of $1.3 million and the debt discounts attributed to the fair value of the warrants and conversion option derivative liability of approximately $0.8 million and $2.1 million, respectively. The Company expensed the entire debt discount and issuance costs as a result of the debenture default, as disclosed below. 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 million 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. An initial fair value of $2.1 million was assigned to the conversion option, The conversion option is marked to market at the end of each reporting period. The Company recorded a revaluation gain (loss) of approximately $2.0 million and ($6.3) million for the years ended December 31, 2022, and 2021, for the change in the fair value of the conversion option. As of December 31, 2022, the derivative liability associated with the conversion option was $3.5 million. Convertible Debenture Conversion For the year ended December 31, 2022, the convertible debenture holders converted approximately $6.2 million of convertible debt into approximately 1.8 billion shares. There were no conversions of convertible debt for the year ended December 31, 2021. As a result of the conversions, the Company recorded a loss on debt extinguishment of approximately $0.2 million and settled approximately $2.9 million of the derivative liability associated with the conversion option for the year ended December 31, 2022. Debenture Default The Debentures provide that any monetary judgment filed against the Company for more than $50,000, and if such judgment remains unvacated for a period of 45 calendar days shall constitute an event of default. The debentures also provide that nonpayment of debt constitutes an event of default. The Company defaulted on its interest payment. 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 $5.9 million which is comprised of the principal sum of $3.3 million and prejudgment interest in the sum of $2.6 million. 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. As a result of the Default Notice, the Company has recorded for the year ended December 31, 2021, a loss of approximately $7.8 million on the Consolidated Statement of Operations on the line captioned Loss contingency on debt default (“Contingent Loss”). The Contingent Loss consists of the unamortized debt issuance costs and original interest discount of approximately $3.3 million and the Default Principal increase of approximately $4.2 million, and approximately $0.3 of debt and issuance costs incurred. The Company recognized approximately $3.4 million of interest expense for the year ended December 31, 2022. Included in Convertible debt is $3.1 million of interest payable on December 31, 2022, to the Convertible Debenture Holders. Non-Recourse Factoring and Security Agreement Effective as June 19, 2020, prior to the merger, the Company and SouthStar Financial, LLC (“SouthStar”) entered into a Non-Recourse Factoring and Security Agreement (the “Agreement”) pursuant to which SouthStar may purchase receivables from the Company (the “Purchased Receivables”) for a price not to exceed 85% of the face value of the Purchased Receivables or a lesser percentage agreed upon between the Company and SouthStar. In consideration of SouthStar’s purchase of the Purchased Receivables, the Company will pay to SouthStar an amount equal to 0.8% of the face amount of the Purchased Receivables for the first 10-day period after payment for the Purchased Receivables is transmitted to SouthStar plus 0.9% for each additional 10-day period or part thereof, calculated from the date of purchase until payments received by SouthStar in collected funds on the Purchased Receivables equals the purchase price of the Purchased Receivables plus all charges due SouthStar from the Company at the time. An additional 1.0% per 10-day period will be charged for invoices exceeding 60 days from invoice date. The Company utilizes the security agreement to provide assurance of payment to the supplier. The Company currently utilizes SouthStar to finance its purchase orders and it also can factor its receivables if needed to fund operations. The Company, SouthStar and the Distributor/vendor enter a triparty agreement whereby SouthStar will pay the vendor under net 30-day terms the purchase order amount. As of December 31, 2022, the Company financed $0.9 million of purchase orders which is recorded in the consolidated balance sheet accrued liabilities. As of December 31, 2022, the Company did not have any of its receivables financed. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Fair Value Measurements | Note 9 — Fair Value Measurements 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 December 31, 2022 and 2021 (in thousands): Fair value measurement at reporting date using Balance Quoted prices in Significant Significant As of December 31, 2022: (in thousands) Recurring fair value measurements Assets: Equity investment in Ostendo $ 1,397 $ - $ - $ 1,397 Derivative liabilities: Conversion feature derivative liability $ 3,472 $ - $ - $ 3,472 Common stock derivative liability 273 - - 273 Total derivative liabilities 3,745 - - 3,745 As of December 31, 2021: (in thousands) Recurring fair value measurements Derivative liabilities: Conversion feature derivative liability $ 8,355 $ - $ - $ 8,355 Total derivative liabilities 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 year ended December 31, 2022, the Company recorded a gain of approximately $2.0 million for the change in fair value of debt conversion feature. The Company evaluated its equity investment in Ostendo of $1.6 million and recorded an impairment of approximately $0.2 million. The Company utilized inputs of market data and trends of peer group companies to determine the fair value of the equity investment. 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 December 31, 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 feature derivative liability Common stock derivative liability Total level 3 derivative liability Balance as of December 31, 2020 $ - $ - $ - Issuance of convertible debentures 2,077 - 2,077 Increase in fair value included in earnings 6,278 - 6,278 Balance as of December 31, 2021 $ 8,355 $ - $ 8,355 Transferred to equity on debt conversion (2,921 ) - (2,921 ) Transferred to equity on RSU issuance - (5 ) (5 ) Transferred from equity on recognition of derivative liability - 314 314 Fair value of warrants issued - 534 534 Decrease in fair value included in earnings (1,962 ) (570 ) (2,532 ) Balance as of December 31, 2022 $ 3,472 $ 273 $ 3,745 |
Digital Assets
Digital Assets | 12 Months Ended |
Dec. 31, 2022 | |
Digital Assets [Abstract] | |
Digital Assets | Note 10 — Digital Assets The following table presents the roll forward of digital asset activity from continuing and discontinued operations during the periods ended: December 31, 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 4,094 12,534 Payment of Mining equipment under lease to buy arrangement - (1,091 ) Mining pool operating fees (42 ) (129 ) Management fees - (321 ) Transaction fees (138 ) (26 ) Owners’ distributions - (1,521 ) Digital asset impairment (2,748 ) (704 ) Proceeds from sale of digital assets (8,119 ) (3,670 ) Realized gain on sale of digital assets 1,751 106 Ending Balance $ - $ 5,202 |
Equity
Equity | 12 Months Ended |
Dec. 31, 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 December 31, 2022, shares were issued, shares were outstanding. As of December 31, 2021, 499,560,659 common stock shares were authorized; 145,713,591 shares were issued, and 145,638,212 shares were outstanding. No preferred stock has been designated or issued. 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. The additional shares and Warrant 3 will be issuable for each 30-day period, or portion thereof, that the registrable securities have not become effective. As of May 31, 2023, the Company is obligated to issue an additional 271 million shares of common stock and warrant 3 to purchase an additional 271 million shares of common stock. Share Issuance On February 8, 2022, the Company entered into an Advisory Services Agreement (the “Agreement”) with ViewTrade Securities, Inc. (“Advisor”) whereby the Advisor will assist the Company and provide services that will contribute to the overall growth of the Company. ViewTrade’s owner is a shareholder in the Company. The term of the engagement is six months and may be extended by mutual agreement of the parties. In consideration of the services, the Company paid an Advisory Fee in an amount equal to 6,000,000 restricted common shares (the “Fees) and the Fees shall be deemed fully earned upon execution of the Agreement. As of December 31, 2022, the Company recorded a value of the stock of $240,000, which included $239,940 of additional paid in capital and $60 par value. Stock Options On July 30, 2018, the board of directors of the Company’s 2018 Equity Incentive Plan (the “2018 Plan”), which enables the Company to grant stock options, share appreciation rights, restricted stock, restricted stock units, share awards, performance unit awards, and cash awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company’s sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. The 2018 Plan is to be administered by the Board, which shall have discretion over the awards and grants there under. The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 80,000, which number will be automatically increased on the first day of each quarter, beginning on January 1, 2019 and for each quarter thereafter, by a number of shares of common stock equal to the least of (i) 10,000 shares,(ii) 10% of the shares of common stock issued and outstanding on that date, or (iii) a lesser number of shares that may be determined by the board. No awards may be issued after July 30, 2028. Stock options granted under the 2018 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986. Each option, or portion thereof, that is not an incentive stock option, shall be considered a non-qualified option. The option price must be at least 100% of the fair market value on the date of the grant and if an Incentive Stock Option is issued to a 10% or greater shareholder the grant must be 110% of the fair market value on the date of the grant. On July 20, 2021, the Board of Directors of the Company approved an amendment (the “Plan Amendment”) of the Company’s 2018 Equity Incentive Plan (as so amended, the “Plan”) to increase the number of shares of the Company’s common stock reserved for issuance thereunder by 8,000,000 shares. The Plan Amendment became effective immediately. As of December 31, 2022, the awards outstanding under the equity incentive plan consisted of the employee stock options granted on July 20, 2021, to purchase up to 1,656,000 shares of common stock. A summary of stock option activity for the year ended December 31, 2022, is as follows: Number of Weighted Outstanding, January 1, 2022 1,656,000 $ 2.00 Granted - $ - Exercised - - Forfeited or cancelled (48,500 ) - Outstanding, December 31, 2022 1,607,500 $ 2.00 Exercisable, December 31, 2022 1,607,500 $ 2.00 The Company recognized approximately $0.01 million of stock-based compensation for the year ended December 31, 2022. Warrants The following table represents the activity related to the Company’s warrants during the year ended December 31, 2022: Number of Weighted Outstanding, January 1, 2022 5,926,763 $ * Granted 1,004,576,431 .001 Exercised (418,931 ) - Outstanding, December 31, 2022 1,010,084,263 $ - * The exercise price will be determined by a 5-day VWAP price calculation on the exercise date. The weighted average contractual term as of December 31, 2022, 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 4,576,731 warrants through Decembe r 31, 2022. The Company has recorded on the consolidated balance sheets, accrued liabilities, approximately $0.25 million of accrued registration rights penalties and interest. In connection with the sale of 500,000,000 shares of common stock to Investors on October 18, 2022, the Company granted an aggregate of 1,000,000,000 warrants to purchase common stock. The warrants issued consisted of warrant 1 to acquire 500,000,000 shares of common stock and warrant 2 to acquire 500,000,000 shares of common stock. The terms of Warrant 1 and Warrant 2 permit the holder 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. As discussed above in Private Placement Agreement, if the Company does not file a registration statement declared effective by the SEC by the Registration Deadline, Warrant 3 will be issued to each Investor for the right to acquire the number of Additional Shares issued to the Investor for failure to meet the Registration Deadline. The additional shares and Warrant 3 will be issuable for each 30-day period, or portion thereof, that the registrable securities have not become effective. As of May 31, 2023, the Company is obligated to issue an additional 271 million shares of common stock and warrant 3 to purchase an additional 271 million shares of common stock. SYSOREX, INC. AND SUBSIDIARIES Prefunded Warrants In connection with the Company’s merger with TTM Digital in April 2021 three TTM Digital shareholders accepted prefunded warrants aggregating the right to receive 12,361,622 shares of Company stock. The prefunded warrants were converted to common stock of the Company during the quarter ended March 31, 2022. In addition, a Company debt holder agreed to convert certain of the Company obligations to a fully paid right to receive 3,000,000 shares of Company stock. As the rights to receive shares have been fully paid by the holders, the rights to receive the shares are considered to be issued for the purpose of determining Company Basic shares outstanding. The activity for the Prefunded warrants during the twelve months ended December 31, 2022 is shown in the table below: Prefunded Outstanding, January 1, 2022 15,361,622 New issuances - Exercised 12,361,622 Outstanding, December 31, 2022 3,000,000 Restricted Stock Units The following table represents the activity related to the Company’s restricted stock awards granted to employees and directors during the twelve months ended December 31, 2022: Number of Weighted Outstanding, January 1, 2022 1,100,000 $ 0.48 Granted - - Vested 1,100,000 0.40 Unvested, December 31, 2022 - $ - The Company Share Derivative Liabilities As the amount of common stock on an as converted basis as of December 31, 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 December 31, 2022 (dollars in thousands): December 31, Warrants $ 272 Stock options 1 Total share derivative liability $ 273 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. 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: 12/31/2022 2,484,501,880 2,484,502 12/31/2021 145,713,591 145,714 Shares Outstanding: 12/31/2022 2,484,426,501 2,484,427 12/31/2021 145,638,212 145,638 Treasury Stock: 75,379 75 Year Ended EPS 2022 2021 Weighted Average Shares Outstanding – basic and diluted As stated 843,858,474 139,061,084 Proforma 843,858 139,061 Net income (loss) per share: Continuing operations As stated (0.010 ) (0.38 ) Proforma (10.00 ) (38.00 ) Discontinued Operations As stated (0.004 ) 0.02 Proforma (4.00 ) 20.00 |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 12 — Commitments and Contingencies Contractual Commitments Settlement Agreements 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. Subsequently thereafter, the Company defaulted under the terms of the agreement. The liability of approximately $0.7 million has been accrued and includes interest $0.2 million calculated based on a default rate of 8%, which is included as a component of accounts payable and accrued liabilities as of December 31, 2022, in the 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. Subsequently thereafter, the Company defaulted under the terms of the agreement. The liability of approximately $0.2 million has been accrued and includes interest $0.1 million calculated based on a default rate of 6% and is included as a component of accounts payable and accrued liabilities as of December 31, 2022, in the Consolidated Balance Sheets. Registration Rights Agreement 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 thereafter up to and including the filing of this Annual Report on Form 10-K and therefore has accounted for an accrued liability in the amount of $0.2 million recorded in the Consolidated Balance Sheets – Accrued Liabilities for the year ended December 31, 2022. The RRA terminated as of October 14, 2021, by its own terms. Promissory Judgement 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 $6.8 million 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 $3.3 million as of December 31, 2021, 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 $5.9 million, which is comprised of the principal sum of $3.3million and prejudgment interest in the sum of $2.6 million. 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 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. Convertible Debenture Litigation 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 approximately $0.2 million is recorded in the consolidated balance sheets – accrued liabilities for the period ended December 31, 2022. The notice of conversion to convert its convertible debt to shares of the Company’s sto ck will be honored. 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. The following is a summary of the activity in the Company’s current and long-term operating lease liabilities for the years ended December 31, 2022, and 2021: Year Ended 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ - $ - Leased assets obtained in exchange for new and modified operating lease liabilities $ (487 ) $ (558 ) Leased assets surrendered in exchange for termination of operating lease liabilities $ - $ - As of December 31, 2022, future minimum operating leases commitments are as follows: Calendar Years ending December 31, Amount 2023 $ 216 2024 222 2025 95 Total future lease payments 533 Less: interest expense at incremental borrowing rate (45 ) Net present value of lease liabilities $ 487 Other assumptions and pertinent information related to the Company’s accounting for operating leases are: Weighted average remaining lease term: 4.8 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. See Contractual Commitments above, for disclosure 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 consolidated balance sheets – accrued liabilities for the year ended December 31, 2022. The notice of conversion to convert its convertible debt to shares of the Company’s stock will be honored. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 13 — Related Party Transactions Effective April 1, 2021, the Company entered into a variety of contracts with CoreWeave, Inc. (“CoreWeave”). CoreWeave is a shareholder in the Company. Asset Contribution and Exchange Agreement On April 1, 2021, CoreWeave contributed 3,130 GPU of data mining equipment with 150 gigahash of computing power to the Company in exchange for an equity interest representing 28.65% of the outstanding pre-merger equity of TTM Digital prior to the merger transaction with Sysorex for a total value of approximately $12 million. As a result of the merger, and in consideration for the 28.65% ownership of TTM Digital. CoreWeave was issued 35,588,548 shares of Sysorex common stock at the merger. Lease to Buy Purchase Order The Company acquired 1,344 GPU data mining equipment with 125 gigahash of computing power in a lease to buy arrangement. The Company agreed to total payments of $2.2 million over 180 days subject to acceleration based on the completion of certain corporate events. Revenue generated by operation of the equipment from April 1, 2021, shall be credited against the purchase price until payment of the balance of the purchase price. The Company has determined that the fair value of the installment payments is $2.1 million and will record $70,000 in financing interest costs for the aggregate $2.2 million in installment payments. The Company recognized approximately $70,000 of such interest expenses for the year ended December 31, 2021, respectively. 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 twelve months ended December 31, 2022, the Company recorded $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 twelve months ended December 31, 2022, the Company recorded $143,640 in mining costs within discontinued operations on the statement of operations. The Company terminated the Service agreement effective June 30, 2022. Master Services Agreement On April 29, 2021, the Company entered into a Master Services Agreement with CoreWeave to provide support to management relating to cryptocurrency expertise, marketing, and other operational matters for a three-month term. The compensation for these services is a fixed fee of $35,000 per 30-day period, which includes 175 hours per period. The Company recorded $105,000 and in service costs for the year ended December 31, 2021. Effective February 24, 2022, the master services agreement has been terminated. First Choice International Company, Inc (“First Choice”) On July 9, 2021, the Company executed an agreement whereby First Choice will provide consulting services to the Company. First Choice’s owner is a shareholder in the Company. The Company paid First Choice a fully earned flat fee of $175,000 for its services. The Agreement shall extend for an initial period of six (6) months. Unless immediate termination is otherwise specifically permitted herein, the Company may cancel the agreement by providing thirty (30) calendar days written notice. Notwithstanding, in the event of a Termination Notice, all of the compensation due during the Term or any extension thereof shall be deemed fully earned and/or immediately due and payable. BK Consulting Group, LLC On September 24, 2021, the Company entered into a Business Advisory Consulting Agreement (the “Consulting Agreement”) with BK Consulting Group, LLC ("BK Consulting"). The President of BK Consulting, Brian Kantor, is a beneficial owner in the Company as disclosed in the beneficial owner table. The Company paid BK Consulting an upfront flat fee of $300,000 with a service period term from September 24, 2021 through March 23, 2022 for consulting services. In connection with this fee, the Company expensed $160,000 through December 31, 2021 and $140,000 in 2022. In November 2021, the Company entered into the First Amendment to Consulting Agreement (“Amendment 1”) in which the Company agreed to pay BK Consulting an additional $300,000 for consulting services, extending the service period term and additional 3 months to June 23, 2022. The Company recorded $75,000 of this additional fee in 2021, and $225,000 in 2022 over the extended service period. In May 2022, the Company entered into an additional term extension on the initial services provided in the Consulting Agreement (“Amendment 2") through June 3, 2022, for which an additional $50,000 was paid and expensed for services provided in May 2022. During 2021, the Company expensed in total $235,000 relating to the Consulting Agreement and Amendment 1. During 2022, the Company expensed in total $415,000 relating to the Consulting Agreement, Amendment 1 and Amendment 2. ViewTrade Securities, Inc. On February 8, 2022, the Company entered into an Advisory Services Agreement (the “Agreement”) with ViewTrade Securities, Inc. (“Advisor”) whereby the Advisor will assist the Company and provide services that will contribute to the overall growth of the Company. ViewTrade and its owner Brian Herman are shareholders in the Company. The term of the engagement is six months and may be extended by mutual agreement of the parties. In consideration of the services, the Company paid an Advisory Fee in an amount equal to 6,000,000 restricted common shares (the “Fees) and the Fees shall be deemed fully earned upon execution of the Agreement. As of December 31, 2022, the Company recorded a value of the stock of $240,000, which included $239,940 of additional paid in capital and $60 par value. Bespoke Growth Partners, Inc. (“Bespoke”) Effective April 1, 2021, the Company entered into a consulting agreement with Bespoke. Bespoke’s owner is a shareholder in the Company. In connection with the consulting agreement, the Company agreed to issue 5,589,820 shares of common stock, of which 5,250,000 were later exercised for pre-funded warrants, of which 5,250,000 were unexercised as of December 31, 2021. The pre-funded warrants were subsequently exercised on January 21, 2022. The Company recognized an expense associated with the share issuance totaling approximately $1,884,888. 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 twelve months ended December 31, 2022, which is recorded as consultant fees in general and administrative operating costs in the 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 twelve months ended December 31, 2022, which is recorded as consultant fees in general and administrative in the consolidated statement of operations. Ressense LLC On August 4, 2021, the Company executed a six (6) month business advisory services agreement with Ressense LLC. Ressense’s owner is a shareholder in the Company. 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 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 owner of One Percent is a shareholder in the Company. 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 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 $125,000 of expense during the year ended December 31, 2022, which is recorded as consultant fees in general and administrative operating costs in the consolidated statement of operations. 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 Digital, 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. Accrued Salaries and Bonuses As of December 31, 2022, officers of the Company, Zaman Khan and Vincent Loiacono deferred bonuses of $90,000 and $75,000 respectively. As of December 31, 2022, the Company recorded $318,000 of severance and bonus as part of the CTO’s termination package. Style Hunter, Inc. On September 26, 2021, the Company acquired a 5% minority interest in Style Hunter, Inc. (“Hunt”). The owner of Style Hunter is a shareholder in the Company. The Hunt issued 613,723 shares of its common stock: par value $0.0001 per share for $0.81470 per share for a total price of $500,000. The Company shall have a one-time option to purchase an additional $500,000 of the Common Stock. As of December 31, 2022, the Company recorded an impairment charge of $0.5 million, which is recorded as an impairment of investments in the statement of operations as disclosed in Note 5 Discontinued Operations. Omniverse, LLC On April 3, 2023, the Company entered into a Stock Purchase Agreement (the “Agreement”) with Omniverse LLC (“Omniverse”), whereby the Company agreed to sell to Omniverse 136,667 shares of Series C-7b Preferred Stock of Ostendo Technologies, Inc. The owner of Omniverse is a shareholder in the Company. The Agreement requires Omniverse to pay the Company a purchase price consisting of $182,000 and other valuable consideration in the form of consulting services of approximately $1.0 million. The Company retained 30,000 shares of the investment in Ostendo. As of December 31, 2022, the Company has recorded $1.4 million in the Consolidated Balance sheets as equity investment in Ostendo. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 12 Months Ended |
Dec. 31, 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 December 31, 2022, and 2021: December 31, December 31, Consultants $ - $ 565 Rent - 17 Vendor Payments 16 - Insurance - 162 License and Maintenance Contracts 622 658 $ 638 $ 1,402 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Note 15 — Income Taxes The income tax provision (benefit) for the year ended December 31, 2022, consists of the following (in thousands of dollars): Net loss before income tax is as follows (in thousands): Year ended Net loss before income tax $ (8,609 ) Income tax expense (benefit) consists of the following: Year ended U.S. Federal Current $ 39 Deferred (2,062 ) State and Local Current 9 Deferred 92 (1,922 ) Change in Valuation Allowance 1,969 Total income tax provision (benefit) $ 47 The reconciliation between the U.S. statutory federal income tax rate and the Company’s effective rate for the year ended December 31, 2022, is as follows: Year ended Pretax Income 14.9 % State taxes, net of federal benefit 2.2 % Federal and state rate change and other -5.4 % Transaction costs -1.3 % Extinguishment of debt -0.4 % Other permanent items 2.4 % Embedded Derivative 3.4 % Change in valuation allowance -16.2 % Effective income tax rate -0.4 % As of December 31, 2022, the Company’s deferred tax assets consisted of the effects of temporary differences attributable to the following (in thousands of dollars): December 31, December 31, Deferred tax assets: Net operating loss carry forwards $ 7,888 $ 3,501 Fixed assets 965 1,126 Accrued compensation 143 40 Reserves 621 504 Intangible assets 2,969 3,053 Business interest limitation 662 727 Lease Liabilities 113 142 Tax Credits - 211 Loss Contingency 32 1,937 Other 669 181 Total deferred tax assets before valuation allowance 14,062 11,422 Valuation allowance (13,967 ) (11,280 ) Total deferred tax assets after valuation allowance 95 142 Deferred tax liabilities: Operating lease right of use assets (95 ) (142 ) Total deferred tax liabilities (95 ) (142 ) Net deferred tax assets and liabilities $ - $ - Prior to the merger (as discussed in Note 1), the Company was a Partnership for US Income Tax purposes and therefore had no provision for income tax as of December 31, 2020. Subsequent to the merger the entity became a taxable entity. The Company had approximately $32.1 million and $15.2 million of U.S. federal net operating loss (“NOL”) carryovers available to offset future taxable income at December 31, 2022 and December 31, 2021, respectively. The Company had approximately $19.3 million and $13.2 million of state NOL carryovers available to offset future taxable income at December 31, 2022 and December 31, 2021, respectively. The U.S. federal NOL’s generated in 2022 do not expire and have an indefinite life. State NOLs begin to expire at various dates beginning in 2038. The future utilization of federal net operating loss carryforwards generated after 2017 is limited to 80% of taxable income. An additional limitation applies to the use of federal net operating loss and credit carryforwards, under Section 382 of the Internal Revenue Code of 1986, as amended, that is applicable if the Company experiences an “ownership change.” The Company completed a 382 study and determined that there was a change in ownership on April 14, 2021, which limits their NOL and Section 163(j) carryforwards. The resulting Section 382 limitations are not expected to materially impact the Company’s ability to utilize carryforwards as NOLs and 163(j) should be available for utilization before expiration assuming sufficient future taxable income. Future changes in the ownership of the Company could further limit the Company’s ability to utilize its NOLs and credits. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. In assessing the realization of deferred tax assets, management considers whether it is “more likely than not”, that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. ASC 740, “Income Taxes” requires that a valuation allowance be established when it is “more likely than not” that all, or a portion of, deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets and has, therefore, established a full valuation allowance as of December 31, 2022. As of December 31, 2022, the net change in valuation allowance was $2.6 million. ASC 740 also clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and prescribes a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The Company is required to file federal and state income tax returns. Based on the Company’s evaluation, it has been concluded that there are no material uncertain tax positions requiring recognition in the Company’s consolidated financial statements for the year ended December 31, 2022. The Company’s policy for recording interest and penalties associated with unrecognized tax benefits is to record such interest and penalties as interest expense and as a component of general and administrative expense, respectively. There were no amounts accrued for interest or penalties for the year ended December 31, 2022. Management does not expect any material changes in its unrecognized tax benefits in the next year. The Company operates in multiple tax jurisdictions, and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations may result in future assessments by these taxing authorities. The Company is subject to examination by U.S. tax authorities beginning with the year ended December 31, 2018. Currently, the Company is not subject to any examinations. |
OTC Status
OTC Status | 12 Months Ended |
Dec. 31, 2022 | |
Otc Status Abstract | |
OTC Status | Note 16 — OTC Status The Company announced, effective November 25, 2022, its common shares are quoted on OTC Market’s Pink current information tier, in lieu of the OTCQB, due to the minimum bid price requirement for the OTCQB. The Company continues to trade its shares in the OTC Market, Pink Tier. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Note 17 — Subsequent Events Equity, Private Placement Agreement As discussed in Note 11 – Equity, Private Placement Agreement, on October 18, 2022, the Company sold to investors an aggregate of 500 million shares of common stock along with warrants 1 and 2 to each acquire an additional 500 million shares of common stock. Pursuant to the terms of the agreement, 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, the Company agreed to issue each investor a number of additional shares of common stock equal to 10% of the purchased shares acquired by each investor and a third warrant equal to the number of additional shares. The Company was unable to have the registration statement become effective by January 16, 2023, 90 days past October 18, 2022. As a result, the additional shares and warrant 3 will be issuable for each 30-day period, or portion thereof, that the registrable securities have not become effective. As of May 31, 2023, the Company is obligated to issue an additional 271 million shares of common stock and warrant 3 to purchase an additional 271 million shares of common stock. Stock Purchase Agreement On April 3, 2023, the Company entered into a Stock Purchase Agreement (the “Agreement”) with Omniverse LLC (“Omniverse”), whereby the Company agreed to sell to Omniverse 136,667 shares of Series C-7b Preferred Stock of Ostendo Technologies, Inc. The Agreement requires Omniverse to pay the Company a purchase price consisting of $182,000 and other valuable consideration in the form of consulting services of approximately $1.0 million. The Company retained 30,000 shares of the investment in Ostendo. As of December 31, 2022, the Company has recorded $1.4 million in the Consolidated Balance sheets as equity investment in Ostendo. Furnishing of Information: Public Information As required under the Securities Purchase Agreement, disclosed in Note 8 Short Term debt, with the convertible debenture holders thereunder, the Company is required to timely file its Annual Report, Form 10K and Quarterly Report Form 10Q under the Securities and Exchange Act and in order to satisfy the provisions of Rule 144(c). As of March 31, 2023, the Company was unable to meet its filing requirements deadlines, therefore, the Company has incurred partial liquidated damages of approximately $ 0.6 million. Damages will continue to accrue until the date on which the public information requirements of Rule 144(c) have been satisfied. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The 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. Up until November 2, 2021, the Company’s wholly owned subsidiary, TTM Digital had a 50% interest in Up North Hosting, LLC (“UNH”) which was accounted for as an equity method investment. On November 2, 2021, the Company acquired the remaining 50% interest in UNH making it a wholly owned subsidiary of the Company. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States (“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 stock ● Expected useful lives and valuation of long-lived assets ● Fair value of derivative liabilities |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity from the date of purchase of years or less to be cash equivalents. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject the Company to credit risk consist primarily of cash. The Company’s cash is deposited with commercial banks in the United States and may exceed federally insured limits from time to time. The recorded carrying amount of cash and cash equivalents approximates their fair value. The Company uses a digital asset exchange to custody and liquidate its digital assets. If demand for digital assets decline the Exchange could be negatively impacted. The Company’s digital assets are not insured under the third-party custody provider or exchanges. |
Mining Equipment | Mining Equipment Mining Equipment is stated at cost. Depreciation is computed using the straight-line method regardless of the category of asset. In the fall of 2021, the Company made the decision to divest certain mining equipment and the data center of the TTM Digital reporting unit. As a result, the Company reports these assets as held for sale in discontinued operations and no longer depreciates these assets. Prior to this classification, The Company had determined that the useful life of graphics processing units (“GPUs”) is 3-years and remaining mining equipment (primarily chassis, power supply units, computer memory, motherboards, risers, and fans) is depreciated over the estimated useful life of 5-years. Expenditures for repairs and maintenance are charged to expense as incurred. Upon disposition, the cost and related accumulated depreciation are removed from the accounts and the resulting gain or loss is reflected in the statement of operations. The rate at which the Company generates digital assets and, therefore, consumes the economic benefits of its transaction verification servers are influenced by several factors including the following: - The complexity of the transaction verification process which is driven by the algorithms contained within the Ethereum open-source software; - The general availability of appropriate computer processing capacity on a global basis (commonly referred to in the industry as hashing capacity which is measured in Terahash units); and - Technological obsolescence reflecting rapid development in the transaction verification server industry such that more recently developed hardware is more economically efficient to run in terms of digital assets generated as a function of operating costs, primarily power costs. i.e., the speed of hardware evolution in the industry is such that later hardware models generally have faster processing capacity combined with lower operating costs and on average a lower cost of purchase. The Company operates in an emerging industry for which limited data is available to make estimates of the useful economic lives and values of specialized equipment. Management will review this estimate quarterly and will revise such estimates as and when data becomes available. To the extent that any of the assumptions underlying management’s estimate of useful life or values of its mining equipment are subject to revision in a future reporting period either because of changes in circumstances or through the availability of greater quantities of data then the estimated useful life or value could change and have a prospective impact on the carrying amounts of these assets. |
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. An impairment loss of $4.1 million and $3.3 million was recorded for long-lived assets for the years ended December 31, 2022, and 2021. As of September 15, 2022, Ethereum switched from a Proof of Work model to a Proof of Stake model, The Company is no longer mining Ethereum or any other cryptocurrency. TTM Digital no longer holds any Ethereum or other crypto tokens or crypto assets at this time and does not conduct any mining activities and does not have any plans to mine crypto tokens in the future. TTM Digital is currently exploring sales opportunities for its Graphics Processing Unit (GPU) assets and datacenter located in Lockport, NY. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation. |
Mining Revenue | Mining Revenue TTM Digital has entered into a mining pool with the operator to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s arrangement with mining pool operators. The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date earned, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. The fair value of the digital asset award received is determined using the quoted price of the related digital asset at the time earned. The Company monitors the market and when an identical digital asset is bought and sold at a price below the Company’s carrying value, often an indicator that impairment is more likely than not, the Company will follow ASC 820, Fair Value Measurement |
Hardware and Software Revenue Recognition | Hardware and Software Revenue Recognition SGS is a primary resale channel for a large group of vendors and suppliers, including original equipment manufacturers (“OEMs”), software publishers and wholesale distributors. The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified product or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides a direct warranty to the customer with the Company’s own personnel as the customer requires a warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross basis over time. |
License and Maintenance Services Revenue Recognition | License and Maintenance Services Revenue Recognition SGS provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer’s needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company’s performance obligation to provide the overall systems solution is satisfied at that time. The Company’s customers generally pay within 30 to 60 days of the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis. SGS’s professional services include fixed fee contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Anticipated losses are recognized as soon as they become known. For the year ended December 31, 2022, SGS did not incur any such losses. These amounts are based on known and estimated factors. Revenues from time and material or firm fixed price long-term and short-term contracts are derived principally with various United States government agencies. |
Contract Balances | Contract Balances The timing of revenue recognition may differ from the timing of payment by customers. The Company records receivables when revenue is recognized prior to payment and there is an unconditional right to payment. Alternatively, when payment precedes the provision of the related services, the Company records deferred revenue until the performance obligations are satisfied. The following table details the contract balances presented (in thousands): Deferred Revenue: Balance as Additions Revenue Deletions Balance as Customer A $ 246 $ 639 $ 476 $ - $ 409 Customer B 725 15 236 - 504 Various - 43 25 - 18 Valuation Adjustment (39 ) - - 39 - $ 932 $ 697 $ 737 $ 39 $ 931 |
Accounts Receivable, Net | Accounts Receivable, Net Account receivables are stated at the amount the Company expects to collect. The Company recognizes an allowance for doubtful accounts to ensure accounts receivables are not overstated due to un-collectability. Bad debt reserves are maintained for various customers based on a variety of factors, including the length of time the receivables are past due, significant one-time events and historical experience. An additional reserve for individual accounts is recorded when the Company becomes aware of a customer’s inability to meet its financial obligation, such as in the case of bankruptcy filings, or deterioration in the customer’s operating results or financial position. If circumstances related to customers change, estimates of the recoverability of receivables would be further adjusted. The Company’s allowance for doubtful accounts was $0.05 million as of December 31, 2022, and $0.05 million as of December 31, 2021. |
Digital Assets | Digital Assets Digital assets (predominantly Ethereum) are included in current assets in the accompanying consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. ASC-350-35-19 requires an impairment at any time the fair value of the digital asset is below its carrying value. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The Company recorded a $2.7 million and $0.7 million impairment charge during the years ended December 31, 2022, and 2021, respectively. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows and it’s mining activities are disclosed in Note 5-Discontinued Operations. The sales of digital assets are included within investing activities in the accompanying consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company recognized realized gains (losses) through the sale and disbursement of digital assets during the year ended December 31, 2022, and 2021 of $1.7 million and $0.1 million, respectively. |
Goodwill | Goodwill and Intangible Assets The Company accounts for intangible assets under ASC 350-30, Intangibles-Goodwill and Other Intangible assets with finite lives are comprised of customer contracts, and trademarks that are amortized on a straight-line basis over their expected useful lives. The carrying value of finite-lived assets and the remaining useful lives are reviewed at least annually to determine if circumstances exist which may indicate a potential impairment or revision to the amortization period. Investments in Equity The Company’s investment in Ostendo include an investment in an equity instruments, accounted for under ASC 321 Investments – Equity Securities, where the Company (1) holds less than 20% ownership in the entity, and (2) does not exercise significant influence. These are recorded at cost and adjusted for observable transactions for same or similar investments of the same issuer (referred to as the measurement alternative) or impairment. |
Fair Value | Fair Value The Company follows the accounting guidance under FASB’s Accounting Standards Codification 820, Fair Value Measurements, for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. Certain nonfinancial assets such as property and equipment, land and intangible assets are subject to nonrecurring fair value measurements if they are deemed to be impaired. The impairment models used for nonfinancial assets depend on the type of asset. For the year ended December 31, 2022, the Company recorded impairment charges related to assets measured on a non-recurring basis of $4.1 million for graphics processing units in Note 5 – Discontinued Operations and $2.7 million for digital assets in the Consolidated Statement of Operations. The Company utilized a market approach as of December 31, 2022, to determine fair value. The Company evaluated its equity investment in Ostendo of $1.6 million and its Style Hunter investment and recorded an impairment of approximately $0.2 million, reported in the Consolidated Statement of Operations and $0.5 million, reported in Note 5 – Discontinued Operations, respectively The Company utilized inputs of market data and trends of peer group companies to determine the fair value of the equity investment. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable, are of approximate fair value due to the short-term nature of these instruments. |
Held for Sale Classification | Held for Sale Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy. An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset shall not be depreciated or amortized while it is classified as held for sale. |
Stock Based Compensation | Stock Based Compensation The Company accounts for its stock-based compensation awards to employees and directors in accordance with FASB ASC Topic 718, Compensation-Stock Compensation (“ASC 718”). ASC 718 requires all stock-based compensation to employees, including grants of employee stock options, and restricted stock, to be recognized in the consolidated statements of operations based on their grant date fair values. The fair value of stock options is estimated as of the date of grant using the Monte Carlo Simulation option pricing model. The fair value of restricted stock is calculated as the fair value of the Company’s common stock as of the date of the grant. The expense is recognized on a straight-line basis over the requisite service period |
Pre-funded Warrants / Rights to Shares | Pre-funded Warrants / Rights to Shares The Company has certain forward sale contracts for equity issuances (“Forward Contracts”) where the Holder has provided all funding towards the equity issuance and additional consideration is not required for equity issuance. The Forward Contracts are referred to as Pre-funded Warrants or Rights to Shares. Shares will be issued upon the contractual terms of the Forward Contracts. The Company includes the proceeds of the Forward Contracts in equity in Additional paid-in-capital. In accordance with ASC 260, Earnings Per Share, the underlying shares to be issued are included in the number of outstanding shares used for Basic earnings per share. |
Income Taxes | Income Taxes The Company accounts for income taxes under the asset and liability method, in which deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income taxes of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is required to the extent any deferred tax assets may not be realizable. ASC 740-10, Accounting for Uncertainty in Income Taxes, defines uncertainty in income taxes and the evaluation of a tax position as a two-step process. The first step is to determine whether it is more likely than not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigation based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likelihood of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely than-not threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. The Company had no uncertain tax positions as of December 31, 2022, and 2021. |
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 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 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. |
Leases | Leases The right of use asset (“ROU”) on the Company’s consolidated balance sheet represents a lessee’s right to use an asset over the life of a lease. Operating lease ROU assets and lease liabilities are recognized at commencement date based on the present value of lease payments over the lease term, plus any lease payments made to the lessor before the lease commencement date, plus any initial direct costs incurred, minus any lease incentives received. The amortization period for the right of use asset is from the lease commencement date to the earlier of the end of the lease term or the end of the useful life of the asset. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease term. The Company has elected to exclude all short-term leases (i.e., leases with a term of 12 months or less) from recognition on the balance sheet. The Company’s lease liabilities are determined by calculating the present value of all future lease payments using the rate implicit in the lease if it can be readily determined, or the lessee’s incremental borrowing rate. The Company uses its incremental borrowing rate at the inception of the lease to determine the present value of future lease payments as the rate implicit in its leases could not be readily determined. |
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 years ended December 31, 2022 and 2021, 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: December 31, 2022 2021 Weighted-average common shares outstanding 840,858,474 128,603,982 Weighted-average potential common shares considered outstanding 3,000,000 10,457,102 Weighted-average common shares outstanding – basic 843,858,474 139,061,084 Dilutive effect of options, warrants and restricted stock - - Weighted-average common shares outstanding – diluted 843,858,474 139,061,084 Options, restricted stock, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive 129,509,270 6,603,716 |
Recent Accounting Standards | Recent Accounting Standards The Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change. In June 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments Financial Instruments – Credit Losses In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12” Earnings Per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40) |
Reclassifications | Reclassifications Certain prior year amounts reported on our Form 10-K/A (Amendment No. 2) have been reclassified for consistency with the current year presentation. The Company has retroactively restated its assets reported as discontinued operations as 100% held for sale. Costs associated with the TTM Digital reporting unit were reclassified from the consolidated statement of operations to discontinued operations. |
Emerging Growth Company | Emerging Growth Company Sysorex is an “emerging growth company” as defined in 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. 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 Exchange Act, 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) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies [Abstract] | |
Schedule of deferred Revenue | Balance as Additions Revenue Deletions Balance as Customer A $ 246 $ 639 $ 476 $ - $ 409 Customer B 725 15 236 - 504 Various - 43 25 - 18 Valuation Adjustment (39 ) - - 39 - $ 932 $ 697 $ 737 $ 39 $ 931 |
Schedule of basic and diluted weighted average common shares outstanding | December 31, 2022 2021 Weighted-average common shares outstanding 840,858,474 128,603,982 Weighted-average potential common shares considered outstanding 3,000,000 10,457,102 Weighted-average common shares outstanding – basic 843,858,474 139,061,084 Dilutive effect of options, warrants and restricted stock - - Weighted-average common shares outstanding – diluted 843,858,474 139,061,084 Options, restricted stock, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive 129,509,270 6,603,716 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Discontinued Operations [Abstract] | |
Schedule of balance sheet | 2022 2021 Current Assets Mining facilities, net 1,083 1,083 Mining equipment, net 3,491 8,476 Investment in Style Hunter - 500 Intangible assets, net 89 89 Total Assets associated with discontinued operations $ 4,663 $ 10,148 |
Schedule of statement of operations | 2022 2021 Revenues Mining income $ 4,094 $ 12,534 Other revenue 96 38 Total Revenues 4,190 12,572 Operating costs and expenses Mining cost 1,457 1,273 General and administrative 785 294 Impairment of investments 500 - Impairment of fixed assets 4,061 3,274 Depreciation 910 4,144 Total Operating Costs and Expenses 7,713 8,985 (Loss) Gain from Discontinued Operations (3,523 ) 3,587 Other Income (Expenses) Gain (loss) on sale of fixed assets (14 ) (146 ) Fair value loss on previously held equity interest - (18 ) Other income (expenses), net - 58 Total Other Income (14 ) (106 ) (Loss) Income before net loss of equity method investee (3,537 ) 3,481 Share of net loss of equity method investee - (94 ) Net (loss) income from discontinued operations $ (3,537 ) $ 3,387 |
Schedule of net cash flows from discontinued operations | For the Year Ended 2022 2021 Net cash used in operating activities – discontinued operations (1,966 ) (13,165 ) Net cash used in investing activities – discontinued operations - (1,520 ) Net cash provided by financing activities – discontinued operations - - |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Intangible Assets [Abstract] | |
Schedule of intangible assets | Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (179 ) $ 881 Customer Relationships 1,900 (802 ) 1,098 Total intangible assets $ 2,960 $ (981 ) $ 1,979 |
Schedule of future amortization expense | Calendar Years ending December 31, Amount 2023 573 2024 573 2025 266 Thereafter 567 Total $ 1,979 |
Credit Risk and Concentrations
Credit Risk and Concentrations (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Schedule of risk percentage of revenue | The Years Ended December 31, 2022 December 31, 2021 $ % $ % Customer A 4,388 26 % 4,826 44 % Customer B 10,421 61 % 2,946 27 % |
Short Term Convertible Debt (Ta
Short Term Convertible Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Short Term Debt [Abstract] | |
Schedule of short term convertible debt | December 31, December 31, 2022 2021 Convertible Debentures, including interest payable to the Convertible Debenture Holders $ 15,272 $ 19,439 Total Short-Term Convertible Debt $ 15,272 $ 19,439 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements [Abstract] | |
Schedule of recurring fair value measurements | Fair value measurement at reporting date using Balance Quoted prices in Significant Significant As of December 31, 2022: (in thousands) Recurring fair value measurements Assets: Equity investment in Ostendo $ 1,397 $ - $ - $ 1,397 Derivative liabilities: Conversion feature derivative liability $ 3,472 $ - $ - $ 3,472 Common stock derivative liability 273 - - 273 Total derivative liabilities 3,745 - - 3,745 As of December 31, 2021: (in thousands) Recurring fair value measurements Derivative liabilities: Conversion feature derivative liability $ 8,355 $ - $ - $ 8,355 Total derivative liabilities 8,355 - - 8,355 |
Schedule of fair value of the Company's derivative liabilities | Conversion feature derivative liability Common stock derivative liability Total level 3 derivative liability Balance as of December 31, 2020 $ - $ - $ - Issuance of convertible debentures 2,077 - 2,077 Increase in fair value included in earnings 6,278 - 6,278 Balance as of December 31, 2021 $ 8,355 $ - $ 8,355 Transferred to equity on debt conversion (2,921 ) - (2,921 ) Transferred to equity on RSU issuance - (5 ) (5 ) Transferred from equity on recognition of derivative liability - 314 314 Fair value of warrants issued - 534 534 Decrease in fair value included in earnings (1,962 ) (570 ) (2,532 ) Balance as of December 31, 2022 $ 3,472 $ 273 $ 3,745 |
Digital Assets (Tables)
Digital Assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Digital Assets [Abstract] | |
Schedule of digital asset activity | December 31, 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 4,094 12,534 Payment of Mining equipment under lease to buy arrangement - (1,091 ) Mining pool operating fees (42 ) (129 ) Management fees - (321 ) Transaction fees (138 ) (26 ) Owners’ distributions - (1,521 ) Digital asset impairment (2,748 ) (704 ) Proceeds from sale of digital assets (8,119 ) (3,670 ) Realized gain on sale of digital assets 1,751 106 Ending Balance $ - $ 5,202 |
Equity (Tables)
Equity (Tables) | 12 Months Ended |
Dec. 31, 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 (48,500 ) - Outstanding, December 31, 2022 1,607,500 $ 2.00 Exercisable, December 31, 2022 1,607,500 $ 2.00 |
Schedule of table represents the activity | Number of Weighted Outstanding, January 1, 2022 5,926,763 $ * Granted 1,004,576,431 .001 Exercised (418,931 ) - Outstanding, December 31, 2022 1,010,084,263 $ - Prefunded Outstanding, January 1, 2022 15,361,622 New issuances - Exercised 12,361,622 Outstanding, December 31, 2022 3,000,000 Number of Weighted Outstanding, January 1, 2022 1,100,000 $ 0.48 Granted - - Vested 1,100,000 0.40 Unvested, December 31, 2022 - $ - |
Schedule of share derivative liabilities | December 31, Warrants $ 272 Stock options 1 Total share derivative liability $ 273 |
Schedule of reverse stock split balance sheet | Proforma As Stated Effect Balance Sheet Common stock: Shares Issued: 12/31/2022 2,484,501,880 2,484,502 12/31/2021 145,713,591 145,714 Shares Outstanding: 12/31/2022 2,484,426,501 2,484,427 12/31/2021 145,638,212 145,638 Treasury Stock: 75,379 75 |
Schedule of reverse stock split EPS | Year Ended EPS 2022 2021 Weighted Average Shares Outstanding – basic and diluted As stated 843,858,474 139,061,084 Proforma 843,858 139,061 Net income (loss) per share: Continuing operations As stated (0.010 ) (0.38 ) Proforma (10.00 ) (38.00 ) Discontinued Operations As stated (0.004 ) 0.02 Proforma (4.00 ) 20.00 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of current and long-term operating lease liabilities | Year Ended 2022 2021 Cash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases $ - $ - Leased assets obtained in exchange for new and modified operating lease liabilities $ (487 ) $ (558 ) Leased assets surrendered in exchange for termination of operating lease liabilities $ - $ - |
Schedule of future minimum operating leases | Calendar Years ending December 31, Amount 2023 $ 216 2024 222 2025 95 Total future lease payments 533 Less: interest expense at incremental borrowing rate (45 ) Net present value of lease liabilities $ 487 |
Schedule of operating leases | Weighted average remaining lease term: 4.8 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) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid Expenses and Other Current Assets [Abstract] | |
Schedule of prepaid expenses and other current assets | December 31, December 31, Consultants $ - $ 565 Rent - 17 Vendor Payments 16 - Insurance - 162 License and Maintenance Contracts 622 658 $ 638 $ 1,402 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Tax Disclosure [Abstract] | |
Schedule of net loss before income tax | Year ended Net loss before income tax $ (8,609 ) |
Schedule of income tax expense (benefit) | Year ended U.S. Federal Current $ 39 Deferred (2,062 ) State and Local Current 9 Deferred 92 (1,922 ) Change in Valuation Allowance 1,969 Total income tax provision (benefit) $ 47 |
Schedule of reconciliation between the U.S. statutory federal income tax rate | Year ended Pretax Income 14.9 % State taxes, net of federal benefit 2.2 % Federal and state rate change and other -5.4 % Transaction costs -1.3 % Extinguishment of debt -0.4 % Other permanent items 2.4 % Embedded Derivative 3.4 % Change in valuation allowance -16.2 % Effective income tax rate -0.4 % |
Schedule of deferred tax assets consisted of the effects | December 31, December 31, Deferred tax assets: Net operating loss carry forwards $ 7,888 $ 3,501 Fixed assets 965 1,126 Accrued compensation 143 40 Reserves 621 504 Intangible assets 2,969 3,053 Business interest limitation 662 727 Lease Liabilities 113 142 Tax Credits - 211 Loss Contingency 32 1,937 Other 669 181 Total deferred tax assets before valuation allowance 14,062 11,422 Valuation allowance (13,967 ) (11,280 ) Total deferred tax assets after valuation allowance 95 142 Deferred tax liabilities: Operating lease right of use assets (95 ) (142 ) Total deferred tax liabilities (95 ) (142 ) Net deferred tax assets and liabilities $ - $ - |
Nature and Description of Bus_2
Nature and Description of Business (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2021 | May 17, 2022 | |
Accounting Policies [Abstract] | ||
Convertible debentures | 12.50% | |
Increase in net loss | $ 8.4 | |
Fair value expense | 6.3 | |
Interest expense increase | 0.9 | |
Debt default | $ 1.2 |
Going Concern (Details)
Going Concern (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Sep. 22, 2022 | Dec. 31, 2022 | Apr. 01, 2021 | |
Going Concern [Abstract] | |||
Cash balance (in Dollars) | $ 30 | ||
Working capital (in Dollars) | 18,100 | ||
Accumulated deficit (in Dollars) | 61,400 | ||
Private placement (in Dollars) | $ 500 | ||
Preferred shares | 180,000 | ||
Shares of common stock | 3,000,000,000 | 500,000,000 | |
Authorized shares | 1,159,494,989 | ||
Estimates share | 43,400,000,000 | 5,589,820 | |
Authorized | 3,000,000,000 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 23, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Number of common stock right to receive (in Shares) | 124,218,268 | ||
Common stock par value per share (in Dollars per share) | $ 0.00001 | $ 0.00001 | |
Percentage of outstanding shares of capital stock | 80% | ||
Mining revenue | $ 4,400 | ||
Mining costs | 400 | ||
Depreciation | 2,500 | ||
Impairment of fixed assets | 3,300 | ||
Net effect change | $ 1,800 | $ 2,000 | |
Net loss from operations | 5,200 | ||
Net income from discontinued operations | 3,400 | ||
Equipment to assets held for sale | $ 4,000 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) | 12 Months Ended | |||
Nov. 02, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | Apr. 01, 2021 | |
Accounting Policies [Abstract] | ||||
Principles of consolidation interest percentage | 50% | 50% | ||
Long-lived assets | $ 4,100,000 | $ 3,300,000 | ||
Allowance for doubtful accounts | 50,000 | 50,000 | ||
Impairment charge | 2,700,000 | 700,000 | ||
Digital assets | 1.7 | $ 0.1 | ||
Goodwill impairment loss | $ 1,600,000 | |||
Ownership percentage | 20% | 28.65% | ||
Assets measured | $ 4.1 | |||
Utilized a market | 2.7 | |||
Equity investment | 1,600,000 | |||
Impairment | $ 200,000 | |||
Held for sale percentage | 100% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of deferred Revenue $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Summary of Significant Accounting Policies (Details) - Schedule of deferred Revenue [Line Items] | |
Balance as of beginning balance | $ 932 |
Additions | 697 |
Revenue Amortization | 737 |
Deletions | 39 |
Balance as of ending balance | 931 |
Customer A [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of deferred Revenue [Line Items] | |
Balance as of beginning balance | 246 |
Additions | 639 |
Revenue Amortization | 476 |
Deletions | |
Balance as of ending balance | 409 |
Customer B [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of deferred Revenue [Line Items] | |
Balance as of beginning balance | 725 |
Additions | 15 |
Revenue Amortization | 236 |
Deletions | |
Balance as of ending balance | 504 |
Various [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of deferred Revenue [Line Items] | |
Additions | 43 |
Revenue Amortization | 25 |
Deletions | |
Balance as of ending balance | 18 |
Valuation Adjustment [Member] | |
Summary of Significant Accounting Policies (Details) - Schedule of deferred Revenue [Line Items] | |
Balance as of beginning balance | (39) |
Revenue Amortization | |
Deletions | 39 |
Balance as of ending balance |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details) - Schedule of basic and diluted weighted average common shares outstanding - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Basic and Diluted Weighted Average Common Shares Outstanding [Abstract] | ||
Weighted-average common shares outstanding | 840,858,474 | 128,603,982 |
Weighted-average potential common shares considered outstanding | 3,000,000 | 10,457,102 |
Weighted-average common shares outstanding – basic | 843,858,474 | 139,061,084 |
Dilutive effect of options, warrants and restricted stock (in Dollars) | ||
Weighted-average common shares outstanding – diluted | 843,858,474 | 139,061,084 |
Options, restricted stock, and warrants and convertible debt excluded from the computation of diluted loss per share because the effect of inclusion would be anti-dilutive | 129,509,270 | 6,603,716 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) | 12 Months Ended | |
Mar. 24, 2022 | Dec. 31, 2022 | |
Discontinued Operations [Abstract] | ||
Non refundable deposit | $ 1,600,000 | |
Purchase of additional shares (in Shares) | 166,667 | |
Carrying value of digital assets | $ 4,700,000 | |
Impairment of fixed assets | $ 4,100,000 |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of balance sheet - Discontinued Operations [Member] - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Mining facilities, net | $ 1,083 | $ 1,083 |
Mining equipment, net | 3,491 | 8,476 |
Investment in Style Hunter | 500 | |
Intangible assets, net | 89 | 89 |
Total Assets associated with discontinued operations | $ 4,663 | $ 10,148 |
Discontinued Operations (Deta_3
Discontinued Operations (Details) - Schedule of statement of operations - Discontinued Operations [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Revenues | ||
Mining income | $ 4,094 | $ 12,534 |
Other revenue | 96 | 38 |
Total Revenues | 4,190 | 12,572 |
Operating costs and expenses | ||
Mining cost | 1,457 | 1,273 |
General and administrative | 785 | 294 |
Impairment of investments | 500 | |
Impairment of fixed assets | 4,061 | 3,274 |
Depreciation | 910 | 4,144 |
Total Operating Costs and Expenses | 7,713 | 8,985 |
(Loss) Gain from Discontinued Operations | (3,523) | 3,587 |
Other Income (Expenses) | ||
Gain (loss) on sale of fixed assets | (14) | (146) |
Fair value loss on previously held equity interest | (18) | |
Other income (expenses), net | 58 | |
Total Other Income | (14) | (106) |
(Loss) Income before net loss of equity method investee | (3,537) | 3,481 |
Share of net loss of equity method investee | (94) | |
Net (loss) income from discontinued operations | $ (3,537) | $ 3,387 |
Discontinued Operations (Deta_4
Discontinued Operations (Details) - Schedule of net cash flows from discontinued operations - TTM Digital [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Discontinued Operations (Details) - Schedule of net cash flows from discontinued operations [Line Items] | ||
Net cash used in operating activities – discontinued operations | $ (1,966) | $ (13,165) |
Net cash used in investing activities – discontinued operations | (1,520) | |
Net cash provided by financing activities – discontinued operations |
Intangible Assets (Details)
Intangible Assets (Details) $ / shares in Units, shares in Millions | Nov. 02, 2021 USD ($) $ / shares shares |
Intangible Assets (Details) [Line Items] | |
Membership interest rate | 50% |
Restricted common stock value | $ 1,000,000 |
Restricted common stock (in Shares) | shares | 1 |
Restricted common stock, par value (in Dollars per share) | $ / shares | $ 0.00001 |
Total acquisition cost | $ 1,400,000 |
Acquisition cost | 694,100 |
Equity method investment | 17,962 |
Membership interest carrying value | 649,462 |
Building, and improvements value | 1,100,000 |
UNH Acquisition [Member] | |
Intangible Assets (Details) [Line Items] | |
Acquisition cost | 705,900 |
Equity method investment | 631,500 |
Consideration amount | 705,900 |
Effective settlement of intercompany | 104,285 |
Net purchase consideration | $ 1,233,115 |
BWP Acquisition [Member] | |
Intangible Assets (Details) [Line Items] | |
Ownership interest rate | 100% |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets $ in Thousands | Dec. 31, 2022 USD ($) |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | |
Gross Carrying Amount | $ 2,960 |
Accumulated Amortization | (981) |
Net Carrying Amount | 1,979 |
Trade name [Member] | |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | |
Gross Carrying Amount | 1,060 |
Accumulated Amortization | (179) |
Net Carrying Amount | 881 |
Customer relationships [Member] | |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | |
Gross Carrying Amount | 1,900 |
Accumulated Amortization | (802) |
Net Carrying Amount | $ 1,098 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of future amortization expense $ in Thousands | Dec. 31, 2022 USD ($) |
Schedule Of Future Amortization Expense Abstract | |
2023 | $ 573 |
2024 | 573 |
2025 | 266 |
Thereafter | 567 |
Total | $ 1,979 |
Credit Risk and Concentration_2
Credit Risk and Concentrations (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 10% | |
Customer A [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 61% | |
Customer B [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 30% | |
Accounts Receivable [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 11% | |
Total Purchase [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Purchases from vendors (in Dollars) | $ 2.9 | |
Customer A [Member] | Accounts Receivable [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 72% | |
Vendor One [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 41% | 36% |
Purchases from vendors (in Dollars) | $ 9.5 | |
Vendor One [Member] | Total Purchase [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Purchases from vendors (in Dollars) | $ 3.8 | |
Vendor Two [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 35% | 25% |
Purchases from vendors (in Dollars) | $ 8.1 | |
Vendor Two [Member] | Total Purchase [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Purchases from vendors (in Dollars) | $ 2.6 | |
Vendor Three [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Concentration risk percentage | 12% | 25% |
Vendor Three [Member] | Total Purchase [Member] | ||
Credit Risk and Concentrations (Details) [Line Items] | ||
Purchases from vendors (in Dollars) | $ 2.6 |
Credit Risk and Concentration_3
Credit Risk and Concentrations (Details) - Schedule of risk percentage of revenue - Sales [Member] - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Customer A [Member] | ||
Schedule of risk percentage of revenue [Abstract] | ||
Purchases from vendors | $ 4,388 | $ 4,826 |
Concentration risk percentage | 26% | 44% |
Customer B [Member] | ||
Schedule of risk percentage of revenue [Abstract] | ||
Purchases from vendors | $ 10,421 | $ 2,946 |
Concentration risk percentage | 61% | 27% |
Short Term Convertible Debt (De
Short Term Convertible Debt (Details) - USD ($) | 12 Months Ended | ||||
Jan. 07, 2022 | Aug. 13, 2021 | Jul. 07, 2021 | Dec. 31, 2022 | Dec. 31, 2021 | |
Short Term Convertible Debt (Details) [Line Items] | |||||
Principal amount | $ 15,200,000 | ||||
Bearing interest rate | 18% | 12.50% | |||
Shares of common stock (in Shares) | 180,000 | ||||
Total gross proceeds | $ 1,500,000 | ||||
Percentage of debentures | 130% | ||||
Agent fees and expenses | $ 1,300,000 | ||||
WarrantPurchaseAgreementDescription | The exercise price will be either 1) the Qualified Offering Price, in the event of a Qualified Offering or 2) in the event of no Qualified Offering, the lower of a) $18.00 and b) an amount equal to 80% of the average of VWAP (as defined therein) for the common stock. The term of the warrant is five years. The warrants issued in connection with the debt were equity classified at issuance and were allocated a value of approximately $896,000 on a relative fair value basis. | ||||
Debt discount attributed | $ 800,000 | ||||
Derivative liability | $ 2,100,000 | ||||
ConvertibilityNoteDescription | 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. | ||||
Receives gross proceeds | $ 40,000,000 | ||||
Initial fair value | 2,100,000 | ||||
Revaluation loss | $ 2,000,000 | $ (6,300,000) | |||
Conversion option (in Shares) | 3,500,000 | ||||
Debenture holders debts | $ 6.2 | ||||
Convertible debt (in Shares) | 1.8 | ||||
Loss on debt extinguishment | $ 200,000 | ||||
Derivative liability | 2,900,000 | ||||
Debentures provide | 50,000 | ||||
Judgement total sum | 5.9 | ||||
Principal sum | 3.3 | ||||
Prejudgment interest | 2.6 | ||||
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. | ||||
Loss recorded | 7,800,000 | ||||
Debt issuance costs | 3,300,000 | ||||
Increase in principal | 4,200,000 | ||||
Debt and issuance costs incurred | 0.3 | ||||
Interest expense | $ 3,400,000 | ||||
Description of non recourse factoring and security agreement | Effective as June 19, 2020, prior to the merger, the Company and SouthStar Financial, LLC (“SouthStar”) entered into a Non-Recourse Factoring and Security Agreement (the “Agreement”) pursuant to which SouthStar may purchase receivables from the Company (the “Purchased Receivables”) for a price not to exceed 85% of the face value of the Purchased Receivables or a lesser percentage agreed upon between the Company and SouthStar. In consideration of SouthStar’s purchase of the Purchased Receivables, the Company will pay to SouthStar an amount equal to 0.8% of the face amount of the Purchased Receivables for the first 10-day period after payment for the Purchased Receivables is transmitted to SouthStar plus 0.9% for each additional 10-day period or part thereof, calculated from the date of purchase until payments received by SouthStar in collected funds on the Purchased Receivables equals the purchase price of the Purchased Receivables plus all charges due SouthStar from the Company at the time. An additional 1.0% per 10-day period will be charged for invoices exceeding 60 days from invoice date. The Company utilizes the security agreement to provide assurance of payment to the supplier. The Company currently utilizes SouthStar to finance its purchase orders and it also can factor its receivables if needed to fund operations. The Company, SouthStar and the Distributor/vendor enter a triparty agreement whereby SouthStar will pay the vendor under net 30-day terms the purchase order amount. | ||||
Financed of purchase orders | $ 900,000 | ||||
2021 Convertible Debentures & Warrants [Member] | |||||
Short Term Convertible Debt (Details) [Line Items] | |||||
Bearing interest rate | 12.50% | 12.50% | |||
Aggregate principal amount | $ 3,400,000 | $ 9,990,000 | |||
Shares of common stock (in Shares) | 1,862,279 | 3,500,000 | |||
Total gross proceeds | $ 3,500,000 | $ 8,900,000 | |||
Percentage of debentures | 12% | 12.50% | |||
Agent fees and expenses | $ 300,000 | $ 900,000 | |||
Maturity date | Aug. 13, 2022 | ||||
Convertible Debt [Member] | |||||
Short Term Convertible Debt (Details) [Line Items] | |||||
Interest payable | $ 3,100,000 |
Short Term Convertible Debt (D
Short Term Convertible Debt (Details) - Schedule of short term convertible debt - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Schedule Of Short Term Convertible Debt Abstract | ||
Convertible Debentures, including interest payable to the Convertible Debenture Holders | $ 15,272 | $ 19,439 |
Total Short-Term Convertible Debt | $ 15,272 | $ 19,439 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) $ in Millions | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Fair Value Measurements [Abstract] | |
Change in fair value of debt conversion feature | $ 2 |
Equity investment amount | 1.6 |
Equity impairment | $ 0.2 |
Fair Value Measurements (Deta_2
Fair Value Measurements (Details) - Schedule of recurring fair value measurements - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Recurring fair value measurements | ||
Equity investment in Ostendo | $ 1,397 | |
Conversion feature derivative liability | 3,472 | 8,355 |
Common stock derivative liability | 273 | |
Total derivative liabilities | 3,745 | 8,355 |
Quoted prices in active markets for identical assets (Level 1) [Member] | ||
Recurring fair value measurements | ||
Equity investment in Ostendo | ||
Conversion feature derivative liability | ||
Common stock derivative liability | ||
Total derivative liabilities | ||
Significant other observable inputs (Level 2) [Member] | ||
Recurring fair value measurements | ||
Equity investment in Ostendo | ||
Conversion feature derivative liability | ||
Common stock derivative liability | ||
Total derivative liabilities | ||
Significant unobservable inputs (Level 3) [Member] | ||
Recurring fair value measurements | ||
Equity investment in Ostendo | 1,397 | |
Conversion feature derivative liability | 3,472 | 8,355 |
Common stock derivative liability | 273 | |
Total derivative liabilities | $ 3,745 | $ 8,355 |
Fair Value Measurements (Deta_3
Fair Value Measurements (Details) - Schedule of fair value of the Company's derivative liabilities - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value Measurements (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | ||
Beginning balance | $ 8,355 | |
Issuance of convertible debentures | 2,077 | |
Increase in fair value included in earnings | 6,278 | |
Ending balance | 3,745 | 8,355 |
Transferred to equity on debt conversion | (2,921) | |
Transferred to equity on RSU issuance | (5) | |
Transferred from equity on recognition of derivative liability | 314 | |
Fair value of warrants issued | 534 | |
Decrease in fair value included in earnings | (2,532) | |
Conversion feature derivative liability [Member] | ||
Fair Value Measurements (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | ||
Beginning balance | 8,355 | |
Issuance of convertible debentures | 2,077 | |
Increase in fair value included in earnings | 6,278 | |
Ending balance | 3,472 | 8,355 |
Transferred to equity on debt conversion | (2,921) | |
Transferred from equity on recognition of derivative liability | ||
Fair value of warrants issued | ||
Decrease in fair value included in earnings | (1,962) | |
Common stock derivative liability [Member] | ||
Fair Value Measurements (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | ||
Beginning balance | ||
Issuance of convertible debentures | ||
Increase in fair value included in earnings | ||
Ending balance | 273 | |
Transferred to equity on debt conversion | ||
Transferred to equity on RSU issuance | (5) | |
Transferred from equity on recognition of derivative liability | 314 | |
Fair value of warrants issued | 534 | |
Decrease in fair value included in earnings | $ (570) |
Digital Assets (Details) - Sche
Digital Assets (Details) - Schedule of digital asset activity - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Schedule of Digital Asset Activity [Abstract] | ||
Opening Balance | $ 5,202 | $ 24 |
Revenue from mining | 4,094 | 12,534 |
Payment of Mining equipment under lease to buy arrangement | (1,091) | |
Mining pool operating fees | (42) | (129) |
Management fees | (321) | |
Transaction fees | (138) | (26) |
Owners’ distributions | (1,521) | |
Digital asset impairment | (2,748) | (704) |
Proceeds from sale of digital assets | (8,119) | (3,670) |
Realized gain on sale of digital assets | 1,751 | 106 |
Ending Balance | $ 5,202 |
Equity (Details)
Equity (Details) - USD ($) | 1 Months Ended | 12 Months Ended | ||||
May 31, 2023 | Sep. 22, 2022 | Oct. 18, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jul. 20, 2021 | |
Equity (Details) [Line Items] | ||||||
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 | 2,484,501,880 | 145,713,591 | ||||
Common stock, shares outstanding | 2,484,426,501 | 145,638,212 | ||||
Common stock shares authorized | 3,000,000,000 | 3,000,000,000 | ||||
Investors sold aggregate price | 500,000,000 | |||||
Warrants Common stock | 500,000,000 | |||||
Common stock acquired warrants | 500,000,000 | |||||
Warrants common stock | 500,000,000 | |||||
Consideration payment (in Dollars) | $ 500,000 | |||||
Purchase price (in Dollars per share) | $ 0.001 | |||||
Common stock an exercise price (in Dollars per share) | 0.001 | |||||
Common stock warrant price (in Dollars per share) | $ 0.001 | |||||
Common stock percentage | 10% | |||||
Restricted common shares | 6,000,000 | |||||
Stock value (in Dollars) | $ 240,000 | |||||
Granted shares | 80,000 | |||||
Common shares | 180,000 | |||||
Common stock shares percenatge | 10% | |||||
Fair market value percentage | 110% | |||||
Stock option issued percentage | 10% | |||||
Common stock reserved issuance shares | 8,000,000 | |||||
Purchase of common shares | 1,656,000 | |||||
weighted average contractual term | 3 years 7 months 6 days | |||||
Weighted average contractual term | 4,576,731 | |||||
Accrued liabilities (in Dollars) | $ 250,000 | |||||
Shares of common stock | 3,000,000,000 | 500,000,000 | ||||
Aggregate of shares | 1,000,000,000 | |||||
Exercise price per share (in Dollars per share) | $ 0.001 | |||||
Right to receive shares | 3,000,000 | |||||
Reverse Split description | 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. | |||||
Common Stock [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Common shares | 10,000 | |||||
Warrant One [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Shares of common stock | 500,000,000 | |||||
Warrant Two [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Shares of common stock | 500,000,000 | |||||
Stock Options [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Stock-based compensation (in Dollars) | $ 10,000 | |||||
Common Stock [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Common stock shares authorized | 499,560,659 | |||||
Subsequent Event [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Common stock, shares issued | 271,000,000 | |||||
Additional common stock shares | 271,000,000 | |||||
Subsequent Event [Member] | Warrant [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Common stock, shares issued | 271,000,000 | |||||
Additional common stock shares | 271,000,000 | |||||
TTM Digital [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Warrants aggregating | 12,361,622 | |||||
Share Issuance [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Additional paid in capital (in Dollars) | $ 239,940 | |||||
Par value of share issuance (in Dollars) | $ 60 | |||||
2018 Plan [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Fair market value percentage | 100% | |||||
Restricted Stock Units (RSUs) [Member] | ||||||
Equity (Details) [Line Items] | ||||||
Stock-based compensation (in Dollars) | $ 100,000 |
Equity (Details) - Schedule of
Equity (Details) - Schedule of stock option activity | 12 Months Ended |
Dec. 31, 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 | (48,500) |
Weighted Average Exercise Price, Forfeited or cancelled | $ / shares | |
Number of Options, Outstanding, Ending balance | shares | 1,607,500 |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | $ 2 |
Number of Options, Exercisable, Ending balance | shares | 1,607,500 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares | $ 2 |
Equity (Details) - Schedule o_2
Equity (Details) - Schedule of table represents the activity | 12 Months Ended | |
Dec. 31, 2022 $ / shares shares | ||
Schedule of Table Represents the Activity [Abstract] | ||
Number of Warrants, Outstanding beginning balance | 5,926,763 | |
Weighted Average Exercise Price, Outstanding beginning balance (in Dollars per share) | $ / shares | [1] | |
Number of Warrants, Granted | 1,004,576,431 | |
Weighted Average Exercise Price, Granted | 0.001 | |
Number of Warrants, Exercised | (418,931) | |
Weighted Average Exercise Price, Exercised (in Dollars per share) | $ / shares | ||
Number of Warrants, Outstanding ending balance | 1,010,084,263 | |
Weighted Average Exercise Price, Outstanding ending balance (in Dollars per share) | $ / shares | ||
Prefunded Warrants, Outstanding beginning balance | 15,361,622 | |
Prefunded Warrants, New issuances | ||
Prefunded Warrants, Exercised | 12,361,622 | |
Prefunded Warrants, Outstanding ending balance | 3,000,000 | |
Number of Restricted Stock Shares, Outstanding beginning balance | 1,100,000 | |
Weighted Average Grant Date Fair Value, Outstanding beginning balance (in Dollars per share) | $ / shares | $ 0.48 | |
Number of Restricted Stock Shares, Granted | ||
Weighted Average Grant Date Fair Value, Granted (in Dollars per share) | $ / shares | ||
Number of Restricted Stock Shares, Vested | 1,100,000 | |
Weighted Average Grant Date Fair Value, Vested (in Dollars per share) | $ / shares | $ 0.4 | |
Number of Restricted Stock Shares,, Unvested Ending Balance | ||
Weighted Average Grant Date Fair Value, Unvested Ending Balance (in Dollars per share) | $ / 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 | Dec. 31, 2022 shares |
Schedule Of Share Derivative Liabilities Abstract | |
Warrants | 272 |
Stock options | 1 |
Total share derivative liability | 273 |
Equity (Details) - Schedule o_4
Equity (Details) - Schedule of reverse stock split balance sheet - shares | Dec. 31, 2022 | Dec. 31, 2021 |
As stated [Member] | ||
Equity (Details) - Schedule of reverse stock split balance sheet [Line Items] | ||
Common stock Shares Issued | 2,484,501,880 | 145,713,591 |
Common stock Shares Outstanding | 2,484,426,501 | 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 | 2,484,502 | 145,714 |
Common stock Shares Outstanding | 2,484,427 | 145,638 |
Treasury Stock | 75 |
Equity (Details) - Schedule o_5
Equity (Details) - Schedule of reverse stock split EPS - EPS [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
As stated [Member] | ||
Equity (Details) - Schedule of reverse stock split EPS [Line Items] | ||
Outstanding – basic and diluted (in Shares) | 843,858,474 | 139,061,084 |
Net income (loss) per share: | ||
Continuing operations | $ (0.01) | $ (0.38) |
Discontinued Operations | $ (0.004) | $ 0.02 |
Pro Forma [Member] | ||
Equity (Details) - Schedule of reverse stock split EPS [Line Items] | ||
Outstanding - basic and diluted (in Shares) | 843,858 | 139,061 |
Net income (loss) per share: | ||
Continuing operations | $ (10) | $ (38) |
Discontinued Operations | $ (4) | $ 20 |
Equity (Details) - Schedule o_6
Equity (Details) - Schedule of reverse stock split EPS (Parentheticals) - EPS [Member] - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
As stated [Member] | ||
Equity (Details) - Schedule of reverse stock split EPS (Parentheticals) [Line Items] | ||
Outstanding -diluted | 843,858,474 | 139,061,084 |
Pro Forma [Member] | ||
Equity (Details) - Schedule of reverse stock split EPS (Parentheticals) [Line Items] | ||
Outstanding -diluted | 843,858 | 139,061 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | 12 Months Ended | |||||||||
Dec. 14, 2021 | Dec. 08, 2021 ft² | Aug. 15, 2018 USD ($) | Jan. 22, 2018 USD ($) | Sep. 05, 2017 USD ($) | Dec. 31, 2022 USD ($) | Dec. 31, 2021 USD ($) | Jun. 03, 2022 USD ($) | Jan. 14, 2022 USD ($) | Jan. 13, 2022 USD ($) | |
Commitments and Contingencies (Details) [Line Items] | ||||||||||
Payment of unpaid invoices | $ 1,800,000 | |||||||||
Accrued liability | $ 100,000 | |||||||||
Interest | $ 200,000 | |||||||||
Default rate percentage | 6% | |||||||||
Judgment amount | $ 336,000 | |||||||||
Legal fees | $ 20,000 | |||||||||
Accrued liability | $ 200,000 | |||||||||
Principal amount | $ 3.3 | |||||||||
Interest rate per annum | 18% | |||||||||
Confession of judgment description | the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement is entered for a total sum of $5.9 million, which is comprised of the principal sum of $3.3million and prejudgment interest in the sum of $2.6 million. | |||||||||
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 | |||||||||
Convertible debenture | $ 200,000 | |||||||||
Contractual Commitments [Member] | ||||||||||
Commitments and Contingencies (Details) [Line Items] | ||||||||||
Accrued liability | $ 700,000 | |||||||||
Interest | $ 200,000 | |||||||||
Default rate percentage | 8% | |||||||||
Tech Data [Member] | ||||||||||
Commitments and Contingencies (Details) [Line Items] | ||||||||||
Principal amount | $ 6.8 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of current and long-term operating lease liabilities - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows from operating leases | ||
Leased assets obtained in exchange for new and modified operating lease liabilities | (487) | (558) |
Leased assets surrendered in exchange for termination of operating lease liabilities |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of future minimum operating leases | Dec. 31, 2022 USD ($) |
Schedule Of Future Minimum Operating Leases Abstract | |
2023 | $ 216 |
2024 | 222 |
2025 | 95 |
Total future lease payments | 533 |
Less: interest expense at incremental borrowing rate | (45) |
Net present value of lease liabilities | $ 487 |
Commitments and Contingencies_5
Commitments and Contingencies (Details) - Schedule of operating leases | Dec. 31, 2022 |
Schedule Of Operating Leases Abstract | |
Weighted average remaining lease term: | 4 years 9 months 18 days |
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 | 9 Months Ended | 12 Months Ended | ||||||||||||
Apr. 03, 2023 | Feb. 08, 2022 | Jan. 13, 2022 | Jul. 09, 2021 | Apr. 29, 2021 | Apr. 01, 2021 | May 31, 2022 | Jan. 31, 2022 | Nov. 30, 2021 | Sep. 26, 2021 | Sep. 24, 2021 | Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2022 | Dec. 31, 2021 | Jun. 21, 2022 | |
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Merger transaction value | $ 12,000,000 | |||||||||||||||
Ownership percentage | 28.65% | 20% | ||||||||||||||
Shares issued (in Shares) | 180,000 | |||||||||||||||
Total payment | $ 2,200,000 | |||||||||||||||
Fair value of installment payments | $ 25,000 | 2,100,000 | ||||||||||||||
Financing interest costs | 70,000 | |||||||||||||||
Installation expenses | 2,200,000 | |||||||||||||||
Interest expenses | $ 70,000 | |||||||||||||||
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). | |||||||||||||||
Mining costs | $ 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 twelve months ended December 31, 2022, the Company recorded $143,640 in mining costs within discontinued operations on the statement of operations. | |||||||||||||||
Services cost | $ 175,000 | |||||||||||||||
flat fee | $ 300,000 | |||||||||||||||
Expense fee | $ 140,000 | $ 160,000 | ||||||||||||||
Additional expenses | $ 50,000 | $ 300,000 | ||||||||||||||
Additional fee | 225,000 | 75,000 | ||||||||||||||
Total expense | $ 415,000 | $ 235,000 | ||||||||||||||
Restricted common shares (in Shares) | 6,000,000 | |||||||||||||||
Stock value | $ 240,000 | |||||||||||||||
Additional paid in capital | $ 239,940 | |||||||||||||||
Additional paid in capital par value (in Dollars per share) | $ 60 | |||||||||||||||
Common stock, shares issued (in Shares) | 5,589,820 | 43,400,000,000 | ||||||||||||||
Prefunded warrants (in Shares) | 5,250,000 | |||||||||||||||
Recognized an expense | $ 1,884,888 | |||||||||||||||
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 | |||||||||||||||
Respective service | 125,000 | |||||||||||||||
Additional compensation | $ 500,000 | |||||||||||||||
Expense | $ 125,000 | |||||||||||||||
Accrued but unpaid bonus | 100% | |||||||||||||||
Minimum achievement bonus | $ 100,000 | |||||||||||||||
Financing amount | 5,000,000 | |||||||||||||||
Severance cost | $ 318,000 | |||||||||||||||
Minority interests description | the Company acquired a 5% minority interest in Style Hunter, Inc. (“Hunt”). The owner of Style Hunter is a shareholder in the Company. The Hunt issued 613,723 shares of its common stock: par value $0.0001 per share for $0.81470 per share for a total price of $500,000. The Company shall have a one-time option to purchase an additional $500,000 of the Common Stock. As of December 31, 2022, the Company recorded an impairment charge of $0.5 million, which is recorded as an impairment of investments in the statement of operations as disclosed in Note 5 Discontinued Operations. | |||||||||||||||
Warrant [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Common stock, shares issued (in Shares) | 5,250,000 | |||||||||||||||
TTM Digital [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Equity investments percentage | 28.65% | |||||||||||||||
Investments, Inc. [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Equity investments percentage | 1% | 1% | ||||||||||||||
Subsequent Event [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Description of stock purchase agreement | the Company entered into a Stock Purchase Agreement (the “Agreement”) with Omniverse LLC (“Omniverse”), whereby the Company agreed to sell to Omniverse 136,667 shares of Series C-7b Preferred Stock of Ostendo Technologies, Inc. The owner of Omniverse is a shareholder in the Company. The Agreement requires Omniverse to pay the Company a purchase price consisting of $182,000 and other valuable consideration in the form of consulting services of approximately $1.0 million. The Company retained 30,000 shares of the investment in Ostendo. As of December 31, 2022, the Company has recorded $1.4 million in the Consolidated Balance sheets as equity investment in Ostendo. | |||||||||||||||
Asset Contribution and Exchange Agreement [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Shares issued (in Shares) | 35,588,548 | |||||||||||||||
Master Services Agreement [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Services cost | $ 35,000 | $ 105,000 | ||||||||||||||
Zaman Khan [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Deferred bonuses | $ 90,000 | |||||||||||||||
Vincent Loiacono [Member] | ||||||||||||||||
Related Party Transactions (Details) [Line Items] | ||||||||||||||||
Deferred bonuses | $ 75,000 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - Schedule of prepaid expenses and other current assets - USD ($) $ in Thousands | Dec. 31, 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 | $ 638 | $ 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 | 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 | 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 | 16 | |
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 | 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 | $ 622 | $ 658 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Tax Disclosure [Abstract] | ||
U.S. federal net operating loss | $ 32.1 | $ 15.2 |
Taxable income | $ 19.3 | $ 13.2 |
Taxable income percentage | 80% | |
Net change in valuation allowance | $ 2.6 |
Income Taxes (Details) - Schedu
Income Taxes (Details) - Schedule of net loss before income tax $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Schedule Of Net Loss Before Income Tax Abstract | |
Net loss before income tax | $ (8,609) |
Income Taxes (Details) - Sche_2
Income Taxes (Details) - Schedule of income tax expense (benefit) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
U.S. Federal | |
Current | $ 39 |
Deferred | (2,062) |
State and Local | |
Current | 9 |
Deferred | 92 |
Total | (1,922) |
Change in Valuation Allowance | 1,969 |
Total income tax provision (benefit) | $ 47 |
Income Taxes (Details) - Sche_3
Income Taxes (Details) - Schedule of reconciliation between the U.S. statutory federal income tax rate | 12 Months Ended |
Dec. 31, 2022 | |
Schedule Of Reconciliation Between The USStatutory Federal Income Tax Rate Abstract | |
Pretax Income | 14.90% |
State taxes, net of federal benefit | 2.20% |
Federal and state rate change and other | (5.40%) |
Transaction costs | (1.30%) |
Extinguishment of debt | (0.40%) |
Other permanent items | 2.40% |
Embedded Derivative | 3.40% |
Change in valuation allowance | (16.20%) |
Effective income tax rate | (0.40%) |
Income Taxes (Details) - Sche_4
Income Taxes (Details) - Schedule of deferred tax assets consisted of the effects - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Deferred tax assets: | ||
Net operating loss carry forwards | $ 7,888 | $ 3,501 |
Fixed assets | 965 | 1,126 |
Accrued compensation | 143 | 40 |
Reserves | 621 | 504 |
Intangible assets | 2,969 | 3,053 |
Business interest limitation | 662 | 727 |
Lease Liabilities | 113 | 142 |
Tax Credits | 211 | |
Loss Contingency | 32 | 1,937 |
Other | 669 | 181 |
Total deferred tax assets before valuation allowance | 14,062 | 11,422 |
Valuation allowance | (13,967) | (11,280) |
Total deferred tax assets after valuation allowance | 95 | 142 |
Deferred tax liabilities: | ||
Operating lease right of use assets | (95) | (142) |
Total deferred tax liabilities | (95) | (142) |
Net deferred tax assets and liabilities |
Subsequent Events (Details)
Subsequent Events (Details) - USD ($) | 1 Months Ended | 12 Months Ended | |
Apr. 03, 2023 | Mar. 31, 2023 | Dec. 31, 2022 | |
Subsequent Events (Details) [Line Items] | |||
Description of equity, private placement agreement | As discussed in Note 11 – Equity, Private Placement Agreement, on October 18, 2022, the Company sold to investors an aggregate of 500 million shares of common stock along with warrants 1 and 2 to each acquire an additional 500 million shares of common stock. Pursuant to the terms of the agreement, 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, the Company agreed to issue each investor a number of additional shares of common stock equal to 10% of the purchased shares acquired by each investor and a third warrant equal to the number of additional shares. The Company was unable to have the registration statement become effective by January 16, 2023, 90 days past October 18, 2022. | ||
Pre-funded right amount | $ 1,400,000 | ||
Liquidated damages | $ 600,000 | ||
Subsequent Event [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Additional common stock | 271,000,000 | ||
Consulting services cost | $ 1,000,000 | ||
Retained shares | 30,000 | ||
Subsequent Event [Member] | Warrant 3 [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Additional common stock | 271,000,000 | ||
Forecast [Member] | |||
Subsequent Events (Details) [Line Items] | |||
Sold shares | 136,667 | ||
Purchase price | $ 182,000 |