Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 23, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | SYSOREX, INC. | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 494,443,611 | |
Amendment Flag | false | |
Entity Central Index Key | 0001737372 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 000-55924 | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 68-0319458 | |
Entity Address, Address Line One | 13880 Dulles Corner Lane | |
Entity Address, Address Line Two | Suite 175 | |
Entity Address, City or Town | Herndon | |
Entity Address, State or Province | VA | |
Entity Address, Postal Zip Code | 20171 | |
Local Phone Number | 929-3871 | |
City Area Code | 800 | |
Entity Interactive Data Current | Yes |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Assets | ||
Cash and cash equivalents | $ 938 | $ 659 |
Digital assets, net | 1,237 | 5,202 |
Accounts receivable, net | 1,553 | 3,023 |
Prepaid expenses and other current assets | 1,024 | 1,402 |
Assets held for sale | 6,071 | 6,071 |
Total Current Assets | 10,823 | 16,357 |
Mining equipment, net | 3,620 | 4,077 |
Intangible assets, net | 2,409 | 2,553 |
Goodwill | 1,634 | 1,634 |
Pre-funded right- in Ostendo | 1,600 | |
Operating lease right-of-use asset, net | 510 | 558 |
Other assets | 75 | 103 |
Total Assets | 20,671 | 25,282 |
Liabilities and Stockholders’ Deficit | ||
Accounts payable | 3,637 | 6,724 |
Accrued liabilities | 2,349 | 2,382 |
Short-term debt | 17,721 | 19,439 |
Conversion feature derivative liability | 8,424 | 8,355 |
Operating lease obligation, current | 158 | 49 |
Common stock derivative liability | 314 | |
Deferred revenue | 866 | 932 |
Total Current Liabilities | 33,469 | 37,881 |
Operating lease obligation - noncurrent | 397 | 509 |
Total Liabilities | 33,866 | 38,390 |
Commitments and Contingencies | ||
Stockholders’ Deficit | ||
Common stock, par value $0.00001 per share, 499,560,659 shares authorized; 237,513,850 shares issued as of March 31, 2022, and 145,713,591 shares issued as of December 31, 2021, 237,438,471 shares outstanding as of March 31, 2022, and 145,638,212 shares outstanding as of December 31, 2021 | 1 | 1 |
Treasury stock, at cost, 75,379 shares as of March 31, 2022, and as of December 31, 2021 | ||
Additional paid-in-capital | 39,102 | 36,156 |
Accumulated Deficit | (52,298) | (49,265) |
Total Stockholders’ Deficit | (13,195) | (13,108) |
Total Liabilities and Stockholders’ Deficit | $ 20,671 | $ 25,282 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parentheticals) - $ / shares | Mar. 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 | 499,560,659 | 499,560,659 |
Common stock, shares issued | 237,513,850 | 145,713,591 |
Common stock, shares outstanding | 237,438,471 | 145,638,212 |
Treasury stock, shares | 75,379 | 75,379 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues | ||
Mining income | $ 765 | |
Product revenue | 4,529 | |
Services revenue | 508 | |
Total Revenues | 5,802 | |
Mining cost | 144 | |
Product cost | 2,015 | |
Services cost | 262 | |
Sales and marketing | 398 | |
General and administrative | 3,568 | 58 |
Management fee | 321 | |
Depreciation | 457 | |
Impairment of digital assets | 1,236 | |
Amortization of intangibles | 143 | |
Total Operating Costs and Expenses | 8,223 | 379 |
Loss from Continuing Operations | (2,421) | (379) |
Interest expense | (974) | |
Gain on sale of digital assets | 1,107 | 87 |
Revaluation of conversion feature derivative liability | (838) | |
Loss on extinguishment of debt | (549) | |
Other income, net | 6 | (2) |
Total Other Income (Expense) | (1,248) | 85 |
Loss from continuing operations before income taxes | (3,669) | (294) |
Income tax expense | 178 | |
Loss from continuing operations | (3,669) | (472) |
Gain from discontinued operations | 636 | 1,683 |
Net (Loss) Income | $ (3,033) | $ 1,211 |
Net Loss per share - basic and diluted - continuing operations (in Dollars per share) | $ (0.021) | $ (0.001) |
Net 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) | 174,980,542 | 83,039,900 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders’ Equity (Unaudited) - USD ($) $ in Thousands | Common Stock | Treasury Stock Shares | 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 | |||||
Net Income (Loss) | 1,211 | 1,211 | ||||
Balance at Mar. 31, 2021 | 539 | 1,076 | 1,615 | |||
Balance (in Shares) at Mar. 31, 2021 | 81,039,900 | |||||
Distributions to shareholders | (1,521) | (1,521) | ||||
Payments of subscription receivables | 100 | 100 | ||||
Exercise of Moon warrants (in Shares) | 14,607,980 | |||||
Balance at Dec. 31, 2021 | $ 1 | 36,156 | (49,265) | (13,108) | ||
Balance (in Shares) at Dec. 31, 2021 | 145,638,212 | 75,379 | ||||
Convertible debt conversions | 2,909 | 2,909 | ||||
Convertible debt conversions (in Shares) | 72,717,883 | |||||
Reclassification of equity contracts to liabilities | (314) | (314) | ||||
Professional services | 240 | 240 | ||||
Professional services (in Shares) | 6,000,000 | |||||
Exercise of Pre-funded warrants (in Shares) | 12,361,622 | |||||
Cashless exercise of warrants (in Shares) | 220,754 | |||||
Stock based compensation | 111 | 111 | ||||
Vesting of restricted stock (in Shares) | 500,000 | |||||
Net Income (Loss) | (3,033) | (3,033) | ||||
Balance at Mar. 31, 2022 | $ 1 | $ 39,102 | $ (52,298) | $ (13,195) | ||
Balance (in Shares) at Mar. 31, 2022 | 237,438,471 | 75,379 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Cash Flows from Operating Activities | ||
Net loss from continuing operations | $ (3,669) | $ (234) |
Adjustments to reconcile net loss to net cash used in operating activities | ||
Depreciation and amortization | 601 | |
Stock-based compensation expense | 166 | |
Amortization of right of use asset | 62 | |
Realized gain on sale of digital assets | (1,107) | (87) |
Loss on extinguishment of debt | 549 | |
Change in fair value of debt conversion feature | 838 | |
Gain on settlement of vendor liabilities | (1,533) | |
Impairment of digital assets | 1,236 | |
Issuance of shares in exchange for services | 240 | |
Changes in assets and liabilities: | ||
Digital assets – mining net of pool fees | (611) | |
Prepaid assets and other current assets | 390 | |
Accounts receivable and other receivables | 1,470 | |
Accounts payable | (1,554) | 164 |
Accrued liabilities and other current liabilities | (282) | |
Net cash used in operating activities- continuing operations | (3,204) | (157) |
Net cash used in operating activities – discontinued operations | (626) | (47) |
Net cash used in operating activities | (3,830) | (204) |
Cash Flows from Investing Activities | ||
Proceeds from sale of digital assets | 5,709 | 251 |
Pre-funded right in Ostendo | (1,600) | |
Net cash provided by investing activities -continuing operations | 4,109 | 251 |
Net cash provided by investing activities – discontinued operations | 47 | |
Net cash provided by investing activities | 4,109 | 298 |
Cash Flows from Financing Activities | ||
Payment of subscription receivable | 100 | |
Net cash provided by financing activities- continuing operations | 100 | |
Net cash provided by financing activities – discontinued operations | ||
Net cash provided by financing activities | 100 | |
Net increase in cash and cash equivalents | 279 | 194 |
Cash and cash equivalents at beginning of period | 659 | 67 |
Cash and cash equivalents at end of period | 938 | 261 |
Cash paid for: | ||
Interest | 932 | |
Income taxes | ||
Supplemental disclosure of noncash investing and financing activities: | ||
Conversion of debt to equity | 2,909 | |
Settlement of loan with mining equipment | 75 | |
Digital assets received for members interest | 46 | |
Distributions of digital assets to members | 1,521 | |
Reclassification of equity contracts to liabilities | $ 314 |
Nature and Description of Busin
Nature and Description of Business | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Nature and description of Business | Note 1 — Nature and description of Business Description of Business Sysorex, Inc. is a technology company focused on Ethereum mining and the Ethereum blockchain and information technology solutions primarily in the public sector segments including federal, state and local governments. The Company has two wholly owned subsidiaries: TTM Digital Assets & Technologies, Inc. (“TTM Digital”) and Sysorex Government Services, Inc. (“SGS”). Following the Company’s Merger with TTM Digital in April 2021, the Company shifted its business focus to the mining of Ethereum and opportunities related to the Ethereum blockchain. In addition to the mining of Ethereum, the Company continues to operate its wholly owned subsidiary, SGS, a business that provides information technology products, solutions, and services to federal, state, and local government, including system integrators. SGS provides these services to enable its customers to manage, protect, and monetize their enterprise assets whether on-premises, in the cloud, or via mobile technology. The Company is headquartered in Virginia. TTM Digital was originally formed as a Delaware limited liability company on June 28, 2017, under the name of TTM Ventures LLC. Thereafter, on March 30, 2021, it filed a certificate of conversion to a non-Delaware entity with the Secretary of State of the State of Delaware together with Articles of Conversion and Articles of Incorporation with the Nevada Secretary of State filed on the same date. As a result, of such conversion, TTM Digital has become a Nevada corporation under the name of “TTM Digital Assets & Technologies, Inc. Heads of Terms Agreement On March 24, 2022, Sysorex, Inc. (“ Company Heads of Terms Ostendo Assets Definitive Documentation The Purchase Price shall be comprised of the issuance to the Company of 7,125,000 fully paid, non-assessable shares of Ostendo preferred stock (“ Shares Public Listing Transfer Event 312,500 shares to Bespoke Growth Partners, Inc. and 1,562,500 shares to Omniverse LLC, Accordingly, following the closing, the Company will hold 5,250,000 shares, Bespoke Growth Partners, Inc. will hold 312,500 shares and Omniverse LLC will hold 1,562,500 shares. As of May 23, 2022, the parties will either (i) execute Definitive Documentation regarding the TTM Digital Asset sale and close the TTM Digital Asset sale or (ii) extend the closing date of the TTM Digital Asset sale. The closing of the TTM Digital Asset sale will be subject to the satisfaction or waiver of customary closing conditions. Additionally, pursuant to the Heads of Terms, the Company has agreed to make a non-refundable deposit of $1,600,000 (“ Deposit Purchased Shares |
Going Concern
Going Concern | 3 Months Ended |
Mar. 31, 2022 | |
Going Concern [Abstract] | |
Going Concern | Note 2 — Going Concern As of March 31, 2022, the Company had an approximate cash balance of $0.9 million, a working capital deficit of approximately $22.7 million, and an accumulated deficit of approximately $52.3 million. The aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the date of issuance of these unaudited condensed consolidated financial statements. The accompanying unaudited condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The unaudited condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern within one year after the date the unaudited condensed consolidated financial statements are issued. The Company does not believe that its capital resources as of March 31, 2022, its ability to mine cryptocurrency, its expected sale of certain mining assets and data center, its ability to settle convertible debt obligations through issuance of the Company’s shares, availability on the SGS SouthStar credit facility to finance purchase orders and invoices, reauthorization of key vendors and credit limitation improvements will be sufficient to fund planned operations. As a result, the Company will need additional funds to support its obligations for the next twelve months. The Company continues to explore a number of other possible solutions to its financing needs, including additional 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. In addition, the Company will need to increase its authorized common stock to potentially settle convertible debt conversions. If the Company is unable to raise additional capital on terms acceptable to the Company and on a timely basis, the Company will be required to downsize or wind down its operations through liquidation, bankruptcy, or sale of its assets. In addition, the Ethereum network is in the process of implementing software upgrades and other changes to its protocol, which are intended to be a new iteration of the Ethereum network that changes its consensus mechanism from “proof of work” to “proof of stake”, which may decrease the reliance on computing power as an advantage to validating blocks. The move to a proof of stake mechanism will shift the network from mining utilizing computing power to staking, in which Ethereum holders can deposit their Ethereum in exchange for rewards. The switch to a proof of stake model would adversely affect the Company’s operations and ability to sustain operations as it would make the Company’s mining equipment obsolete. In addition, as of March 31, 2022, the Company has been reliant on its ability to liquidate Ethereum to continue to fund operations when needed, and as such, the Company does not currently have enough Ethereum on hand to fund operations through a proof of stake model. |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Note 3 — Basis of Presentation The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with accounting principles that are generally accepted in the United States of America (“GAAP”) for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. The results of the Company’s operations for the three months ended March 31, 2022, are not necessarily indicative of the results to be expected for the year ending December 31, 2022. These interim unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes for the years ended December 31, 2021, and 2020 included in Amendment No. 1 to the Company’s Annual Report on Form 10-K/A filed with the Securities and Exchange Commission (the “SEC”) on May 23, 2022. The Company’s significant accounting policies are discussed in Note 4 of the unaudited condensed consolidated financial statements. We believe that the following accounting estimates are the most critical to aid in fully understanding and evaluating our reported financial results, and they require our most difficult, subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. TTM Digital Reverse Merger and Sysorex Recapitalization On April 8, 2021, the Company, TTM Digital, and TTM Acquisition Corp., a Nevada corporation, and, a wholly owned subsidiary of Sysorex (“MergerSub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”). Under the terms of the Merger Agreement, the parties agreed that Sysorex would acquire TTM Digital by way of a reverse triangular merger, subject to certain closing conditions (the “Merger”). On April 14, 2021 (the “Effective Time”), the closing conditions delineated in the Merger Agreement were satisfied and the Merger closed. At the Effective Time, the MergerSub was merged with and into TTM Digital with TTM Digital surviving the Merger. Under the terms of the Merger Agreement, the shareholders of TTM Digital received a right to receive an aggregate of 124,218,268 shares of Sysorex common stock, $0.00001 par value per share (the “Merger Shares”) in exchange for their shares of TTM Digital. Simultaneously, upon the issuance of the Merger Shares to the TTM Digital shareholders, Sysorex was issued all of the authorized capital of TTM Digital and TTM Digital became a wholly owned subsidiary of Sysorex (together, the “Combined Company”). The Merger resulted in a change of control, with the shareholders of TTM Digital receiving that number of Merger Shares equal to approximately eighty percent (80%) of the outstanding shares of capital stock of Sysorex including the effect of the Sysorex Recapitalization as discussed in TTM Digital Reverse Merger and Sysorex Recapitalization. Due to the TTM Digital shareholders acquiring a controlling interest in Sysorex after the merger, the transaction was accounted for as a reverse acquisition for accounting purposes, with TTM Digital being the accounting acquirer and reporting entity. Therefore, the historical amounts presented prior to the Merger are those of TTM Digital. The Merger is accounted for under the acquisition method of accounting applied to Sysorex as the accounting acquiree under the guidance of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Codification (“ASC”) 805 Business Combinations (“ASC 805”). In accordance with acquisition method guidance under ASC 805, the purchase consideration was $0.3 million. As discussed in Note 5 Segment Reporting after the completion of the Merger the Company reports two segments (“TTM Digital” and “Sysorex Government Services”) which are also defined as reporting units for impairment assessment purposes. As TTM Digital met the definition of discontinued operations, segment reporting disclosures have been omitted, as permitted by ASC 280 Segment Reporting. See Note 5, Segment Reporting and Note 6, Discontinued Operations for additional information. Pro Forma Financial Information The following proforma results of operations are presented for information purposes only and include the results of TTM Digital that are reported in discontinued operations in Note 6. The proforma results of operations are not intended to present actual results that would have been attained had the reverse merger and Sysorex Recapitalization been completed as of January 1, 2021, or to project potential operating results as of any future date or for any future periods. March 31, 2022 2021 Total Revenues $ 7,077 $ 3,425 Net Loss (3,669 ) (20 ) Net Loss per share – basic and diluted (0.021 ) - Weighted Average Shares Outstanding – basic and diluted 174,980,542 83,039,900 Discontinued Operations As discussed in Note 6 – Discontinued Operation, 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. As of December 31, 2021, the Company determined the TTM Assets represented discontinued operations as it constituted a disposal of a significant component and a strategic shift that will have a material effect on the Company’s operations and financial results. As a result, the Company reclassified the balances and activities of the TTM Assets from their historical presentation to assets held for sale and assets and liabilities – discontinued operations on the Condensed Consolidated balance sheets and to loss from discontinued operations on the Condensed Consolidated statements of operations for the periods presented. As of the date of this report, no transaction has been consummated. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Note 4 — Summary of Significant Accounting Policies Principles of Consolidation The unaudited condensed consolidated financial statements have been prepared using the accounting records of Sysorex, TTM Digital and SGS. All inter-company balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of: ● Revenue recognition ● Fair value of digital assets ● Fair value of the Company’s common stock ● Expected useful lives and valuation of assets ● Fair value of derivative liabilities Mining Equipment Mining equipment is stated at cost. Depreciation is computed using the straight-line method regardless of the category of asset. The Company has 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 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 of specialized equipment. Management will review this estimate quarterly and will revise such estimates as and when data comes available. To the extent that any of the assumptions underlying management’s estimate of useful life 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 could change and have a prospective impact on depreciation expense and 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. No impairment charges were identified for long-lived assets during the periods ended March 31, 2022, or March 31, 2021. Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation. Mining Revenue TTM Digital has entered into mining pools with the operators to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date received, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the digital asset award received is determined using the quoted price of the related digital asset at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could impact the Company’s Condensed Consolidated financial position and results from operations. Hardware and Software Revenue Recognition The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified product or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides direct warranty to the customer with the Company’s own personnel as the customer requires warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross basis over time. License and Maintenance Services Revenue Recognition SGS provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer’s needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company’s performance obligation to provide the overall systems solution is satisfied at that time. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis. SGS’s professional services include fixed fee contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Anticipated losses are recognized as soon as they become known. For the three months ended March 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 a receivable 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 Company had deferred revenue of $0.9 million as of March 31, 2022, and December 31, 2021. 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 March 31, 2022, and December 31, 2021. Digital Assets Digital assets (predominantly Ethereum) are included in current assets in the accompanying Condensed Consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. During the three months ended March 31, 2022, and March 31, 2021, the Company recorded impairment of $1.2 million and $0, respectively. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying Condensed Consolidated statements of cash flows. The sales of digital assets are included within investing activities in the accompanying Condensed Consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company recognized realized gains of $1.1 million for the three months ended March 31, 2022. The Company recognized realized gains through the sale and disbursement of digital assets during the three-month period ended March 31, 2021, of $0.08 million. Investments The Company accounts for its investments that represent less than 20% ownership, and for which the Company does not have the ability to exercise significant influence, using the FASB’s Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities Fair Value The Company follows the accounting guidance under FASB’s ASC 820, Fair Value Measurements for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable, approximate fair value due to the short-term nature of these instruments. Derivative Liabilities The Company evaluates its convertible instruments, options, warrants, or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, Derivatives and Hedging. The Company evaluates whether the amount of common stock on a as converted basis is in excess of its authorized share total which, if in excess, would result in derivative accounting treatment. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to a liability at the fair value of the instrument on the reclassification date. Held for Sale and Discontinued Operations Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy. An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset shall not be depreciated or amortized while it is classified as held for sale. Convertible Debt The Company’s debt instruments contain a host liability, freestanding warrants, and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation and/or freestanding warrants qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own stock, and (ii) classified in shareholders equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features and/or freestanding warrants that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the Condensed Consolidated statements of operations. Any embedded conversion features and/or freestanding warrants that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods. The host debt instrument is initially recorded at its relative fair value in long-term debt. The host debt instrument is accounted for in accordance with guidance applicable to non-convertible debt under FASB ASC Topic 470 Debt (“ASC 470”) and is accreted to its face value over the term of the debt with accretion expense and periodic interest expense recorded in the unaudited condensed consolidated statements of operations. Issuance costs are allocated to each instrument in the same proportion as the proceeds that are allocated to each instrument. Issuance costs allocated to the debt hosted instrument are netted against the proceeds allocated to the debt host. Issuance costs allocated to freestanding warrants classified in equity are recorded in paid-in-capital. Net Loss per Share Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Convertible debt, restricted stock, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the three months ended March 31, 2022, and as a result, all potentially dilutive common shares are considered antidilutive for this period. The Company includes potentially issuable shares in the Weighted-average common shares – basic that include warrants and other agreements that are exercisable for little or no consideration without substantive contingencies and others once any contingencies relative to the issuance of the shares is resolved. Computations of basic and diluted weighted average common shares outstanding were as follows for the periods reported: March 31, 2022 2021 Weighted-average common shares outstanding 171,980,542 81,039,900 Weighted-average potential common shares considered outstanding 3,000,000 2,000,000 Weighted-average common shares outstanding – basic 174,980,542 83,039,900 Dilutive effect of options, warrants and restricted stock - - Weighted-average common shares outstanding – diluted 174,980,542 83,039,900 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 138,922,213 - Emerging Growth Company Sysorex is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As such, Sysorex is eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended. In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, for complying with new or revised accounting standards, meaning that Sysorex, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Sysorex has elected to take advantage of this extended transition period, and therefore our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Note 5 — Segment Reporting Operating segments are defined as components of an enterprise for which discrete financial information is available that is evaluated regularly by the chief operating decision maker (CODM) for purposes of allocating resources and evaluating financial performance. The Company’s CODM is the chief financial officer who reviews financial information presented at the subsidiary level for purposes of allocating resources and evaluating financial performance. As such, the Company’s operations constitute two (2) operating segments and two (2) reportable segments. The following table reflect the results of continuing operations of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is primarily based on revenue and gross profit. These results are used, in part, by the chief operating decision maker, both in evaluating the performance of, and in allocating resources to, each of the segments. The CODM does not evaluate performance or allocate resources based on segment asset data, and therefore such information is not included. The following tables provide a summary of the revenue, and cost of revenue from continuing operations for our subsidiary segments for the three months ended March 31, 2022 (in thousands): For the Three Months Ended March 31, 2022 Revenues TTM Sysorex Condensed Products Revenue $ - $ 4,529 $ 4,529 Services Revenue - 508 508 Mining Income 765 - 765 Total Revenues $ 765 $ 5,037 $ 5,802 Product Cost $ - $ 2,015 $ 2,015 Services Cost - 262 262 Mining Cost 144 - 144 Other Operating Expenses $ 3,908 $ 1,894 $ 5,802 Operating Income (Loss) $ (3,287 ) $ 866 $ (2,421 ) Total Segment Assets $ 5,741 $ 8,859 $ 14,600 |
Discontinued Operations
Discontinued Operations | 3 Months Ended |
Mar. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Note 6 — Discontinued Operations In December 2021, the Company made the decision to divest certain mining equipment, graphic processing units and data center and its assets of TTM Digital reporting unit (“TTM Assets”) and commenced discussions with a third party to execute an asset sale. On March 24, 2022, Company executed Heads of Terms agreement with a third party which includes certain binding and non-binding provisions. Pursuant to the Heads of Terms, the Company and the third party agreed to certain terms related to the Company’s sale of approximately 75% of its Ethereum mining assets and certain associated real property. The Assets to be sold are those assets located in the facility in New York. The Company will continue to operate certain graphics processing units or associated assets at a co-located facility in North Carolina. 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 Condensed Consolidated balance sheets and to loss from discontinued operations on the Condensed Consolidated statements of operations for the periods presented. The carrying value of the TTM Digital asset disposal group was $6.1 million as of March 31, 2022, and December 31, 2021. No adjustments were recorded to the carrying value of the assets held for sale as the estimated fair value less selling costs exceeded the carrying value. 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): March 31, December 31, 2022 2021 Current Assets Mining equipment and facilities, net $ 5,571 $ 5,571 Investment in Style Hunter 500 500 Total Current Assets $ 6,071 $ 6,071 Total Assets associated with discontinued operations $ 6,071 $ 6,071 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 three-months ended March 31, 2022, and 2021 (in thousands): 2022 2021 Revenues Mining income $ 1,275 $ 2,018 Total revenues 1,275 2,018 Operating costs and expenses Mining cost 383 131 General and administrative 256 - Depreciation - 199 Total operating costs and expenses 639 330 Gain from Operations 636 1,688 Other Income (Expenses) Loss on sale of fixed assets - (8 ) Income before taxes and equity method investee 636 1,680 Provision for income taxes - - Income before equity method investee 636 1,680 Share of net loss of equity method investee - 3 - Net income from discontinued operations $ 636 $ 1,683 The following table summarizes the net cash flows from discontinued operations of TTM Digital (in thousands): For the Three Months 2022 2021 Net cash used in operating activities -discontinued operations (626 ) (47 ) Net cash provided by investing activities – discontinued operations - 47 Net cash provided by financing activities – discontinued operations - - |
Mining Equipment, Net
Mining Equipment, Net | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Mining Equipment, net | Note 7 — Mining Equipment, net Mining equipment, net, was comprised of the following (in thousands of dollars): Balance as of March 31, December 31, 2022 2021 Gross Mining Equipment: Mining Equipment (non-GPUs) $ 493 $ 493 GPUs 6,033 6,033 Accumulated Depreciation: Mining Equipment (non-GPUs) (164 ) (123 ) GPUs (2,742 ) (2,326 ) Mining Equipment, net $ 3,620 $ 4,077 An Ethereum mining server consists of multiple commodity Graphics Processing Units (GPUs) and ancillary components such as chassis, CPU, motherboard, and power supply. The GPUs are solely responsible for the compute power to generate the cryptographic hashes for mining, while the other components act to support the system. Depreciation expense was approximately $0.5 million for the three months ended March 31, 2022. |
Intangible Assets
Intangible Assets | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Note 8 — Intangible Assets Intangible assets as of March 31, 2022, consist of the following: Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (100 ) $ 960 Customer relationships 1,900 (451 ) 1,449 Total intangible assets $ 2,960 $ (551 ) $ 2,409 Intangible assets as of December 31, 2021, consist of the following: Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (74 ) $ 986 Customer relationships 1,900 (333 ) 1,567 Total intangible assets $ 2,960 $ (407 ) $ 2,553 The estimated future amortization expense associated with intangible assets is as follows: Calendar Years Ending December 31, Amount 2022 430 2023 573 2024 573 2025 266 Thereafter 567 Total $ 2,409 |
Credit Risk and Concentrations
Credit Risk and Concentrations | 3 Months Ended |
Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Credit Risk and Concentrations | Note 9 — 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 during the three months ended March 31, 2022 (in thousands of dollars): For the Three Months March 31, 2022 $ % Customer A $ 3,583 72 % Customer B $ 1,170 24 % As of March 31, 2022, Customer B represented approximately 88% of total accounts receivable. One other customer represents approximately 11% of total accounts receivable. For the three months ended March 31, 2022, one vendor represented approximately 82% of total purchases. Purchases from this vendor during the three months ended March 31, 2022, was approximately $3.2 million. Geographic and Technology Concentration The Company had geographic concentration risk with mining operations being exclusively carried out within New York in the first quarter of 2022 and throughout 2021, while the Company has added geographic diversity during April 2021 using a colocation datacenter in North Carolina. Any legislation that restricts or bans the mining of proof-of-work related digital asset mining in New York State would have a negative impact on the Company’s ability to operate and generate revenues. Further, the Company had concentrated exposure to the Ethereum blockchain infrastructure through its mining operations during the periods presented. There is a possibility of digital asset mining algorithms transitioning to proof-of-stake validation and other mining related risks, which could make us less competitive and ultimately adversely affect our business and our ability to generate revenues. When and if Ethereum switches to proof-of stake the Company’s GPUs will no longer be able to mine Ethereum. Additionally, on August 5, 2021, the London Hard Fork protocol went into effect which includes changes in Ethereum’s handling of transaction fees. These changes had an impact on the Company’s future potential Ethereum revenue stream due to less Ethereum being distributed per mined block, if not offset by an increase in the value of ETH and/or additional transaction tipping, the process by which a user can pay an additional amount to ensure a transaction is processed very quickly. The Company saw a financial impact during the quarter ended March 31, 2022. While the Company doubled mining capacity in the first half of 2021, the difficulty to mine increased. This resulted in a steady decrease of average mining rewards, along with the market price of Ethereum, particularly during the second half of 2021 and into the first quarter of 2022. |
Convertible Debentures & Warran
Convertible Debentures & Warrants | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Convertible Debentures & Warrants | Note 10 — Convertible Debentures & Warrants Convertible debt as of March 31, 2022, consisted of the following (in thousands): March 31, December 31, 2022 2021 Convertible Debentures & Warrants, including interest payable to the Convertible Debenture Holders $ 17,721 $ 19,439 2021 Convertible Debentures & Warrants On July 7, 2021, the Company consummated the initial closing of a private placement offering (the “Offering”) pursuant to the terms and conditions of a Securities Purchase Agreement for up to $15,187,500 in principal amount (“Original Principal Value”) Convertible Debentures. To manage the administration of the Offering the Company entered into a placement agency agreement with Joseph Gunner & Co. LLC, a U.S. registered broker-dealer (“Placement Agent”). At the initial closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Convertible Debentures (“Debentures”) in an aggregate principal amount of $9,990,000 and (ii) warrants to purchase up to 3,534,751 shares of common stock of the Company. The Company received total gross proceeds of $8,880,000 taking into account the 12.5% discount before deducting placement agent fees and expenses of approximately $913,000. The Debentures mature on July 7, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. On August 13, 2021, the Company consummated the second closing of the offering pursuant to the same terms and conditions of the Securities Purchase Agreement dated July 7, 2021. At the second closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Senior Secured Convertible Debentures in an aggregate principal amount of $3,976,875 and (ii) warrants to purchase up to 1,862,279 shares of common stock of the Company. The Company received a total of $3,535,000 in gross proceeds following the second closing taking into account the 12 % discount before deducting placement agent fees and expenses of approximately $354,000. The Debentures mature on August 13, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. Under the conversion terms of the Debentures, the Debenture is convertible, in whole or in part, into shares of Common Stock at the option of the Holder at any time until the Debenture is no longer outstanding. The Holder executes a conversion by delivering to the Company a Notice of Conversion specifying the principal amount to be converted and the date on which the conversion is to be executed. The Conversion Price is set at the lower of (i) $18.00 and (ii) 80% of the average of the VWAP during the 5 Trading Day period immediately prior to the applicable Conversion Date. The number of Conversion Shares to be issued is determined by dividing the outstanding principal amount of the debenture to be converted by the Conversion Price. The Debentures are subject to mandatory conversion (“Mandatory Conversion”) in the event the Company closes a registered public offering of its Common Stock and receives gross proceeds of not less than $40,000,000 and at the completion of which the Company’s securities are traded on a national exchange (“Qualified Offering”). The Company determined that the conversion feature associated with the convertible debentures should be bifurcated and treated as a separate derivative liability. The Company recorded a revaluation loss of approximately $0.8 million for the three months ended March 31, 2022, for the change in the fair value of the conversion option. As of March 31, 2022, the derivative liability associated with the conversion option was $8.4 million. In addition, during the quarter, the Company recognized an extinguishment loss of approximately $0.5 million as a result of the conversion of debt of $1,590,000 and the settlement of the derivative liability associated with the conversion option of $.8 million. Debenture Default The Debentures provide that any monetary judgment filed against the Company for more than $50,000, and if such judgment remains unvacated for a period of 45 calendar days shall constitute an event of default. On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement was entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. As a result, the Confession of Judgment was deemed to be an event of default under the Debentures although the Company only became aware of the Confession of Judgment on December 14, 2021. On January 7, 2022, the Company received a notice of default (the “Default Notice”) from the Placement Agent stating that the Company defaulted under the Purchase Agreement as a result of: (i) the Company failing to disclose certain material indebtedness of the Company outstanding as of the date of the Purchase Agreement; and (ii) the filing of a judgment relating to such material indebtedness. Due to such events of default, (i) the Debentures are now deemed to have begun bearing interest at the default interest rate of 18% per annum from the date of the issuance of the Debentures; and (ii) the holders of the Debentures are entitled to receive in satisfaction of the amounts owing under the Debentures an amount equal to 130% of the Original Principal Value of the Debentures (“Default Principal Increase”), in accordance with the terms of the Debentures. In addition, as a result of the events of default, the exercise price for the Warrant is the lower of: (A) $18.00 and (B) an amount equal to fifty percent (50%) of the average of volume-weighted average price for the common stock of the Company over the five (5) trading days preceding the date of the delivery of the applicable exercise notice or (C) the qualified offering price as defined in the Purchase Agreement. Convertible Debenture Conversion For the three months ended March 31, 2022, the convertible debenture holders converted approximately $1.6 million of debt owed to them into approximately 72.7 million shares. As a result of the conversions, the Company recorded a loss on debt extinguishment of approximately $0.5 million and settled approximately $0.7 million of the derivative liability associated with the conversion option. Subsequent to March 31, 2022, convertible debenture holders have converted approximately $2.1 million of debt owed to them into approximately 257.0 million shares of the Company’s common stock. |
Fair Value Measurement
Fair Value Measurement | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Note 11 — Fair Value Measurement Fair value measurements are determined based on assumptions that a market participant would use in pricing an asset or a liability. A three-tiered hierarchy distinguishes between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2) and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3). The following table presents the placement in the fair value hierarchy measured at fair value on a recurring basis as of March 31, 2022, and December 31, 2021 (in thousands): Fair value measurement at reporting date using Quoted prices in Significant active markets other Significant for identical observable unobservable Balance assets inputs inputs (Level 3) As of March 31, 2022: Recurring fair value measurements: Derivative Liabilities: Conversion feature derivative liability $ 8,424 $ — $ — $ 8,424 Common stock derivative liability 314 — — 314 Total derivative liabilities $ 8,738 $ — $ — $ 8,738 Total recurring fair value measurements $ 8,738 $ — $ — $ 8,738 As of December 31, 2021 Recurring fair value measurements Derivative liability: Conversion feature derivative liability $ 8,355 $ — $ — $ 8,355 Common stock derivative liability — — — — Total derivative liabilities $ 8,355 $ — $ — $ 8,355 Total recurring fair value measurements $ 8,355 $ — $ — $ 8,355 The conversion feature of the convertible Debentures was separately accounted for at fair value as a derivative liability under guidance in ASC 815 that is remeasured at fair value on a recurring basis using Level 3 inputs. The Company uses a probability weighted expected return model (“PWERM”) valuation technique to measure the fair value of the conversion feature with any changes in the fair value of the conversion feature liability recorded in earnings. Significant inputs to the model include estimated time to conversion events, estimated interest converted at the event, the implied yield, the discount rate for the conversion, and the probability of the conversion events. For the three months ended March 31, 2022, the Company recorded a loss of approximately $0.8 million for the change in fair value of debt conversion feature. As discussed in Note 13 – 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 March 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 Common Total level 3 Balance as of December 31, 2021 $ 8,355 $ - $ 8,355 Transferred to equity on debt conversion (769 ) - (769 ) Transferred from equity on recognition of derivative liability - 314 314 Increase in fair value included in earnings 838 - 838 Balance as of March 31, 2022 $ 8,424 $ 314 $ 8,738 |
Digital Assets
Digital Assets | 3 Months Ended |
Mar. 31, 2022 | |
Digital Assets [Abstract] | |
Digital Assets | Note 12 — Digital Assets The following table presents the roll forward of digital asset activity from continuing and discontinued operations during the periods ended: Three Months Ended March 31, 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 1,983 2,018 Mining pool operating fees (20 ) (21 ) Management fees - (322 ) Impairment of digital assets (1,236 ) - Owners’ distributions - (1,521 ) Proceeds from sale of digital assets (5,709 ) (251 ) Transaction fees (90 ) - Realized gain on sale of digital assets 1,107 87 Ending Balance $ 1,237 $ 14 |
Equity
Equity | 3 Months Ended |
Mar. 31, 2022 | |
Stockholders' Equity Note [Abstract] | |
Equity | Note 13 — Equity As discussed in Note 3 Basis of Presentation the Company completed a reverse merger of Sysorex and TTM Digital with TTM Digital being the accounting acquirer and reporting entity. In a reverse merger, the capital accounts of the reporting entity (TTM Digital) are restated to reflect the legal capital structure of the legal acquirer (Sysorex). As a result, the share data of the reporting entity has been retroactively restated for all periods presented to the equivalent share values of Sysorex for the capital transaction activity of TTM Digital, as if the reverse merger occurred on January 1, 2020. The share data of the reporting entity has been retroactively stated for all periods presented to the equivalent share values of Sysorex. The Company is authorized to issue 499,560,659 shares of common stock, $0.00001 par value, and 10,000,000 shares of preferred stock, $0.00001 par value. The holders of the Company’s common stock are entitled to one vote per share. As of March 31, 2022, 499,560,659 common stock shares were authorized; 237,513,850 shares were issued, and 237,438,471 shares were outstanding. No preferred stock has been designated or issued. Stock Options A summary of stock option activity for the three months ended March 31, 2022, is as follows: Number of Weighted Outstanding, January 1, 2022 1,656,000 $ 2.00 Granted - $ - Exercised - - Forfeited or cancelled - - Outstanding, March 31, 2022 1,656,000 $ 2.00 Exercisable, March 31, 2022 1,656,000 $ 2.00 The Company recognized approximately $0.03 million of stock-based compensation for the quarter ended March 31, 2022. The unrecognized stock-based compensation of $0.3 million will be recorded over the derived service period ending in the second quarter 2024. Warrants The following table represents the activity related to the Company’s warrants during the three-month ended March 31, 2022: Number of Weighted Outstanding, January 1, 2022 5,926,763 $ * Granted - - Exercised 418,931 - Outstanding, March 31, 2022 5,507,832 $ - The weighted average contractual term as of March 31, 2022, is 4.36 years. * The exercise price will be determined by a 5-day VWAP price calculation on the exercise date. Restricted Stock Units The following table represents the activity related to the Company’s restricted stock awards granted to employees and directors during the three months ended March 31, 2022: Number of Weighted Outstanding, January 1, 2022 1,000,000 $ 0.40 Granted - - Vested 500,000 - Unvested, March 31, 2022 500,000 $ 0.40 The unrecognized stock compensation at March 31, 2022 is $0.1 million. Share Derivative Liabilities As the amount of common stock on an as converted basis as of March 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 March 31, 2022 (dollars in thousands): March 31, Warrants $ 236 Stock options 66 RSUs vested but unissued 12 Total share derivative liability $ 314 |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Note 14 — Commitments and Contingencies Contractual Commitments On September 5, 2017, prior to the merger and as a result of a spinoff from Sysorex’s previous parent, a computer hardware supplier threatened legal action against the Company and demanded approximately $1.8 million for payment of unpaid invoices. On or about January 29, 2018, the parties executed a settlement agreement resolving the matter. No court action was filed. The liability of approximately $0.6 million has been accrued and includes interest $0.1 million calculated based on a default rate, which is included as a component of accounts payable and accrued liabilities as of March 31, 2022, in the unaudited condensed consolidated balance sheets. On January 22, 2018, a software vendor filed a motion for entry of default judgment (the “Motion”) against SGS in the Circuit Court of Fairfax County, Virginia. The Motion alleges that SGS failed to respond to a complaint served on November 22, 2017. The Motion requests a default judgment in the amount of $336,000 plus $20,000 in legal fees. On August 10, 2018, the Company and vendor entered into a settlement agreement and the Company is repaying the debt in monthly installments. The liability of approximately $0.2 million has been accrued and includes interest $0.08 million calculated based on a default rate and is included as a component of accounts payable and accrued liabilities as of March 31, 2022, in the unaudited condensed consolidated balance sheets. The Company entered into a Registration Rights Agreement (the “RRA”) dated April 13, 2021. The Company had ninety (90) calendar days following the closing date of its Merger with TTM Digital Assets & Technologies, Inc. on April 14, 2021, to file an initial registration statement covering the Shares. The ninety (90) calendar day filing date was July 13, 2021 (“Filing Deadline”). The Company did not fulfil its obligation to file a registration statement covering the Shares by July 13, 2021, nor any date and therefore has accounted for an accrued liability in the amount of $0.2 million recorded in the unaudited condensed consolidated balance sheets – Accrued Liabilities for the year ended March 31, 2022. The RRA terminated as of October 14, 2021, by its own terms. The Company, entered into a Promissory Judgment Note dated as of August 15, 2018 (the “Note”), with Tech Data Corporation (“Tech Data”), pursuant to which the Company promised to pay the principal sum of $6,849,423.42 to Tech Data. The Note provides that interest shall accrue on the balance of the Note at the rate of 18% per annum. Due to miscommunication with Tech Data, the Company inadvertently failed to pay, when due, some of the installment payments in the aggregate principal amount of $3,341,801.80, as set forth in the Note and has defaulted under the Note. On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement is entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. Following a negotiation with Tech Data, the Company was able to reduce the Award by in excess of $4.2 million, and on January 13, 2022, the Company and Tech Data entered into a Settlement and Release Agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company paid $1,375,000. (the “Settlement Amount”) on January 14, 2022. The Company recognized a gain on settlement of $1.5 million and has recorded in product costs in the condensed consolidated statement of operations. The Award was deemed satisfied in full. Among other things, Tech Data agreed to file an acknowledgment of full satisfaction of judgment attached as an exhibit to the Settlement Agreement, not take any further action against the Company in connection with or relating to the Judgment, and release the Company and its representatives from any and all claims, including the Judgment, which Tech Data may have against the Company based upon any transaction that occurred at any time before the date of the Settlement Agreement. Operating Leases/Right-of-Use Assets and Lease Liability On December 8, 2021, the Company’s principal executive offices moved to 13880 Dulles Corner Lane, Suite 120, Herndon, Virginia 20171. We lease these premises, which consist of approximately 5,800 square feet, pursuant to a lease that expires on May 31, 2025. The total amount of rent expense under the leases is recognized on a straight-line basis over the term of the leases. The Company has no other operating or financing leases with terms greater than 12 months. As of March 31, 2022, future minimum operating leases commitments are as follows: Calendar Years Ending December 31, Amount 2022 $ 120 2023 214 2024 219 2025 92 Total future lease payments 645 Less: interest expense at incremental borrowing rate (90 ) Net present value of lease liabilities $ 555 Other assumptions and pertinent information related to the Company’s accounting for operating leases are: Weighted average remaining lease term: 3.17 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. There are no pending legal proceedings to which the Company is a party to. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2022 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 15 — Related Party Transactions Effective April 1, 2021, the Company entered a variety of contracts with CoreWeave, Inc. (“CoreWeave”). Hosting Facilities Services Order The Hosting Facility Services Order (the “Hosting Contract”) provided for the provision of hosting facility space and services by CoreWeave. The services are paid for in advance of the service month and the initial term of the hosting services is through June 30, 2022 and renews automatically for successive one year renewal terms unless either party terminates within sixty (60) days of the expiration of the then current term. At the signing of the Hosting Contract an estimated 382 data mining rigs were covered at an estimated monthly cost of approximately $21,556 ($260,000 per year). The Company recorded $64,667 in mining costs in the condensed statement of operations for the three months ended March 31, 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%. The Company recorded $71,820 in mining costs for the three months ended March 31, 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 did not incur service costs for the three months ended March 31, 2022. Effective February 24, 2022, the master services agreement has been terminated. Bespoke Growth Partners, Inc. (“Bespoke”) Effective as of April 15, 2021, the Company entered into a consulting agreement with Bespoke. Under the terms of the consulting agreement, the Company agreed to total compensation for services of $975,000 which of which $775,000 was paid during the year ended December 31, 2021. The Company made an additional payment in accordance with the agreement of $200,000 in January 2022. The Company recognized an additional $167,000 amount of expense during the three months ended March 31, 2022, which is recorded as consultant fees in general and administrative in the condensed consolidated statement of operations. Lastly, the Company may request Bespoke to expand its services. 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 three months ended March 31, 2022, which is recorded as consultant fees in general and administrative in the condensed consolidated statement of operations. Ressense LLC On August 4, 2021, the Company executed a six (6) month business advisory services agreement with Ressense LLC. The services to be provided include potential business activities including acquisition, merger and reverse merger opportunities. As compensation for the performance of services, the Company paid and recorded $25,000 through January 31, 2022, as consultant fees in general and administrative in the condensed consolidated statement of operations. The business advisory services agreement expired January 31, 2022. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Prepaid Expenses and Other Current Assets | Note 16 — Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consist of the following as of March 31, 2022, and December 31, 2021: March 31, December 31, Consultants $ 146 $ 565 Rent - 17 Vendor Payments 135 - Insurance 102 162 License and Maintenance Contracts 613 658 Other 28 - $ 1,024 $ 1,402 |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements have been prepared using the accounting records of Sysorex, TTM Digital and SGS. All inter-company balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during each of the reporting periods. Actual results could differ from those estimates. The Company’s significant estimates consist of: ● Revenue recognition ● Fair value of digital assets ● Fair value of the Company’s common stock ● Expected useful lives and valuation of assets ● Fair value of derivative liabilities |
Mining Equipment | Mining Equipment Mining equipment is stated at cost. Depreciation is computed using the straight-line method regardless of the category of asset. The Company has 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 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 of specialized equipment. Management will review this estimate quarterly and will revise such estimates as and when data comes available. To the extent that any of the assumptions underlying management’s estimate of useful life 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 could change and have a prospective impact on depreciation expense and 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. No impairment charges were identified for long-lived assets during the periods ended March 31, 2022, or March 31, 2021. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized: ● Identification of the contract, or contracts, with a customer; ● Identification of the performance obligations in the contract; ● Determination of the transaction price; ● Allocation of the transaction price to the performance obligations in the contract; and ● Recognition of revenue when, or as, the Company satisfies a performance obligation. |
Mining Revenue | Mining Revenue TTM Digital has entered into mining pools with the operators to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s contracts with mining pool operators The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date received, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions. Fair value of the digital asset award received is determined using the quoted price of the related digital asset at the time of receipt. There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could impact the Company’s Condensed Consolidated financial position and results from operations. |
Hardware and Software Revenue Recognition | Hardware and Software Revenue Recognition The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are established, the contract has commercial substance and collectability of consideration is probable. The Company evaluates the following indicators amongst others when determining whether it is acting as a principal in the transaction and recording revenue on a gross basis: (i) the Company is primarily responsible for fulfilling the promise to provide the specified product or service, (ii) the Company has inventory risk before the specified good or service has been transferred to a customer or after transfer of control to the customer and (iii) the Company has discretion in establishing the price for the specified good or service. If the terms of a transaction do not indicate the Company is acting as a principal in the transaction, then the Company is acting as an agent in the transaction and the associated revenues are recognized on a net basis. The Company recognizes revenue once control has passed to the customer. The following indicators are evaluated in determining when control has passed to the customer: (i) the Company has a right to payment for the product or service, (ii) the customer has legal title to the product, (iii) the Company has transferred physical possession of the product to the customer, (iv) the customer has the significant risk and rewards of ownership of the product and (v) the customer has accepted the product. The Company’s products can be delivered to customers in a variety of ways, including (i) as physical product shipped from the Company’s warehouse, (ii) via drop-shipment by the vendor or supplier or (iii) via electronic delivery of keys for software licenses. The Company’s shipping terms typically specify F.O.B. destination. The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without having to physically hold the inventory at its warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis. The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement, the Company provides direct warranty to the customer with the Company’s own personnel as the customer requires warranty on the solution and not individual vendor products. This type of warranty is sold integral to the overall solution quoted to the customer. The Company considers these service-type warranties to be performance obligations of the principal from the underlying products that make up a solution and therefore is acting as a principal in the transaction and records revenue on a gross basis over time. |
License and Maintenance Services Revenue Recognition | License and Maintenance Services Revenue Recognition SGS provides a customized design and configuration solution for its customers and in this capacity resells hardware, software and other IT equipment license and maintenance services in exchange for fixed fees. The Company selects the vendors and sells the products and services, including maintenance services, that best fit the customer’s needs. For sales of maintenance services and warranties, the customer obtains control at the point in time that the services to be provided by a third-party vendor are purchased by the customer and therefore the Company’s performance obligation to provide the overall systems solution is satisfied at that time. The Company’s customers generally pay within 30 to 60 days from the receipt of a customer-approved invoice. For resale of services, including maintenance services, warranties, and extended warranties, the Company is acting as an agent as the primary activity for those services are fulfilled by a third party. While the Company may facilitate and act as a first responder for these services, the third-party service providers perform the primary maintenance and warranty services for the customer. Therefore, the Company is not primarily responsible for performing these services and revenue is recorded on a net basis. SGS’s professional services include fixed fee contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables. For fixed fee contracts, the Company recognizes revenue evenly over the service period using a time-based measure because the Company is providing continuous service. Anticipated losses are recognized as soon as they become known. For the three months ended March 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 a receivable 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 Company had deferred revenue of $0.9 million as of March 31, 2022, and December 31, 2021. |
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 March 31, 2022, and December 31, 2021. |
Digital Assets | Digital Assets Digital assets (predominantly Ethereum) are included in current assets in the accompanying Condensed Consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Digital assets purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy disclosed above. Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. During the three months ended March 31, 2022, and March 31, 2021, the Company recorded impairment of $1.2 million and $0, respectively. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying Condensed Consolidated statements of cash flows. The sales of digital assets are included within investing activities in the accompanying Condensed Consolidated statements of cash flows. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company recognized realized gains of $1.1 million for the three months ended March 31, 2022. The Company recognized realized gains through the sale and disbursement of digital assets during the three-month period ended March 31, 2021, of $0.08 million. |
Investments | Investments The Company accounts for its investments that represent less than 20% ownership, and for which the Company does not have the ability to exercise significant influence, using the FASB’s Accounting Standards Update (“ASU”) 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities |
Fair Value | Fair Value The Company follows the accounting guidance under FASB’s ASC 820, Fair Value Measurements for its fair value measurements of financial assets and liabilities measured at fair value on a recurring basis. Under this accounting guidance, fair value is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. This statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements, ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 — observable inputs other than Level 1, quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, and model-derived prices whose inputs are observable or whose significant value drivers are observable; and Level 3 — assets and liabilities whose significant value drivers are unobservable. Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment. The carrying amounts of the Company’s financial assets and liabilities, such as cash and cash equivalents, accounts receivable, accrued liabilities, and accounts payable, approximate fair value due to the short-term nature of these instruments. |
Accounting for Derivatives | Derivative Liabilities The Company evaluates its convertible instruments, options, warrants, or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, Derivatives and Hedging. The Company evaluates whether the amount of common stock on a as converted basis is in excess of its authorized share total which, if in excess, would result in derivative accounting treatment. The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to a liability at the fair value of the instrument on the reclassification date. |
Held for Sale and Discontinued Operations Classification | Held for Sale and Discontinued Operations Classification The Company classifies a business as held for sale in the period in which management commits to a plan to sell the business, the business is available for immediate sale in its present condition, an active program to complete the plan to sell the business is initiated, the sale of the business within one year is probable and the business is being marketed at a reasonable price in relation to its fair value. Newly acquired businesses that meet the held-for-sale classification criteria upon acquisition are reported as discontinued operations. Upon a business’ classification as held for sale, net assets are measured for impairment. Goodwill impairment is measured in accordance with the method described in the accounting policy. An impairment loss is recorded for long-lived assets held for sale when the carrying amount of the asset exceeds its fair value less cost to sell. Other assets and liabilities are generally measured for impairment by comparing their carrying values to their respective fair values. A long-lived asset shall not be depreciated or amortized while it is classified as held for sale. |
Convertible Debt | Convertible Debt The Company’s debt instruments contain a host liability, freestanding warrants, and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation and/or freestanding warrants qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own stock, and (ii) classified in shareholders equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features and/or freestanding warrants that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the Condensed Consolidated statements of operations. Any embedded conversion features and/or freestanding warrants that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods. The host debt instrument is initially recorded at its relative fair value in long-term debt. The host debt instrument is accounted for in accordance with guidance applicable to non-convertible debt under FASB ASC Topic 470 Debt (“ASC 470”) and is accreted to its face value over the term of the debt with accretion expense and periodic interest expense recorded in the unaudited condensed consolidated statements of operations. Issuance costs are allocated to each instrument in the same proportion as the proceeds that are allocated to each instrument. Issuance costs allocated to the debt hosted instrument are netted against the proceeds allocated to the debt host. Issuance costs allocated to freestanding warrants classified in equity are recorded in paid-in-capital. |
Net Loss per Share | Net Loss per Share Basic loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding during the period. Diluted net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted average number of common shares outstanding, plus potentially dilutive common shares. Convertible debt, restricted stock, stock options and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported a net loss for the three months ended March 31, 2022, and as a result, all potentially dilutive common shares are considered antidilutive for this period. The Company includes potentially issuable shares in the Weighted-average common shares – basic that include warrants and other agreements that are exercisable for little or no consideration without substantive contingencies and others once any contingencies relative to the issuance of the shares is resolved. Computations of basic and diluted weighted average common shares outstanding were as follows for the periods reported: March 31, 2022 2021 Weighted-average common shares outstanding 171,980,542 81,039,900 Weighted-average potential common shares considered outstanding 3,000,000 2,000,000 Weighted-average common shares outstanding – basic 174,980,542 83,039,900 Dilutive effect of options, warrants and restricted stock - - Weighted-average common shares outstanding – diluted 174,980,542 83,039,900 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 138,922,213 - |
Emerging Growth Company | Emerging Growth Company Sysorex is an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As such, Sysorex is eligible to take advantage of certain exemptions from various reporting requirements that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended. In addition, Section 107 of the JOBS Act provides that an emerging growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, for complying with new or revised accounting standards, meaning that Sysorex, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. Sysorex has elected to take advantage of this extended transition period, and therefore our financial statements may not be comparable to those of companies that comply with such new or revised accounting standards. |
Basis of Presentation (Tables)
Basis of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of proforma results of operations | March 31, 2022 2021 Total Revenues $ 7,077 $ 3,425 Net Loss (3,669 ) (20 ) Net Loss per share – basic and diluted (0.021 ) - Weighted Average Shares Outstanding – basic and diluted 174,980,542 83,039,900 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of basic and diluted weighted average common shares outstanding | March 31, 2022 2021 Weighted-average common shares outstanding 171,980,542 81,039,900 Weighted-average potential common shares considered outstanding 3,000,000 2,000,000 Weighted-average common shares outstanding – basic 174,980,542 83,039,900 Dilutive effect of options, warrants and restricted stock - - Weighted-average common shares outstanding – diluted 174,980,542 83,039,900 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 138,922,213 - |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Schedule of revenues cost of revenues for our subsidiary segments | For the Three Months Ended March 31, 2022 Revenues TTM Sysorex Condensed Products Revenue $ - $ 4,529 $ 4,529 Services Revenue - 508 508 Mining Income 765 - 765 Total Revenues $ 765 $ 5,037 $ 5,802 Product Cost $ - $ 2,015 $ 2,015 Services Cost - 262 262 Mining Cost 144 - 144 Other Operating Expenses $ 3,908 $ 1,894 $ 5,802 Operating Income (Loss) $ (3,287 ) $ 866 $ (2,421 ) Total Segment Assets $ 5,741 $ 8,859 $ 14,600 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of balance sheet | March 31, December 31, 2022 2021 Current Assets Mining equipment and facilities, net $ 5,571 $ 5,571 Investment in Style Hunter 500 500 Total Current Assets $ 6,071 $ 6,071 Total Assets associated with discontinued operations $ 6,071 $ 6,071 |
Schedule of statement of operations | 2022 2021 Revenues Mining income $ 1,275 $ 2,018 Total revenues 1,275 2,018 Operating costs and expenses Mining cost 383 131 General and administrative 256 - Depreciation - 199 Total operating costs and expenses 639 330 Gain from Operations 636 1,688 Other Income (Expenses) Loss on sale of fixed assets - (8 ) Income before taxes and equity method investee 636 1,680 Provision for income taxes - - Income before equity method investee 636 1,680 Share of net loss of equity method investee - 3 - Net income from discontinued operations $ 636 $ 1,683 |
Schedule of net cash flows from discontinued operations | For the Three Months 2022 2021 Net cash used in operating activities -discontinued operations (626 ) (47 ) Net cash provided by investing activities – discontinued operations - 47 Net cash provided by financing activities – discontinued operations - - |
Mining Equipment, Net (Tables)
Mining Equipment, Net (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Property, Plant and Equipment [Abstract] | |
Schedule of mining equipment, net | Balance as of March 31, December 31, 2022 2021 Gross Mining Equipment: Mining Equipment (non-GPUs) $ 493 $ 493 GPUs 6,033 6,033 Accumulated Depreciation: Mining Equipment (non-GPUs) (164 ) (123 ) GPUs (2,742 ) (2,326 ) Mining Equipment, net $ 3,620 $ 4,077 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (100 ) $ 960 Customer relationships 1,900 (451 ) 1,449 Total intangible assets $ 2,960 $ (551 ) $ 2,409 Gross Net Carrying Accumulated Carrying Amount Amortization Amount Trade name $ 1,060 $ (74 ) $ 986 Customer relationships 1,900 (333 ) 1,567 Total intangible assets $ 2,960 $ (407 ) $ 2,553 |
Schedule of remaining years | Calendar Years Ending December 31, Amount 2022 430 2023 573 2024 573 2025 266 Thereafter 567 Total $ 2,409 |
Credit Risk and Concentrations
Credit Risk and Concentrations (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Risks and Uncertainties [Abstract] | |
Schedule of risk percentage of revenue | For the Three Months March 31, 2022 $ % Customer A $ 3,583 72 % Customer B $ 1,170 24 % |
Convertible Debentures & Warr_2
Convertible Debentures & Warrants (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of convertible debt | March 31, December 31, 2022 2021 Convertible Debentures & Warrants, including interest payable to the Convertible Debenture Holders $ 17,721 $ 19,439 |
Fair Value Measurement (Tables)
Fair Value Measurement (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value of the Company's derivative liabilities | Fair value measurement at reporting date using Quoted prices in Significant active markets other Significant for identical observable unobservable Balance assets inputs inputs (Level 3) As of March 31, 2022: Recurring fair value measurements: Derivative Liabilities: Conversion feature derivative liability $ 8,424 $ — $ — $ 8,424 Common stock derivative liability 314 — — 314 Total derivative liabilities $ 8,738 $ — $ — $ 8,738 Total recurring fair value measurements $ 8,738 $ — $ — $ 8,738 As of December 31, 2021 Recurring fair value measurements Derivative liability: Conversion feature derivative liability $ 8,355 $ — $ — $ 8,355 Common stock derivative liability — — — — Total derivative liabilities $ 8,355 $ — $ — $ 8,355 Total recurring fair value measurements $ 8,355 $ — $ — $ 8,355 |
Schedule of fair value of the Company's derivative liabilities | Conversion Common Total level 3 Balance as of December 31, 2021 $ 8,355 $ - $ 8,355 Transferred to equity on debt conversion (769 ) - (769 ) Transferred from equity on recognition of derivative liability - 314 314 Increase in fair value included in earnings 838 - 838 Balance as of March 31, 2022 $ 8,424 $ 314 $ 8,738 |
Digital Assets (Tables)
Digital Assets (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Digital Assets [Abstract] | |
Schedule of digital asset activity | Three Months Ended March 31, 2022 2021 Opening Balance $ 5,202 $ 24 Revenue from mining 1,983 2,018 Mining pool operating fees (20 ) (21 ) Management fees - (322 ) Impairment of digital assets (1,236 ) - Owners’ distributions - (1,521 ) Proceeds from sale of digital assets (5,709 ) (251 ) Transaction fees (90 ) - Realized gain on sale of digital assets 1,107 87 Ending Balance $ 1,237 $ 14 |
Equity (Tables)
Equity (Tables) | 3 Months Ended |
Mar. 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 - - Outstanding, March 31, 2022 1,656,000 $ 2.00 Exercisable, March 31, 2022 1,656,000 $ 2.00 |
Schedule of warrants | Number of Weighted Outstanding, January 1, 2022 5,926,763 $ * Granted - - Exercised 418,931 - Outstanding, March 31, 2022 5,507,832 $ - Number of Weighted Outstanding, January 1, 2022 1,000,000 $ 0.40 Granted - - Vested 500,000 - Unvested, March 31, 2022 500,000 $ 0.40 |
Schedule of share derivative liabilities | March 31, Warrants $ 236 Stock options 66 RSUs vested but unissued 12 Total share derivative liability $ 314 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of future minimum operating leases | Calendar Years Ending December 31, Amount 2022 $ 120 2023 214 2024 219 2025 92 Total future lease payments 645 Less: interest expense at incremental borrowing rate (90 ) Net present value of lease liabilities $ 555 |
Schedule of operating leases | Weighted average remaining lease term: 3.17 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) | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Schedule of Prepaid expenses and other current assets | March 31, December 31, Consultants $ 146 $ 565 Rent - 17 Vendor Payments 135 - Insurance 102 162 License and Maintenance Contracts 613 658 Other 28 - $ 1,024 $ 1,402 |
Nature and Description of Bus_2
Nature and Description of Business (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 24, 2022 | |
Accounting Policies [Abstract] | ||
Mining assets percentage | 20.00% | 75.00% |
Preferred stock shares | 7,125,000 | |
Business acquisition planned restructuring activities description | (i) Ostendo completes an underwritten initial public offering of its common stock pursuant to a registration statement under the Securities Act of 1933, as amended, or similar law of a foreign jurisdiction, (ii) Ostendo’s outstanding shares of capital stock are exchanged for or otherwise converted into securities that are publicly listed, pursuant to a transaction governing such exchange or conversion, on a national securities exchange, including through a merger (including a reverse merger), acquisition, business combination or similar transaction, in one transaction or series of related transactions, and including a transaction or series of related transactions involving a vehicle commonly known as a special purpose acquisition company (SPAC) (“Public Listing”), (iii) a “change in control” event with at least 50% plus 1 share of Ostendo’s issued and outstanding capital stock being sold to an unaffiliated third-party, or (iv) Ostendo undergoing a liquidity or other event that necessitates the transfer of the Shares (each, a “Transfer Event”). Upon the occurrence of a Transfer Event, the Company shall have the right to transfer the Shares. | |
Heads of terms agreement, description | Pursuant to the Heads of Term agreement, the Company agreed to transfer 312,500 shares to Bespoke Growth Partners, Inc. and 1,562,500 shares to Omniverse LLC, Accordingly, following the closing, the Company will hold 5,250,000 shares, Bespoke Growth Partners, Inc. will hold 312,500 shares and Omniverse LLC will hold 1,562,500 shares. | |
Deposits | $ 1,600,000 | |
Additional shares of preferred stock | 166,667 |
Going Concern (Details)
Going Concern (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Going Concern [Abstract] | |
Cash balance | $ 0.9 |
Working capital | 22.7 |
Accumulated deficit | $ 52.3 |
Basis of Presentation (Details)
Basis of Presentation (Details) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Number of common stock right to receive | 124,218,268 | |
Common stock par value per share | $ 0.00001 | $ 0.00001 |
Percentage of outstanding shares of capital stock | 80.00% | |
Purchase consideration | $ 0.3 |
Basis of Presentation (Detail_2
Basis of Presentation (Details) - Schedule of proforma results of operations - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of proforma results of operations [Abstract] | ||
Total Revenues | $ 7,077 | $ 3,425 |
Net Loss | $ (3,669) | $ (20) |
Net Loss per share – basic and diluted (in Dollars per share) | $ (0.021) | |
Weighted Average Shares Outstanding – basic and diluted (in Shares) | 174,980,542 | 83,039,900 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | Mar. 24, 2022 | |
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Deferred revenue | $ 900 | |||
Allowance for doubtful account | 50 | $ 50 | ||
Impairment chargers | 1,200 | $ 0 | ||
Realized gain | $ 1,100 | |||
Digital assets | $ 80 | |||
Ownership percentage | 20.00% | 75.00% | ||
Minimum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Estimated useful life | 3 years | |||
Maximum [Member] | ||||
Summary of Significant Accounting Policies (Details) [Line Items] | ||||
Estimated useful life | 5 years |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - Schedule of basic and diluted weighted average common shares outstanding - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of basic and diluted weighted average common shares outstanding [Abstract] | ||
Weighted-average common shares outstanding | 171,980,542 | 81,039,900 |
Weighted-average potential common shares considered outstanding | 3,000,000 | 2,000,000 |
Weighted-average common shares outstanding – basic | 174,980,542 | 83,039,900 |
Dilutive effect of options, warrants and restricted stock (in Dollars) | ||
Weighted-average common shares outstanding – diluted | 174,980,542 | 83,039,900 |
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 | 138,922,213 |
Segment Reporting (Details) - S
Segment Reporting (Details) - Schedule of revenues cost of revenues for our subsidiary segments $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
TTM Digital [Member] | |
Segment Reporting Information [Line Items] | |
Products Revenue | |
Services Revenue | |
Mining Income | 765 |
Total Revenues | 765 |
Product Cost | |
Services Cost | |
Mining Cost | 144 |
Other Operating Expenses | 3,908 |
Operating Income (Loss) | (3,287) |
Total Segment Assets | 5,741 |
Sysorex Government Services [Member] | |
Segment Reporting Information [Line Items] | |
Products Revenue | 4,529 |
Services Revenue | 508 |
Mining Income | |
Total Revenues | 5,037 |
Product Cost | 2,015 |
Services Cost | 262 |
Mining Cost | |
Other Operating Expenses | 1,894 |
Operating Income (Loss) | 866 |
Total Segment Assets | 8,859 |
Consolidated [Member] | |
Segment Reporting Information [Line Items] | |
Products Revenue | 4,529 |
Services Revenue | 508 |
Mining Income | 765 |
Total Revenues | 5,802 |
Product Cost | 2,015 |
Services Cost | 262 |
Mining Cost | 144 |
Other Operating Expenses | 5,802 |
Operating Income (Loss) | (2,421) |
Total Segment Assets | $ 14,600 |
Discontinued Operations (Detail
Discontinued Operations (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Discontinued Operations (Details) [Line Items] | ||
Carrying value of digital assets | $ 6.1 | $ 6.1 |
TTM Digital [Member] | ||
Discontinued Operations (Details) [Line Items] | ||
Mining assets | 75.00% |
Discontinued Operations (Deta_2
Discontinued Operations (Details) - Schedule of balance sheet - Discontinued Operations [Member] - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Current Assets | ||
Mining equipment and facilities, net | $ 5,571 | $ 5,571 |
Investment in Style Hunter | 500 | 500 |
Total Current Assets | 6,071 | 6,071 |
Total Assets associated with discontinued operations | $ 6,071 | $ 6,071 |
Discontinued Operations (Deta_3
Discontinued Operations (Details) - Schedule of statement of operations - Discontinued Operations [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenues | ||
Mining income | $ 1,275 | $ 2,018 |
Total revenues | 1,275 | 2,018 |
Operating costs and expenses | ||
Mining cost | 383 | 131 |
General and administrative | 256 | |
Depreciation | 199 | |
Total operating costs and expenses | 639 | 330 |
Gain from Operations | 636 | 1,688 |
Other Income (Expenses) | ||
Other expenses, net | (8) | |
Income before taxes and equity method investee | 636 | 1,680 |
Provision for income taxes | ||
Income before equity method investee | 636 | 1,680 |
Share of net loss of equity method investee | 3 | |
Net income from discontinued operations | $ 636 | $ 1,683 |
Discontinued Operations (Deta_4
Discontinued Operations (Details) - Schedule of net cash flows from discontinued operations - Discontinued Operations [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Condensed Cash Flow Statements, Captions [Line Items] | ||
Net cash used in operating activities -discontinued operations | $ (626) | $ (47) |
Net cash provided by investing activities – discontinued operations | 47 | |
Net cash provided by financing activities – discontinued operations |
Mining Equipment, Net (Details)
Mining Equipment, Net (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Property, Plant and Equipment [Abstract] | |
Depreciation expenses | $ 0.5 |
Mining Equipment, Net (Detail_2
Mining Equipment, Net (Details) - Schedule of mining equipment, net - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Accumulated Depreciation: | ||
Mining Equipment, net | $ 3,620 | $ 4,077 |
Mining Equipment (Non-Gpus) [Member] | ||
Gross Mining Equipment: | ||
Gross Mining Equipment | 493 | 493 |
Accumulated Depreciation: | ||
Accumulated Depreciation | (164) | (123) |
GPUs [Member] | ||
Gross Mining Equipment: | ||
Gross Mining Equipment | 6,033 | 6,033 |
Accumulated Depreciation: | ||
Accumulated Depreciation | $ (2,742) | $ (2,326) |
Intangible Assets (Details) - S
Intangible Assets (Details) - Schedule of intangible assets - USD ($) $ in Thousands | Mar. 31, 2022 | Mar. 31, 2021 |
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | $ 2,960 | $ 2,960 |
Accumulated Amortization | (551) | (407) |
Net Carrying Amount | 2,409 | 2,553 |
Trade Names [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,060 | 1,060 |
Accumulated Amortization | (100) | (74) |
Net Carrying Amount | 960 | 986 |
Customer Relationships [Member] | ||
Intangible Assets (Details) - Schedule of intangible assets [Line Items] | ||
Gross Carrying Amount | 1,900 | 1,900 |
Accumulated Amortization | (451) | (333) |
Net Carrying Amount | $ 1,449 | $ 1,567 |
Intangible Assets (Details) -_2
Intangible Assets (Details) - Schedule of remaining years $ in Thousands | Mar. 31, 2022USD ($) |
Schedule of remaining years [Abstract] | |
2022 | $ 430 |
2023 | 573 |
2024 | 573 |
2025 | 266 |
Thereafter | 567 |
Total | $ 2,409 |
Credit Risk and Concentration_2
Credit Risk and Concentrations (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Credit Risk and Concentrations (Details) [Line Items] | |
Concentration risk, percentage | 10.00% |
Total accounts receivable, percentage | 11% |
Customer A [Member] | |
Credit Risk and Concentrations (Details) [Line Items] | |
Total accounts receivable, percentage | 88% |
Customer A [Member] | Maximum [Member] | |
Credit Risk and Concentrations (Details) [Line Items] | |
Concentration risk, percentage | 82.00% |
Customer B [Member] | |
Credit Risk and Concentrations (Details) [Line Items] | |
Purchases from vendors | $ 3.2 |
Credit Risk and Concentration_3
Credit Risk and Concentrations (Details) - Schedule of risk percentage of revenue $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Customer A [Member] | |
Revenue, Major Customer [Line Items] | |
Purchases from vendors | $ 3,583 |
Concentration risk, percentage | 72.00% |
Customer B [Member] | |
Revenue, Major Customer [Line Items] | |
Purchases from vendors | $ 1,170 |
Concentration risk, percentage | 24.00% |
Convertible Debentures & Warr_3
Convertible Debentures & Warrants (Details) - USD ($) | May 13, 2022 | Jan. 07, 2022 | Aug. 13, 2021 | Jul. 07, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Convertible Debentures & Warrants (Details) [Line Items] | ||||||
Principal amount | $ 15,187,500 | |||||
Bearing interest rate | 18.00% | |||||
Percentage of debentures | 130.00% | |||||
Convertible debentures | $ 17,721,000 | $ 19,439,000 | ||||
Conversion of price description | (i) $18.00 and (ii) 80% of the average of the VWAP during the 5 Trading Day period immediately prior to the applicable Conversion Date. The number of Conversion Shares to be issued is determined by dividing the outstanding principal amount of the debenture to be converted by the Conversion Price. The Debentures are subject to mandatory conversion (“Mandatory Conversion”) in the event the Company closes a registered public offering of its Common Stock and receives gross proceeds of not less than $40,000,000 and at the completion of which the Company’s securities are traded on a national exchange (“Qualified Offering”). | |||||
Revaluation loss | $ 800,000 | |||||
Derivative liability | 8,400,000 | |||||
Extinguishment loss | $ 500,000 | |||||
Conversion debt (in Dollars per share) | $ 1,590,000 | |||||
Debt conversion option | $ 800,000 | |||||
Debentures provide | 50,000 | |||||
Judgement total | 5,942,559.05 | |||||
Principal sum | 3,341,801.8 | |||||
Prejudgment interest | $ 2,600,757.25 | |||||
Warrant purchase agreement , description | In addition, as a result of the events of default, the exercise price for the Warrant is the lower of: (A) $18.00 and (B) an amount equal to fifty percent (50%) of the average of volume-weighted average price for the common stock of the Company over the five (5) trading days preceding the date of the delivery of the applicable exercise notice or (C) the qualified offering price as defined in the Purchase Agreement. | |||||
Warrant exercise price (in Dollars per share) | $ 18 | |||||
Weighted average price | 50.00% | |||||
Convertible debenture | $ 2,100,000 | $ 1,600,000 | ||||
Debt | $ 257,000,000 | 72,700,000 | ||||
Recorded a loss | 500,000 | |||||
Derivative liability | $ 700,000 | |||||
2021 Convertible Debentures & Warrants [Member] | ||||||
Convertible Debentures & Warrants (Details) [Line Items] | ||||||
Bearing interest rate | 12.50% | 12.50% | ||||
Aggregate principal amount | $ 9,990,000 | |||||
Shares of common stock (in Shares) | 1,862,279 | 3,534,751 | ||||
Total gross proceeds | $ 3,535,000 | $ 8,880,000 | ||||
Percentage of debentures | 12.00% | 12.50% | ||||
Agent fees and expenses | $ 354,000 | $ 913,000 | ||||
Maturity date | Aug. 13, 2022 | Jul. 7, 2022 | ||||
Convertible debentures | $ 3,976,875 |
Convertible Debentures & Warr_4
Convertible Debentures & Warrants (Details) - Schedule of convertible debt - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Schedule of convertible debt [Abstract] | ||
Convertible Debentures & Warrants, including interest payable to the Convertible Debenture Holders | $ 17,721 | $ 19,439 |
Fair Value Measurement (Details
Fair Value Measurement (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Fair Value Disclosures [Abstract] | |
Change in fair value of debt conversion feature loss | $ 0.8 |
Fair Value Measurement (Detai_2
Fair Value Measurement (Details) - Schedule of recurring fair value measurements - USD ($) $ in Thousands | Mar. 31, 2022 | Dec. 31, 2021 |
Derivative Liabilities: | ||
Conversion feature derivative liability | $ 8,424 | $ 8,355 |
Common stock derivative liability | 314 | |
Total derivative liabilities | 8,738 | 8,355 |
Total recurring fair value measurements | 8,738 | 8,355 |
Quoted prices in active markets for identical assets (Level 1) [Member] | ||
Derivative Liabilities: | ||
Conversion feature derivative liability | ||
Common stock derivative liability | ||
Total derivative liabilities | ||
Total recurring fair value measurements | ||
Significant other observable inputs (Level 2) [Member] | ||
Derivative Liabilities: | ||
Conversion feature derivative liability | ||
Common stock derivative liability | ||
Total derivative liabilities | ||
Total recurring fair value measurements | ||
Significant unobservable inputs (Level 3) [Member] | ||
Derivative Liabilities: | ||
Conversion feature derivative liability | 8,424 | 8,355 |
Common stock derivative liability | 314 | |
Total derivative liabilities | 8,738 | 8,355 |
Total recurring fair value measurements | $ 8,738 | $ 8,355 |
Fair Value Measurement (Detai_3
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities $ in Thousands | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | |
Balance at beginning of year | $ 8,355 |
Transferred to equity on debt conversion | (769) |
Transferred from equity on recognition of derivative liability | 314 |
Increase in fair value included in earnings | 838 |
Balance at end of year | 8,738 |
Conversion feature derivative liability [Member] | |
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | |
Balance at beginning of year | 8,355 |
Transferred to equity on debt conversion | (769) |
Transferred from equity on recognition of derivative liability | |
Increase in fair value included in earnings | 838 |
Balance at end of year | 8,424 |
Common stock derivative liability [Member] | |
Fair Value Measurement (Details) - Schedule of fair value of the Company's derivative liabilities [Line Items] | |
Balance at beginning of year | |
Transferred to equity on debt conversion | |
Transferred from equity on recognition of derivative liability | 314 |
Increase in fair value included in earnings | |
Balance at end of year | $ 314 |
Digital Assets (Details) - Sche
Digital Assets (Details) - Schedule of digital asset activity - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Schedule of digital asset activity [Abstract] | ||
Opening Balance | $ 5,202 | $ 24 |
Revenue from mining | 1,983 | 2,018 |
Mining pool operating fees | (20) | (21) |
Management fees | (322) | |
Impairment of digital assets | (1,236) | |
Owners’ distributions | (1,521) | |
Proceeds from sale of digital assets | (5,709) | (251) |
Transaction fees | (90) | |
Realized gain on sale of digital assets | 1,107 | 87 |
Ending Balance | $ 1,237 | $ 14 |
Equity (Details)
Equity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Equity (Details) [Line Items] | ||
Common stock, shares authorized | 499,560,659 | 499,560,659 |
Common stock, par value (in Dollars per share) | $ 0.00001 | $ 0.00001 |
Common stock vote, description | one | |
Common stock, shares issued | 237,513,850 | 145,713,591 |
Common stock, shares outstanding | 237,438,471 | |
Stock-based compensation (in Dollars) | $ 30 | |
Unrecognized stock-based compensation (in Dollars) | $ 300 | |
Weighted average contractual term | 4 years 4 months 9 days | |
Unrecognized stock compensation (in Dollars) | $ 100 | |
Reverse merger, description | As the amount of common stock on an as converted basis as of March 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. | |
Common Stock [Member] | ||
Equity (Details) [Line Items] | ||
Common stock, shares authorized | 499,560,659 | |
Common stock, par value (in Dollars per share) | $ 0.00001 | |
Preferred Stock [Member] | ||
Equity (Details) [Line Items] | ||
Preferred stock, shares issued | 10,000,000 | |
Preferred stock, par value (in Dollars per share) | $ 0.00001 |
Equity (Details) - Schedule of
Equity (Details) - Schedule of stock option activity | 3 Months Ended |
Mar. 31, 2022$ / sharesshares | |
Schedule of stock option activity [Abstract] | |
Number of Options, Outstanding, Beginning balance | shares | 1,656,000 |
Weighted Average Exercise Price, Outstanding, Beginning balance | $ / shares | $ 2 |
Number of Options, Granted | shares | |
Weighted Average Exercise Price, Granted | $ / shares | |
Number of Options, Exercised | shares | |
Weighted Average Exercise Price, Exercised | $ / shares | |
Number of Options, Forfeited or cancelled | shares | |
Weighted Average Exercise Price, Forfeited or cancelled | $ / shares | |
Number of Options, Outstanding, Ending balance | shares | 1,656,000 |
Weighted Average Exercise Price, Outstanding, Ending balance | $ / shares | $ 2 |
Number of Options, Exercisable, Ending balance | shares | 1,656,000 |
Weighted Average Exercise Price, Exercisable, Ending balance | $ / shares | $ 2 |
Equity (Details) - Schedule o_2
Equity (Details) - Schedule of warrants | 3 Months Ended | |
Mar. 31, 2022$ / sharesshares | ||
Schedule of warrants [Abstract] | ||
Number of Warrants, Outstanding beginning balance | shares | 5,926,763 | |
Weighted Average Exercise Price, Outstanding beginning balance | $ / shares | [1] | |
Number of Restricted Stock Shares, Outstanding beginning balance | shares | 1,000,000 | |
Weighted Average Grant Price, Outstanding beginning balance | $ / shares | $ 0.4 | |
Number of Warrants, Granted | shares | ||
Weighted Average Exercise Price, Granted | $ / shares | ||
Number of Warrants, Exercised | shares | 418,931 | |
Weighted Average Exercise Price, Exercised | $ / shares | ||
Number of Warrants, Outstanding ending balance | shares | 5,507,832 | |
Weighted Average Exercise Price, Outstanding ending balance | $ / shares | ||
Number of Restricted Stock Shares, Granted | shares | ||
Weighted Average Grant Price, Granted | $ / shares | ||
Number of Restricted Stock Shares, Vested | shares | 500,000 | |
Weighted Average Grant Price, Vested | $ / shares | ||
Number of Restricted Stock Shares, Unvested | shares | 500,000 | |
Weighted Average Grant Price, Unvested | $ / shares | $ 0.4 | |
[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 | Mar. 31, 2022shares |
Schedule of share derivative liabilities [Abstract] | |
Warrants | 236 |
Stock options | 66 |
RSUs vested but unissued | 12 |
Total share derivative liability | 314 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) | Dec. 14, 2021 | Aug. 15, 2018USD ($) | Aug. 10, 2018USD ($) | Jan. 29, 2018USD ($) | Jan. 22, 2018USD ($) | Sep. 05, 2017USD ($) | Mar. 31, 2022USD ($)ft² | Dec. 31, 2021USD ($) | Jan. 14, 2022USD ($) | Jan. 13, 2022USD ($) |
Commitments and Contingencies Disclosure [Abstract] | ||||||||||
Payment of unpaid invoices | $ 1,800,000 | |||||||||
Accrued liability | $ 200,000 | $ 600,000 | ||||||||
Interest | $ 80,000 | $ 100,000 | ||||||||
Judgment amount | $ 336,000 | |||||||||
Legal fees | $ 20,000 | |||||||||
Accrued liability | $ 200,000 | |||||||||
Principal amount | $ 6,849,423.42 | $ 3,341,801.8 | ||||||||
Interest rate per annum | 18.00% | |||||||||
Confession of judgment description | On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement is entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25. | |||||||||
Award excess price | $ 4,200,000 | |||||||||
Settlement amount | $ 1,375,000 | |||||||||
Gain on settlement | $ 1,500,000 | |||||||||
Square feet (in Square Feet) | ft² | 5,800 | |||||||||
Expire date | May 31, 2025 |
Commitments and Contingencies_3
Commitments and Contingencies (Details) - Schedule of future minimum operating leases $ in Thousands | Mar. 31, 2022USD ($) |
Schedule of future minimum operating leases [Abstract] | |
2022 | $ 120 |
2023 | 214 |
2024 | 219 |
2025 | 92 |
Total future lease payments | 645 |
Less: interest expense at incremental borrowing rate | (90) |
Net present value of lease liabilities | $ 555 |
Commitments and Contingencies_4
Commitments and Contingencies (Details) - Schedule of operating leases | Mar. 31, 2022 |
Schedule of operating leases [Abstract] | |
Weighted average remaining lease term | 3 years 2 months 1 day |
Weighted average discount rate used to determine present value of operating lease liability: | 8.00% |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) | Jan. 15, 2022 | Jan. 13, 2022 | Sep. 26, 2021 | Apr. 29, 2021 | Mar. 31, 2022 | Dec. 31, 2021 |
Related Party Transactions (Details) [Line Items] | ||||||
Hosting contract description | At the signing of the Hosting Contract an estimated 382 data mining rigs were covered at an estimated monthly cost of approximately $21,556 ($260,000 per year). | |||||
Hosting costs | $ 64,667 | |||||
Services agreement description | The initial term of the Services Agreement runs from April 1, 2021, through December 31, 2022, and automatically renews thereafter for successive one (1)-year terms unless either party provides written notice to the other of nonrenewal within sixty (60) days of the expiration of the then current Term. The initiation of the Services Agreement required a one-time payment of $100,000. The monthly base management fee was set to $20.00 per GPU-based Mining System (approximately $20,000 per month), and $6.50 per ASIC-based Mining System. Base management fees are paid in arrears and due within fifteen (15) days of invoice receipt. If, during any calendar month of the Term, CoreWeave operates on average, more than 1,500 Mining Systems on behalf of the Company, the Base Management Fee with respect to the excess Mining Systems above 1,500 is discounted by 40%. The Company recorded $71,820 in mining costs for the three months ended March 31, 2022. | |||||
Expansion agreement, description | 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. | |||||
Consulting agreement, description | Under the terms of the consulting agreement, the Company agreed to total compensation for services of $975,000 which of which $775,000 was paid during the year ended December 31, 2021. | |||||
Additional payment | $ 200,000 | |||||
Additional expenses. | $ 167,000 | |||||
Gross advisory fee | $ 975,000 | |||||
Fair value of installment payments | $ 25,000,000,000 | |||||
Master Services Agreement [Member] | ||||||
Related Party Transactions (Details) [Line Items] | ||||||
Services cost | $ 35,000 | $ 3 | ||||
Style Hunter, Inc. [Member] | ||||||
Related Party Transactions (Details) [Line Items] | ||||||
Business combination description | Effective April 1, 2021, the Company entered a variety of contracts with CoreWeave, Inc. (“CoreWeave”). |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid expenses and other current assets - USD ($) $ in Thousands | Mar. 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 asstes | $ 1,024 | $ 1,402 |
Other | 28 | |
Consultants [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 146 | 565 |
Rent [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 17 | |
Vendor Payments [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 135 | |
Insurance [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | 102 | 162 |
Warranty and Maintenance Contracts [Member] | ||
Prepaid Expenses and Other Current Assets (Details) - Schedule of Prepaid expenses and other current assets [Line Items] | ||
Total prepaid expenses and other current asstes | $ 613 | $ 658 |