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The term of any loan made to the Borrowers may not exceed 360 days. The principal amount of any loan will accrue interest at a 30-day rate of 2%, calculated per day. Upon the occurrence and during the continuance of an Event of Default, as defined in the Loan Agreement, interest will accrue at a rate equal to the interest rate plus 0.42% per 30 days.
The Company became an independent company through the pro rata distribution by Inpixon of 100% of the outstanding common stock of Sysorex to Inpixon equity holders (the "Distribution"). Each Inpixon equity holder of record as of the close of business on August 21, 2018 received one share of the Company's common stock for every three shares of Inpixon common stock held on the record date or such number of shares of common stock issuable upon complete conversion of Inpixon convertible preferred stock or exercise of certain participating warrants. Approximately 40 million shares of the Company's common stock were distributed on the Distribution Date to Inpixon equity holders. In connection with the initial Distribution of its common stock, the Company has 117,917 shares of common stock reserved for issuance in treasury (a) to the holders of certain Inpixon warrants who will be entitled to receive shares of the Company's common stock if the warrants are exercised, and (b) the holders of Inpixon securities that were subject to beneficial ownership limitations in connection with the distribution and for future issuances.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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<td style="width: 0.5in"> </td>
<td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">the allowance for
doubtful accounts; </font></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">the valuation allowance
for the deferred tax asset; and</font></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td>
<td style="text-align: justify"> </td></tr>
<tr style="vertical-align: top">
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<td style="text-align: justify">the impairment of long-lived assets.</td></tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Recent Accounting Standards</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36pt">In February 2016, the FASB issued ASU No.
2016-02, "Leases (Topic 842)," ("ASU 2016-02"). ASU 2016-02 requires an entity to recognize assets and
liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative
disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash
flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. As an emerging growth company,
the Company expects to delay adoption of ASU 2016-02 until January 1, 2020. ASU 2016-02 is not expected to have a material impact
on the financial statements or <font style="background-color: white">disclosures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 36pt">As a result of the new
standard, all of the Company's leases greater than one year in duration are recognized in its balance sheets as both operating
lease liabilities and right-of-use assets upon adoption of the standard. The Company adopted the standard using the modified-retrospective
method effective January 1, 2020. This adoption primarily affected the Company's consolidated balance sheet based on the
recording of right-of-use assets and the lease liability, current and noncurrent, for its operating leases. The adoption of ASU
2016-02 did not change the Company's historical classification of these leases or the straight-line recognition of related
expenses. Upon adoption, the Company recorded approximately $217,000 in right-of-use assets and operating lease liabilities on
the Company's balance sheet.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36pt">In December 2019, the FASB issued ASU 2019-12
"Income Taxes (Topic 740) -- Simplifying the Accounting for Income Taxes.  This ASU modifies certain provisions
of ASC 740 to simplify the accounting for income taxes.  <font style="background-color: white">The amendments in ASU
2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods
therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements
have not yet been issued. The Company is</font> currently evaluating the accounting, transition, and disclosure requirements of
the standard to determine the impact, if any, on the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Emerging Growth Company </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Sysorex is an "emerging growth company"
as defined in the JOBS Act. As such, Sysorex will be eligible to take advantage of certain exemptions from various reporting requirements
that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act. In addition, Section 107 of the JOBS Act provides that an emerging
growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for complying with new or revised accounting standards, meaning that
Sysorex, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. Sysorex has elected to take advantage of this extended transition period, and therefore our financial
statements may not be comparable to those of companies that comply with such new or revised accounting standards.</p>
The Company filed a Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada to affect a 1-for-100 reverse stock split of the Company's issued and outstanding shares of common stock, effective as of July 30, 2019. The financial statements and accompanying notes give effect to the 1-for-100 reverse stock split as if they occurred at the first period presented.
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Note 8 — Related Party Note</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On December 31, 2018, the Company entered
into a note purchase agreement with Inpixon (the "Note Purchase Agreement") pursuant to which Inpixon, the Company's
former parent, agreed to purchase from the Company at a purchase price equal to the Loan Amount (as defined below), a secured
promissory note (the "Related Party Note") for up to an aggregate principal amount of 3,000,000.00 (the "Principal
Amount"), including any amounts advanced through the date of the Related Party Note (the "Prior Advances"),
to be borrowed and disbursed in increments (such borrowed amount, together with the Prior Advances, collectively referred to as
the "Loan Amount"), with interest to accrue at a rate of ten percent (10%) per annum on all such Loan Amounts, beginning
as of the date of disbursement with respect to any portion of such Loan Amount. In addition, the Company agreed to pay $20,000
to Inpixon to cover Inpixon' legal fees, accounting costs, due diligence, monitoring and other transaction costs incurred
in connection with the purchase and sale of the Related Party Note (the "Transaction Expense Amount"), all of which
amount is included in the Principal Amount. The initial Loan Amount, therefore, includes any amounts disbursed to the Company
and the Transaction Expense Amount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company may borrow under the Related
Party Note, as needed, for a total outstanding balance, exclusive of any unpaid accrued interest, not to exceed the Principal
Amount at any one time.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">All sums advanced by Inpixon to the maturity
date pursuant to the terms of the Note Purchase Agreement will become part of the aggregate Loan Amount underlying the Related
Party Note. All outstanding principal amounts and accrued unpaid interest owing under the Related Party Note shall become immediately
due and payable on the earlier to occur of (i) December 31, 2020 (the "Maturity Date"), (ii) at such date when declared
due and payable by Inpixon upon the occurrence of an Event of Default (as defined in the Related Party Note), or (iii) at any
such earlier date as set forth in the Related Party Note. All accrued unpaid interest shall be payable in cash.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the terms of the Related Party
Note, the Company granted Inpixon, subject to any and all Payplant Liens (as defined in the Related Party Note) and Permitted
Liens (as defined in the Related Party Note), a continuing first priority security interest in all assets of the Company whether
owned as of the date of the Related Party Note or subsequently acquired, including all proceeds therefrom (collectively, the "Collateral")
to secure the payment of the Related Party Note and all other loans and advances (including all renewals, modifications and extensions
thereof) and all obligations of any and every kind and nature of the Company to Inpixon, whether arising prior to, under or after
the Related Party Note, however incurred or evidenced, plus all interest, reasonable costs, reasonable expenses and reasonable
attorneys' fees, which may be made or incurred by Inpixon in the disbursement, administration, and collection of such amounts,
and in the protection, maintenance, and liquidation of the Collateral.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On February 4, 2019, the Related Party
Note was amended to increase the maximum principal amount that may be outstanding at any time under the Related Party Note from
$3,000,000 to $5,000,000. On April 15, 2019, the Related Party Note was amended to increase the maximum principal amount that
may be outstanding at any time under the Related Party Note from $5,000,000 to $8,000,000. On May 22, 2019, the Related Party
Note was amended to increase the maximum principal amount that may be outstanding at any time under the Related Party Note from
$8,000,000 to $10,000,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The proceeds received, interest and legal
costs accrued in accordance with the Related Party Note for the year ended December 31, 2019 is $10,901,000.</p>
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<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 1 — Description of Business, the Spin-Off and
Going Concern and Management's Plans </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Description of Business</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Sysorex, Inc., through its wholly-owned
subsidiary, Sysorex Government Services, Inc., formerly known as (f/k/a) Inpixon Federal, Inc. ("SGS"), (unless otherwise
stated or the context otherwise requires, the terms "SGS" "we," "us," "our" and
the "Company" refer collectively to Sysorex, Inc. and SGS), provides information technology solutions primarily to
the public sector. These solutions include cybersecurity, professional services, engineering support, IT consulting, enterprise
level technology, networking, wireless, help desk, and custom IT solutions. The Company is headquartered in Virginia.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>The Spin-Off</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 31, 2018 (the "Distribution
Date"), the Company became an independent company through the pro rata distribution by Inpixon of 100% of the outstanding
common stock of Sysorex to Inpixon equity holders (the "Distribution"). Each Inpixon equity holder of record as of
the close of business on August 21, 2018 received one share of the Company's common stock for every three shares of Inpixon
common stock held on the record date or such number of shares of common stock issuable upon complete conversion of Inpixon convertible
preferred stock or exercise of certain participating warrants. Approximately 40 million shares of the Company's common stock
were distributed on the Distribution Date to Inpixon equity holders. In connection with the initial Distribution of its common
stock, the Company has 117,917 shares of common stock reserved for issuance in treasury (a) to the holders of certain Inpixon warrants
who will be entitled to receive shares of the Company's common stock if the warrants are exercised, and (b) the holders of
Inpixon securities that were subject to beneficial ownership limitations in connection with the distribution and for future issuances.
The Company's common stock began regular-way trading on the OTC Markets under the symbol "SYSX" on September
4, 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Immediately prior to the Distribution,
Inpixon transferred substantially all of the assets and liabilities and operations of Inpixon's value added reseller business
to the Company, which was completed on August 31, 2018 (the "Capitalization"). The Company's consolidated financial
statements prior to the Capitalization were prepared on a stand-alone basis and were derived from Inpixon's consolidated
financial statements and accounting records. The consolidated financial statements included herein reflect the Company's
financial position, results of operations, and cash flows as the Company's business was operated as part of Inpixon's
prior to the Capitalization. Following the Capitalization, the consolidated financial statements include the accounts of the Company
and SGS. All periods presented have been accounted for in conformity with the accounting principles that are generally accepted
in the United States of America ("GAAP").</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Going Concern and Management's Plans</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2019, the Company had
a minimal cash balance and a working capital deficit of approximately $9.4 million. In addition, the Company has a stockholders'
deficit of approximately $20.0 million. For the years ended December 31, 2019 and 2018, the Company incurred net losses of approximately
$5.4 million and $7.9 million, respectively. The aforementioned factors raise substantial doubt about the Company's ability
to continue as a going concern. The accompanying consolidated financial statements have been prepared on a going concern basis,
which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The consolidated
financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the
classification of liabilities that might be necessary should the Company be unable to continue as a going concern within one year
after the date the consolidated financial statements are issued.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company does not believe that its capital
resources as of December 31, 2019, availability on the Payplant facility to finance purchase orders and invoices in an amount
equal to 80% of the face value of purchase orders received, funds from financing from our related party note (as defined in Note
9 below) and other short-term borrowings, higher margin public sector contracts capture, reauthorization of key vendors and credit
limitation improvements will be sufficient to fund planned operations during the year ending December 31, 2020. As a result, the
Company will need additional funds to support its obligations for the next twelve months. The Company may raise additional capital
as needed, through the issuance of equity, equity-linked or debt securities. The Company's consolidated financial statements
as of December 31, 2019 have been prepared under the assumption that we will continue as a going concern for the next twelve months
from the date the financial statements are issued. Management's plans and assessment of the probability that such plans
will mitigate and alleviate any substantial doubt about the Company's ability to continue as a going concern, is dependent
upon the ability to attain funding to secure additional resources to generate sufficient revenues and increased margin, which
without these represent the principal conditions that raise substantial doubt about our ability to continue as a going concern.
The Company's consolidated financial statements as of December 31, 2019 do not include any adjustments that might result
from the outcome of this uncertainty.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 6 — Accrued Issuable Equity – Other Liabilities</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with the Distribution of
its common stock, the Company has 31,941 shares of common stock reserved in treasury for eventual issuance to certain holders
of Inpixon securities that are currently subject to beneficial ownership limitations in connection with the Distribution. On August
31, 2018, we recorded approximately $128,000 of accrued issuable equity in connection with these share issuance obligations. During
the years ended December 31, 2019 and 2018, the Company has recorded a gain on change in fair value of accrued issuable equity
of approximately $64,000 and $54,000 respectively, which was charged to the statement of operations. This is included in Other
Income, Net. The Accrued Issuable Equity balance as of December 31, 2019 and December 31, 2018 was approximately $10,000 and $74,000,
respectively.</p>
No
No
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Accounts Receivable, net </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Accounts 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 approximately $50,000 and $65,000 as of December 31, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Property and Equipment, net</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Property and equipment are recorded at
cost less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting
purposes using the straight-line method over the estimated useful lives of the assets, which range from three to seven years.
Leasehold improvements are amortized over the lesser of the useful life of the asset, or the initial lease term. Expenditures
for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as
incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed of,
the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal
is recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Intangible Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Intangible assets primarily consist of
customer relationships, supplier relationships and trade name/trademarks. They are amortized ratably over their deemed useful
life of one to seven years. The Company assesses the carrying value of its intangible assets for impairment each year. Based on
its assessments, the Company did not incur any impairment charges for the years ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Carrying Value, Recoverability and
Impairment of Long-Lived Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company has adopted Section 360-10-35
of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment
loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair
value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash
flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the
carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as
the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph
360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis.
For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that
asset. Restoration of a previously recognized impairment loss is prohibited.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to ASC Paragraph 360-10-35-21
the Company's long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes
in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset
group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in
its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value
of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly
in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period
operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates
continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely
than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously
estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more
frequently upon the occurrence of such events.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to ASC Paragraphs 360-10-35-29
through 35-36 Estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall include
only the future cash flows (cash inflows less associated cash outflows) that are directly associated with and that are expected
to arise as a direct result of the use and eventual disposition of the asset (asset group). Estimates of future cash flows used
to test the recoverability of a long-lived asset (asset group) shall incorporate the entity's own assumptions about its
use of the asset (asset group) and shall consider all available evidence. The assumptions used in developing those estimates shall
be reasonable in relation to the assumptions used in developing other information used by the entity for comparable periods, such
as internal budgets and projections, accruals related to incentive compensation plans, or information communicated to others.
However, if alternative courses of action to recover the carrying amount of a long-lived asset (asset group) are under consideration
or if a range is estimated for the amount of possible future cash flows associated with the likely course of action, the likelihood
of those possible outcomes shall be considered. A probability-weighted approach may be useful in considering the likelihood of
those possible outcomes. Estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall
be made for the remaining useful life of the asset (asset group) to the entity. For long-lived assets (asset groups) that have
uncertainties both in timing and amount, an expected present value technique will often be the appropriate technique with which
to estimate fair value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to ASC Paragraphs 360-10-45-4
and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income
from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from
operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset
(disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes
in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the
amounts of those gains or losses. Based on its assessments, the Company did not record any impairment charges for the years ended
December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Shipping and Handling Costs</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Shipping and handling costs are expensed
as incurred as part of cost of revenues. These costs were deemed to be nominal for the years ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Advertising Costs</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Advertising costs are expensed as incurred.
Advertising costs, which are included in selling, general and administrative expenses, were deemed to be nominal for the years
ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Income Taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company accounts for income taxes using
the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits
are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more
likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit,
or that future deductibility is uncertain.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Subsequent Events</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Company evaluates
events and/or transactions occurring after the balance sheet date and before the issue date of the financial statements to determine
if any of those events and/or transactions require adjustment to or disclosure in the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Note 3 — Property and Equipment,
net</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Property and equipment at December 31,
2019 and 2018 consisted of the following (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Computer and office equipment</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">39</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">39</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Furniture and fixtures</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">109</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">109</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Software</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">12</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">12</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">160</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">160</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: accumulated depreciation and amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(151</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(133</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total Property and Equipment, Net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">27</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Depreciation and amortization expense were
$18,000 and $115,000 for the years ended December 31, 2019 and 2018, respectively.</p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Computer and office equipment</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">39</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">39</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Furniture and fixtures</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">109</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">109</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt">Software</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">12</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">12</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Total</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">160</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">160</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: accumulated depreciation and amortization</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(151</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(133</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total Property and Equipment, Net</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">9</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">27</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
160000
160000
39000
39000
109000
109000
12000
12000
133000
151000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 4 — Intangible Assets</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Intangible assets at December 31, 2019
and 2018 consisted of the following (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross Carrying Amount<br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated Amortization<br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">Trade Name/Trademarks</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,250</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,250</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(3,250</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(2,863</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Customer Relationships</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,003</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,003</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3,090</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(2,523</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Supplier Relationships</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,985</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,985</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,985</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,280</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 4pt">Totals</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,238</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,238</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(9,325</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(7,666</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Aggregate amortization expense for the
years ended December 31, 2019 and 2018 was $1.7 million and $2.5 million, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Future amortization expense on intangibles
assets is anticipated to be as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">Years Ending December 31,</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: left">2020</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">313</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">313</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">287</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">913</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Gross Carrying Amount<br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Accumulated Amortization<br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 52%; text-align: left">Trade Name/Trademarks</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,250</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,250</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(3,250</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(2,863</td><td style="width: 1%; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Customer Relationships</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,003</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,003</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3,090</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(2,523</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Supplier Relationships</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,985</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">2,985</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,985</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(2,280</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 4pt">Totals</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,238</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">10,238</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(9,325</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(7,666</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; text-align: left; font-weight: bold">Years Ending December 31,</td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Amount</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 88%; text-align: left">2020</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">313</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">2021</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">313</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">2022</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">287</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">913</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
10238000
10238000
3250000
3250000
4003000
4003000
2985000
2985000
-7666000
-9325000
-3250000
-2863000
-3090000
-2523000
-2985000
-2280000
913000
313000
313000
287000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Note 5 — Deferred Revenue</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Deferred revenue as of December 31, 2019
and 2018 consisted of the following (in thousands of dollars): </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of<br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>Deferred Revenue, Current</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Maintenance agreements</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">89</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Service and other agreements</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">35</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">93</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total Deferred Revenue, Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">35</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">182</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total Deferred Revenue</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">35</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">182</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr></table>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of<br /> December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>Deferred Revenue, Current</td><td> </td>
<td colspan="2"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: center"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Maintenance agreements</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">-</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">89</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Service and other agreements</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">35</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">93</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Total Deferred Revenue, Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">35</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">182</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Total Deferred Revenue</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">35</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">182</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
182000
35000
64000
54000
-745000
3515000
10000
-1921000
5328000
1921000
-5328000
0.21
0.21
0.052
-0.074
0.116
-0.071
-0.355
-0.058
-0.000
0.000
488000
1681000
2000
18000
4000
201000
180000
4173000
4826000
201000
305000
5081000
6998000
5081000
6998000
0
0
1800000
6300000
1900000
1200000
74000
10000
9000
0.05
0.0229
0.05
0.210140
1.00
0.01
0.70
122000
116000
238000
10000000
0.00001
On July 30, 2018, the board of directors of the Company and its sole director approved the Company's 2018 Equity Incentive Plan (the "2018 Plan"), which enables the Company to grant stock options, share appreciation rights, restricted stock, restricted stock units, share awards, performance unit awards, and cash awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability of the Company to attract, retain, and motivate individuals upon whom the Company's sustained growth and financial success depend, by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options granted under the 2018 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b) of the Internal Revenue Code of 1986. Each option, or portion thereof, that is not an incentive stock option, shall be considered a non-qualified option. The option price must be at least 100% of the fair market value on the date of grant and if an Incentive Stock Option is issued to a 10% or greater shareholder the grant must be 110% of the fair market value on the date of the grant. The 2019 Plan is to be administered by the Board, which shall have discretion over the awards and grants thereunder. The aggregate maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 8,000,000, which number will be automatically increased on the first day of each quarter, beginning on January 1, 2019 and for each quarter thereafter, by a number of shares of common stock equal to the least of (i) 1,000,000 shares,(ii) 10% of the shares of common stock issued and outstanding on that date, or (iii) a lesser number of shares that may be determined by the board. No awards may be issued after July 30, 2028. As of December 31, 2019, there were no awards outstanding under the plan. As of December 31, 2019, there were 8,000,000 securities available for future issuance under the 2019 Plan.
6482
1945
The options vest as follows: (i.) every month after the grant date up to 4 years or (ii.) 25% upon the issuance and every year thereafter after on the grant date.
22.76
224.12
2023-03-01
2027-02-28
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">For
the Years Ended<br /> December 31</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2019</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2018</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">$</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">%</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">$</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">%</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; width: 52%; text-align: left">Customer A</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">3,305</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">49</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">%</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">2,005</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">38</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer B</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">999</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">15</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer C</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">672</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">10</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer D</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">633</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">12</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer E</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">523</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">10</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td></tr>
</table>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: left">For the Years
Ending December 31,</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Operating
Lease<br /> Amounts</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; width: 88%; text-align: left">2020</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">122</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">2021</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left">Total</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">238</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
416482
81250
482923
75379
400000
117917
-14662000
-20049000
-11539000
-11511000
-3123000
-8538000
-22172000
-22172000
14059000
14059000
-11604000
11604000
10000
40000
40000
-5871
-36667
25000
25000
-3123000
-3123000
7418
59023
28000
28000
13398000
73000
96000
20000
520000
1040000
9313000
3244000
362000
362000
-9364000
-16576000
-3949000
-8675000
-147000
182000
-56000
-2524000
-3643000
-10570000
-5000
25000
-15000
15000
-32000
-213000
-7000
-161000
1749000
-1284000
64000
54000
276000
105000
299000
65000
62000
-276000
-29000
62000
934000
18000
115000
9386000
16198000
22000
-16000
6000
28000
22000
58000
784000
5000
6000
299000
105000
28000
1287000
18000000
115000000
1176000
-1803000
1065000
1781000
1658000
2540000
2765000
5749000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Revenue Recognition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company reports revenues under ASC 606, "Revenue from
Contracts with Customers" and all the related amendments (Topic 606)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company recognizes revenue after applying the following
five steps:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0"></td><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">1)</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Identification
of the contract, or contracts, with a customer,</font></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0"></td><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">2)</font></td><td style="text-align: left">Identification of the performance obligations in the contract,
including whether they are distinct within the context of the contract</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">3)</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Determination
of the transaction price, including the constraint on variable consideration</font></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
<tr style="vertical-align: top">
<td style="white-space: nowrap; width: 0in; padding-top: 0"></td>
<td style="white-space: nowrap; width: 0.25in; padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">4)</font></td>
<td style="padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">Allocation of the transaction price to the performance obligations in the contract</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
<tr style="vertical-align: top">
<td style="white-space: nowrap; width: 0in; padding-top: 0"></td>
<td style="white-space: nowrap; width: 0.25in; padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">5)</font></td>
<td style="padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">Recognition of revenue when, or as, performance obligations are satisfied</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>Hardware and Software Revenue Recognition</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company is a primary resale channel
for a large group of vendors and suppliers, including original equipment manufacturers ("OEMs"), software publishers
and wholesale distributors.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 at the point of sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>License and Maintenance Services Revenue Recognition</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>Professional Services Revenue Recognition</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company's professional services
include fixed fee and time and materials contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables.
The Company's time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material
contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct
costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue
for the right to invoice because the Company's right to consideration corresponds directly with the value to the customer
of the performance completed to date. 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. Because the Company's contracts have an expected
duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information
about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the years ended
December 31, 2019 and 2018, the Company 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> <b></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>Contract Balances</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 immaterial amounts of deferred revenue as of December 31, 2019
and 2018.</p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>U.S. federal</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt">Current</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 76%; padding-left: 10pt">Deferred</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">(745</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">3,515</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">State and Local</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt">Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 10pt">Deferred</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,176</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,803</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,921</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,328</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,921</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,328</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Income tax provision (benefit)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
<p style="margin: 0pt"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-decoration: underline; text-align: left">Deferred Tax Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net operating loss carryovers</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,681</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">488</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Fixed assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Accrued compensation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Reserves</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">180</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">201</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Intangible assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,826</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,173</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">305</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">201</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total deferred tax assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,998</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,081</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: valuation allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,998</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,081</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Deferred tax assets, net of valuation allowance</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">0</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">0</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="margin: 0pt"></p>
65000000
50000000
P3Y
P7Y
P1Y
P7Y
8000000
28000
25000
-62000
-934000
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%"><tr style="vertical-align: bottom"><td style="font-size: 10pt; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">As
of December 31,</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 10pt; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2019</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2018</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left">Short-Term Debt</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right"> </td><td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right"> </td><td style="font-size: 10pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; width: 76%; text-align: left">Chicago Venture Convertible Note payable
(A)</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">658</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">500</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Revolving Credit Facility (B)</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">168</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">96</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Total Short-Term Debt</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: right">826</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: right">596</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 20pt"><b><i>(A) Chicago Venture Convertible Note Payable</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On December 31, 2018, the Company issued
a $625,000 principal face amount convertible promissory note (the "Convertible Note") to an investor, which yielded
net proceeds of $500,000 to the Company pursuant to a Securities Purchase Agreement, dated as of December 31, 2018, by and between
the Company and the investor. The Convertible Note bears interest at the rate of 10% per year and is due and payable 10 months
after the date of issuance. The Convertible Note carries an original issue discount of $105,000 and the Company agrees to pay
$20,000 to the Lender to cover its transaction costs incurred with the purchase and sale of the Convertible Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The agreement states that the Lender has
the right to convert all or part of the outstanding balance into fully paid and non-assessable common stock. The conversion formula
is as follows: The number of shares will equal the amount of the outstanding note balance being converted divided by $0.05 per
share. The Company determined since the value of the underlying equity on the commitment date was $0.0229 per share, was less
than the Lender Conversion Price $0.05, the Company determined there was no beneficial conversion feature.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Lender Conversion Price is subject
to certain adjustment such as down-round features whereby the agreement notes that if the Company were to sell, issue or grant
any common stock, option to purchase common stock, right to reprice, preferred shares convertible into common stock, or debt,
warrants, options or other securities which are convertible, exercisable, or exchangeable for shares of common stock at a price
per share less than the Lender Conversion Price, then the Lender Conversion Price shall be reduced to equal the new lower price,
subject to a floor of $0.01 per share. When and if there is an adjustment under the down-round provision, the Company will analyze
the accounting treatment of the adjustment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Redemption</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Redemptions may occur at any time after
the 6-month anniversary of the date of issuance of the Convertible Note with a minimum redemption price equal to the Conversion
Price. If the conversion rate is less than the market price, then the redemptions must be made in cash.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 5, 2019, the Company issued 22,857
shares of common stock for the settlement of approximately $20,000 of short-term debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On October 15, 2019, the Company and an
accredited investor (the "Lender") entered into a waiver agreement (the "Waiver Agreement") in connection
with the Lender's delivery of a redemption notice for $7,600 (the "Redemption Amount") in accordance with that
certain Securities Purchase Agreement, dated as of December 31, 2018, and that certain Convertible Promissory Note issued to the
Lender by the Company on December 31, 2018 (the "Note"). Pursuant to the Waiver Agreement, the Lender agreed to waive
certain Equity Conditions Failures (as defined in the Note) in order to receive shares of common stock of the Company instead
of cash to satisfy the Redemption Amount. In addition, the Company and the Lender agreed to issue such shares below the minimum
redemption conversion price of $1.00 at a modified redemption conversion price equal to $0.210140, which is equal to 70% multiplied
by the lowest closing bid price during the twenty (20) trading days immediately preceding this redemption. Accordingly, the Company
issued the Lender 36,166 shares of common stock to satisfy the Redemption Amount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Short-Term Note Extension </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On December 31, 2019, Chicago Venture Partners,
LP agreed to extend the previously agreed to pursuant to the terms of the Convertible Promissory Note dated as of December 31,
2018 whereby Chicago Venture Partners, LP will not be entitled to redeem all or any portion of the principal amount of the original
December 31, 2018 Note until March 31, 2020, and the maturity date of the Original Note was extended to March 31, 2020.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 20pt"><b><i>(B) Revolving Credit Facility</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 31, 2018, the Company entered
in an agreement with Payplant Alternatives Funds LLC, pursuant to which Payplant may purchase from the Borrowers, in Payplant's
sole and absolute discretion, Eligible Receivables, as that term is defined in the agreement, in exchange for cash advances, subject
to the terms and conditions in the agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On September 21, 2018, the Company entered
into the Payplant Loan and Security Agreement (the "Loan Agreement") with Payplant LLC as agent for Payplant Alternatives
Fund LLC ("Payplant"). Pursuant to the Loan Agreement and the terms set forth in the form of promissory note attached
as Exhibit A to the Loan Agreement, (the "Note"), Payplant, in its sole and absolute discretion, may loan money to
the Borrowers on the basis of purchase orders or invoices issued by the Borrowers to customers for goods and services provided.
The term of any loan made to the Borrowers may not exceed 360 days. The principal amount of any loan will accrue interest at a
30-day rate of 2%, calculated per day. Upon the occurrence and during the continuance of an Event of Default, as defined in the
Loan Agreement, interest will accrue at a rate equal to the interest rate plus 0.42% per 30 days. In no event will interest, when
combined with all fees that may be characterized as interest, exceed the Maximum Rate, as defined in the Loan Agreement. All computations
of interest will be made on the basis of a 360-day year. The Borrowers will have the right to prepay any loan upon the payment
of a premium of at least 30 days of interest.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As security for the repayment of any loans
and the performance of the Borrowers' Obligations, as defined in the Loan Agreement, the Borrowers granted to Payplant a
security interest in the Collateral, as defined in the Loan Agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2019 and December 31,
2018, the principal amount outstanding under the Loan Agreement was approximately $168,000 and $96,000, respectively and is included
in Short Term Debt in the consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 13 — Subsequent Events</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>  </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Related Party Note Amendment</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On March 1, 2020, the Related Party Note
was amended to extend the maturity date from December 31, 2020 to December 31, 2022, to increase the default interest rate from
18% to 21% or the maximum rate allowable by law and to require a cash payment by the Company to Inpixon against the loan amount
in an amount equal to no less than 6% of the aggregate gross proceeds raised following the completion of any financing, or series
of related financings, in which the Company raises aggregate gross proceeds of at least $5 million.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Future Receivables Agreement</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On January 21, 2020, SGS and GCF Resources
LLC ("GCF") entered into a Future Receivables Agreement pursuant to which GCF agreed to purchase receivables from SGS
with a value of $497,000 for the sum of $350,000</p>
0.18
0.21
0.06
500000
A Future Receivables Agreement pursuant to which GCF agreed to purchase receivables from SGS with a value of $497,000 for the sum of $350,000.
519929
217000000
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Cash and Cash Equivalents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36pt">Cash and cash equivalents consist of cash,
checking accounts, money market accounts and temporary investments with maturities of three months or less when purchased. As of
December 31, 2019 and 2018, the Company had no cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Net Loss per Share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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, preferred stock, restricted stock units, stock options
and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported
a net loss for the years ended December 31, 2019 and 2018, respectively, and as a result, all potentially dilutive common
shares are considered antidilutive for these periods. The Company had no potentially issuable shares as of December 31, 2019.</p>
0.013
-0.008
-0.036
0.00
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Note 7 — Income Taxes </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The income tax provision (benefit) for
the years ended December 31, 2019 and 2018 consists of the following (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td>U.S. federal</td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td><td> </td>
<td colspan="2" style="text-align: right"> </td><td> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-left: 10pt">Current</td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left">$</td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="width: 76%; padding-left: 10pt">Deferred</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">(745</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">3,515</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">State and Local</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-left: 10pt">Current</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">10</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="padding-bottom: 1.5pt; padding-left: 10pt">Deferred</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(1,176</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,803</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(1,921</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,328</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">1,921</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,328</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Income tax provision (benefit)</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The reconciliation between the U.S. statutory
federal income tax rate and the Company's effective rate for the years ended December 31, 2019 and 2018 is as follows:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-size: 11pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">U.S. federal statutory rate</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">21.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">21.0</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">State income taxes, net of federal benefit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7.4</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Federal and state rate change and other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.6</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7.1</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Other deferred tax adjustments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3.6</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(0.0</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Other permanent items</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.3</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(0.8</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(35.5</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5.8</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Effective rate</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">(0.0</td><td style="padding-bottom: 4pt; text-align: left">)%</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">(0.0</td><td style="padding-bottom: 4pt; text-align: left">)%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2019 and 2018, the Company's
deferred tax assets consisted of the effects of temporary differences attributable to the following (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">As of December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom">
<td> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-decoration: underline; text-align: left">Deferred Tax Assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">Net operating loss carryovers</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">1,681</td><td style="width: 1%; text-align: left"> </td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">488</td><td style="width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Fixed assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">-</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Accrued compensation</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">18</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td>Reserves</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">180</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">201</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Intangible assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,826</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">4,173</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="padding-bottom: 1.5pt">Other</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">305</td><td style="padding-bottom: 1.5pt; text-align: left"> </td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">201</td><td style="padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Total deferred tax assets</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">6,998</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5,081</td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 1.5pt">Less: valuation allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(6,998</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5,081</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right"> </td><td style="text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Deferred tax assets, net of valuation allowance</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">0</td><td style="padding-bottom: 4pt; text-align: left"> </td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">0</td><td style="padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In accordance with applicable U.S. tax
laws, the Spin Off as described in Note 1 was determined to result in a taxable gain to Inpixon. Inpixon made an election pursuant
to the Internal Revenue Code Section 336(e) to treat the Distribution as a sale of assets. Accordingly, the tax effects of the
changes in the tax basis of assets and liabilities, as offset by a valuation allowance, have been recognized in equity.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">As of December 31, 2019 and 2018, the Company
had approximately $6.3 million and $1.8 million, respectively, of U.S. federal and state net operating loss ("NOL")
carryovers available to offset future taxable income. NOL's generated prior to the Distribution were charged off to equity.
The NOL's generated in 2018 and 2019 do not expire and have an indefinite life.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Deferred income taxes reflect the net tax
effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes. In assessing the realization of deferred tax assets, management considers, whether it is
"more likely than not", that some portion or all of the deferred tax assets will not be realized. The ultimate realization
of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences
representing net future deductible amounts become deductible.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">ASC 740, "Income Taxes" requires
that a valuation allowance be established when it is "more likely than not" that all, or a portion of, deferred tax
assets will not be realized. A review of all available positive and negative evidence needs to be considered, including the scheduled
reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies. After consideration of all
the information available, management believes that uncertainty exists with respect to future realization of its deferred tax assets
and has, therefore, established a full valuation allowance as of December 31, 2019 and 2018. As of December 31, 2019 and 2018 the
change in valuation allowance was $1.9 million and $1.2 million, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">ASC 740 also clarifies the accounting for
uncertainty in income taxes recognized in an enterprise's financial statements and prescribes a recognition threshold and
measurement process for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax
return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities.  ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition.  The Company is required to file federal and state income tax returns. Based on the Company's
evaluation, it has been concluded that there are no material uncertain tax positions requiring recognition in the Company's
consolidated financial statements for the years ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company's policy for
recording interest and penalties associated with unrecognized tax benefits is to record such interest and penalties as
interest expense and as a component of general and administrative expense, respectively. There were no amounts accrued
for interest or penalties for the years ended December 31, 2019 and 2018. Management does not expect any material
changes in its unrecognized tax benefits in the next year. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company operates in multiple tax jurisdictions
and, in the normal course of business, its tax returns are subject to examination by various taxing authorities. Such examinations
may result in future assessments by these taxing authorities. The Company is subject to examination by U.S. tax authorities beginning
with the year ended December 31, 2018. Currently, the Company is not subject to any examinations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-size: 11pt"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2019</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td><td style="font-weight: bold; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2018</td><td style="padding-bottom: 1.5pt; font-weight: bold"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="width: 76%; text-align: left">U.S. federal statutory rate</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">21.0</td><td style="width: 1%; text-align: left">%</td><td style="width: 1%"> </td>
<td style="width: 1%; text-align: left"> </td><td style="width: 9%; text-align: right">21.0</td><td style="width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">State income taxes, net of federal benefit</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">5.2</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7.4</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Federal and state rate change and other</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">11.6</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(7.1</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left">Other deferred tax adjustments</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(3.6</td><td style="text-align: left">)</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(0.0</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left">Other permanent items</td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">1.3</td><td style="text-align: left"> </td><td> </td>
<td style="text-align: left"> </td><td style="text-align: right">(0.8</td><td style="text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="text-align: left; padding-bottom: 1.5pt">Change in valuation allowance</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(35.5</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; text-align: right">(5.8</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="text-align: left; padding-bottom: 4pt">Effective rate</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">(0.0</td><td style="padding-bottom: 4pt; text-align: left">)%</td><td style="padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; text-align: left"> </td><td style="border-bottom: Black 4pt double; text-align: right">(0.0</td><td style="padding-bottom: 4pt; text-align: left">)%</td></tr></table>
410044
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 2 — Basis of Presentation and Significant Accounting
Policies</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The consolidated financial statements have
been prepared using the accounting records of Sysorex and SGS. All material inter-company balances and transactions have been
eliminated.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Use of Estimates</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellspacing="0" cellpadding="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
<tr style="vertical-align: top">
<td style="width: 0.5in"> </td>
<td style="width: 0.25in"><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">the allowance for
doubtful accounts; </font></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">the valuation allowance
for the deferred tax asset; and</font></td></tr>
<tr style="vertical-align: top">
<td> </td>
<td> </td>
<td style="text-align: left"> </td></tr>
<tr style="vertical-align: top">
<td> </td>
<td><font style="font: 10pt Times New Roman, Times, Serif">●</font></td>
<td style="text-align: left">the impairment of long-lived assets.</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Revenue Recognition</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company reports revenues under ASC 606, "Revenue from
Contracts with Customers" and all the related amendments (Topic 606)</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company recognizes revenue after applying the following
five steps:</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0"></td><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">1)</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Identification
of the contract, or contracts, with a customer,</font></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0"></td><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">2)</font></td><td style="text-align: left">Identification of the performance obligations in the contract,
including whether they are distinct within the context of the contract</td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left"><font style="font: 10pt Times New Roman, Times, Serif">3)</font></td><td style="text-align: justify"><font style="font: 10pt Times New Roman, Times, Serif">Determination
of the transaction price, including the constraint on variable consideration</font></td>
</tr></table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
<tr style="vertical-align: top">
<td style="white-space: nowrap; width: 0in; padding-top: 0"></td>
<td style="white-space: nowrap; width: 0.25in; padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">4)</font></td>
<td style="padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">Allocation of the transaction price to the performance obligations in the contract</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%">
<tr style="vertical-align: top">
<td style="white-space: nowrap; width: 0in; padding-top: 0"></td>
<td style="white-space: nowrap; width: 0.25in; padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">5)</font></td>
<td style="padding-top: 0"><font style="font: 10pt Times New Roman, Times, Serif">Recognition of revenue when, or as, performance obligations are satisfied</font></td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>Hardware and Software Revenue Recognition</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company is a primary resale channel
for a large group of vendors and suppliers, including original equipment manufacturers ("OEMs"), software publishers
and wholesale distributors.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 at the point of sale.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i> </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>License and Maintenance Services Revenue Recognition</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>Professional Services Revenue Recognition</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company's professional services
include fixed fee and time and materials contracts. Fixed fees are paid monthly, in phases, or upon acceptance of deliverables.
The Company's time and materials contracts are paid weekly or monthly based on hours worked. Revenue on time and material
contracts is recognized based on a fixed hourly rate as direct labor hours are expended. Materials, or other specified direct
costs, are reimbursed as actual costs and may include markup. The Company has elected the practical expedient to recognize revenue
for the right to invoice because the Company's right to consideration corresponds directly with the value to the customer
of the performance completed to date. 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. Because the Company's contracts have an expected
duration of one year or less, the Company has elected the practical expedient in ASC 606-10-50-14(a) to not disclose information
about its remaining performance obligations. Anticipated losses are recognized as soon as they become known. For the years ended
December 31, 2019 and 2018, the Company 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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> <b></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i><u>Contract Balances</u></i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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 immaterial amounts of deferred revenue
as of December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Recent Accounting Standards</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36pt">In February 2016, the FASB issued ASU No.
2016-02, "Leases (Topic 842)," ("ASU 2016-02"). ASU 2016-02 requires an entity to recognize assets and
liabilities arising from a lease for both financing and operating leases. ASU 2016-02 will also require new qualitative and quantitative
disclosures to help investors and other financial statement users better understand the amount, timing, and uncertainty of cash
flows arising from leases. ASU 2016-02 is effective for fiscal years beginning after December 15, 2018. As an emerging growth company,
the Company expects to delay adoption of ASU 2016-02 until January 1, 2020. ASU 2016-02 is not expected to have a material impact
on the financial statements or <font style="background-color: white">disclosures.</font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 36pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 36pt">As a result of the new
standard, all of the Company's leases greater than one year in duration are recognized in its balance sheets as both operating
lease liabilities and right-of-use assets upon adoption of the standard. The Company adopted the standard using the modified-retrospective
method effective January 1, 2020. This adoption primarily affected the Company's consolidated balance sheet based on the
recording of right-of-use assets and the lease liability, current and noncurrent, for its operating leases. The adoption of ASU
2016-02 did not change the Company's historical classification of these leases or the straight-line recognition of related
expenses. Upon adoption, the Company recorded approximately $217,000 in right-of-use assets and operating lease liabilities on
the Company's balance sheet.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36pt">In December 2019, the FASB issued ASU 2019-12
"Income Taxes (Topic 740) -- Simplifying the Accounting for Income Taxes.  This ASU modifies certain provisions
of ASC 740 to simplify the accounting for income taxes.  <font style="background-color: white">The amendments in ASU
2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods
therein. Early adoption of the standard is permitted, including adoption in interim or annual periods for which financial statements
have not yet been issued. The Company is</font> currently evaluating the accounting, transition, and disclosure requirements of
the standard to determine the impact, if any, on the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><font style="background-color: White"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Emerging Growth Company </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b> </b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Sysorex is an "emerging growth company"
as defined in the JOBS Act. As such, Sysorex will be eligible to take advantage of certain exemptions from various reporting requirements
that apply to other public companies that are not emerging growth companies, including compliance with the auditor attestation
requirements of Section 404 of the Sarbanes-Oxley Act. In addition, Section 107 of the JOBS Act provides that an emerging
growth company may take advantage of the extended transition period provided in Section 13(a) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), for complying with new or revised accounting standards, meaning that
Sysorex, as an emerging growth company, can delay the adoption of certain accounting standards until those standards would otherwise
apply to private companies. Sysorex has elected to take advantage of this extended transition period, and therefore our financial
statements may not be comparable to those of companies that comply with such new or revised accounting standards.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Cash and Cash Equivalents</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 36pt">Cash and cash equivalents consist of cash,
checking accounts, money market accounts and temporary investments with maturities of three months or less when purchased. As of
December 31, 2019 and 2018, the Company had no cash equivalents.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Accounts Receivable, net </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Accounts 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 approximately $50,000 and $65,000 as of December 31, 2019 and 2018, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Property and Equipment, net</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Property and equipment are recorded at
cost less accumulated depreciation and amortization. The Company depreciates its property and equipment for financial reporting
purposes using the straight-line method over the estimated useful lives of the assets, which range from three to seven years.
Leasehold improvements are amortized over the lesser of the useful life of the asset, or the initial lease term. Expenditures
for maintenance and repairs, which do not extend the economic useful life of the related assets, are charged to operations as
incurred, and expenditures, which extend the economic life, are capitalized. When assets are retired, or otherwise disposed of,
the costs and related accumulated depreciation or amortization are removed from the accounts and any gain or loss on disposal
is recognized.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Intangible Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Intangible assets primarily consist of
customer relationships, supplier relationships and trade name/trademarks. They are amortized ratably over their deemed useful
life of one to seven years. The Company assesses the carrying value of its intangible assets for impairment each year. Based on
its assessments, the Company did not incur any impairment charges for the years ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Carrying Value, Recoverability and
Impairment of Long-Lived Assets</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company has adopted Section 360-10-35
of the FASB Accounting Standards Codification for its long-lived assets. Pursuant to ASC Paragraph 360-10-35-17 an impairment
loss shall be recognized only if the carrying amount of a long-lived asset (asset group) is not recoverable and exceeds its fair
value. The carrying amount of a long-lived asset (asset group) is not recoverable if it exceeds the sum of the undiscounted cash
flows expected to result from the use and eventual disposition of the asset (asset group). That assessment shall be based on the
carrying amount of the asset (asset group) at the date it is tested for recoverability. An impairment loss shall be measured as
the amount by which the carrying amount of a long-lived asset (asset group) exceeds its fair value. Pursuant to ASC Paragraph
360-10-35-20 if an impairment loss is recognized, the adjusted carrying amount of a long-lived asset shall be its new cost basis.
For a depreciable long-lived asset, the new cost basis shall be depreciated (amortized) over the remaining useful life of that
asset. Restoration of a previously recognized impairment loss is prohibited.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to ASC Paragraph 360-10-35-21
the Company's long-lived asset (asset group) is tested for recoverability whenever events or changes in circumstances indicate
that its carrying amount may not be recoverable. The Company considers the following to be some examples of such events or changes
in circumstances that may trigger an impairment review: (a) significant decrease in the market price of a long-lived asset (asset
group); (b) A significant adverse change in the extent or manner in which a long-lived asset (asset group) is being used or in
its physical condition; (c) A significant adverse change in legal factors or in the business climate that could affect the value
of a long-lived asset (asset group), including an adverse action or assessment by a regulator; (d) An accumulation of costs significantly
in excess of the amount originally expected for the acquisition or construction of a long-lived asset (asset group); (e) A current-period
operating or cash flow loss combined with a history of operating or cash flow losses or a projection or forecast that demonstrates
continuing losses associated with the use of a long-lived asset (asset group); and (f) A current expectation that, more likely
than not, a long-lived asset (asset group) will be sold or otherwise disposed of significantly before the end of its previously
estimated useful life. The Company tests its long-lived assets for potential impairment indicators at least annually and more
frequently upon the occurrence of such events.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to ASC Paragraphs 360-10-35-29
through 35-36 Estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall include
only the future cash flows (cash inflows less associated cash outflows) that are directly associated with and that are expected
to arise as a direct result of the use and eventual disposition of the asset (asset group). Estimates of future cash flows used
to test the recoverability of a long-lived asset (asset group) shall incorporate the entity's own assumptions about its
use of the asset (asset group) and shall consider all available evidence. The assumptions used in developing those estimates shall
be reasonable in relation to the assumptions used in developing other information used by the entity for comparable periods, such
as internal budgets and projections, accruals related to incentive compensation plans, or information communicated to others.
However, if alternative courses of action to recover the carrying amount of a long-lived asset (asset group) are under consideration
or if a range is estimated for the amount of possible future cash flows associated with the likely course of action, the likelihood
of those possible outcomes shall be considered. A probability-weighted approach may be useful in considering the likelihood of
those possible outcomes. Estimates of future cash flows used to test the recoverability of a long-lived asset (asset group) shall
be made for the remaining useful life of the asset (asset group) to the entity. For long-lived assets (asset groups) that have
uncertainties both in timing and amount, an expected present value technique will often be the appropriate technique with which
to estimate fair value.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to ASC Paragraphs 360-10-45-4
and 360-10-45-5 an impairment loss recognized for a long-lived asset (asset group) to be held and used shall be included in income
from continuing operations before income taxes in the income statement of a business entity. If a subtotal such as income from
operations is presented, it shall include the amount of that loss. A gain or loss recognized on the sale of a long-lived asset
(disposal group) that is not a component of an entity shall be included in income from continuing operations before income taxes
in the income statement of a business entity. If a subtotal such as income from operations is presented, it shall include the
amounts of those gains or losses. Based on its assessments, the Company did not record any impairment charges for the years ended
December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Shipping and Handling Costs</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Shipping and handling costs are expensed
as incurred as part of cost of revenues. These costs were deemed to be nominal for the years ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Advertising Costs</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Advertising costs are expensed as incurred.
Advertising costs, which are included in selling, general and administrative expenses, were deemed to be nominal for the years
ended December 31, 2019 and 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b><i>Income Taxes</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company accounts for income taxes using
the asset and liability method. Accordingly, deferred tax assets and liabilities are recognized for the future tax consequences
attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective
tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in the tax rate is recognized in income or expense in the period that the change is effective. Income tax benefits
are recognized when it is probable that the deduction will be sustained. A valuation allowance is established when it is more
likely than not that all or a portion of a deferred tax asset will either expire before the Company is able to realize the benefit,
or that future deductibility is uncertain.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Net Loss per Share</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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, preferred stock, restricted stock units, stock options
and warrants are excluded from the diluted net loss per share calculation when their impact is antidilutive. The Company reported
a net loss for the years ended December 31, 2019 and 2018, respectively, and as a result, all potentially dilutive common
shares are considered antidilutive for these periods. The Company had no potentially issuable shares as of December 31, 2019.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Subsequent Events</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><font style="font-size: 8pt"> </font></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in">The Company evaluates
events and/or transactions occurring after the balance sheet date and before the issue date of the financial statements to determine
if any of those events and/or transactions require adjustment to or disclosure in the financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Note 9 — Short Term Debt</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Short Term Debt as of December 31, 2019
and 2018 consisted of the following (in thousands): </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-size: 10pt; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">As
of December 31,</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 10pt; text-align: center"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2019</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2018</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left">Short-Term Debt</td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right"> </td><td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt"> </td>
<td style="font-size: 10pt; text-align: left"> </td><td style="font-size: 10pt; text-align: right"> </td><td style="font-size: 10pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; width: 76%; text-align: left">Chicago Venture Convertible Note payable
(A)</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">658</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">500</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">Revolving Credit Facility (B)</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">168</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">96</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: bold 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 4pt">Total Short-Term Debt</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: right">826</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: bold 10pt Times New Roman, Times, Serif; text-align: right">596</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 20pt"><b><i>(A) Chicago Venture Convertible Note Payable</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On December 31, 2018, the Company issued
a $625,000 principal face amount convertible promissory note (the "Convertible Note") to an investor, which yielded
net proceeds of $500,000 to the Company pursuant to a Securities Purchase Agreement, dated as of December 31, 2018, by and between
the Company and the investor. The Convertible Note bears interest at the rate of 10% per year and is due and payable 10 months
after the date of issuance. The Convertible Note carries an original issue discount of $105,000 and the Company agrees to pay
$20,000 to the Lender to cover its transaction costs incurred with the purchase and sale of the Convertible Note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The agreement states that the Lender has
the right to convert all or part of the outstanding balance into fully paid and non-assessable common stock. The conversion formula
is as follows: The number of shares will equal the amount of the outstanding note balance being converted divided by $0.05 per
share. The Company determined since the value of the underlying equity on the commitment date was $0.0229 per share, was less
than the Lender Conversion Price $0.05, the Company determined there was no beneficial conversion feature.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Lender Conversion Price is subject
to certain adjustment such as down-round features whereby the agreement notes that if the Company were to sell, issue or grant
any common stock, option to purchase common stock, right to reprice, preferred shares convertible into common stock, or debt,
warrants, options or other securities which are convertible, exercisable, or exchangeable for shares of common stock at a price
per share less than the Lender Conversion Price, then the Lender Conversion Price shall be reduced to equal the new lower price,
subject to a floor of $0.01 per share. When and if there is an adjustment under the down-round provision, the Company will analyze
the accounting treatment of the adjustment.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Redemption</i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Redemptions may occur at any time after
the 6-month anniversary of the date of issuance of the Convertible Note with a minimum redemption price equal to the Conversion
Price. If the conversion rate is less than the market price, then the redemptions must be made in cash.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 5, 2019, the Company issued 22,857
shares of common stock for the settlement of approximately $20,000 of short-term debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On October 15, 2019, the Company and
CVP entered into a waiver agreement (the "Waiver Agreement") in connection with CVP delivery of a
redemption notice for $7,600 (the "Redemption Amount") in accordance with that certain Securities Purchase
Agreement, dated as of December 31, 2018, and that certain Convertible Promissory Note issued to the Lender by the Company on
December 31, 2018 (the "Note"). Pursuant to the Waiver Agreement, the Lender agreed to waive certain Equity
Conditions Failures (as defined in the Note) in order to receive shares of common stock of the Company instead of cash to
satisfy the Redemption Amount. In addition, the Company and the Lender agreed to issue such shares below the minimum
redemption conversion price of $1.00 at a modified redemption conversion price equal to $0.210140, which is equal to 70%
multiplied by the lowest closing bid price during the twenty (20) trading days immediately preceding this redemption.
Accordingly, the Company issued the Lender 36,166 shares of common stock to satisfy the Redemption Amount.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>Short-Term Note Extension </i></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On December 31, 2019, Chicago Venture Partners,
LP agreed to extend the previously agreed to pursuant to the terms of the Convertible Promissory Note dated as of December 31,
2018 whereby Chicago Venture Partners, LP will not be entitled to redeem all or any portion of the principal amount of the original
December 31, 2018 Note until March 31, 2020, and the maturity date of the Original Note was extended to March 31, 2020. The Company is currently in negotiations to extend the note.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 20pt"><b><i>(B) Revolving Credit Facility</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 31, 2018, the Company entered
in an agreement with Payplant Alternatives Funds LLC, pursuant to which Payplant may purchase from the Borrowers, in Payplant's
sole and absolute discretion, Eligible Receivables, as that term is defined in the agreement, in exchange for cash advances, subject
to the terms and conditions in the agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On September 21, 2018, the Company entered
into the Payplant Loan and Security Agreement (the "Loan Agreement") with Payplant LLC as agent for Payplant Alternatives
Fund LLC ("Payplant"). Pursuant to the Loan Agreement and the terms set forth in the form of promissory note attached
as Exhibit A to the Loan Agreement, (the "Note"), Payplant, in its sole and absolute discretion, may loan money to
the Borrowers on the basis of purchase orders or invoices issued by the Borrowers to customers for goods and services provided.
The term of any loan made to the Borrowers may not exceed 360 days. The principal amount of any loan will accrue interest at a
30-day rate of 2%, calculated per day. Upon the occurrence and during the continuance of an Event of Default, as defined in the
Loan Agreement, interest will accrue at a rate equal to the interest rate plus 0.42% per 30 days. In no event will interest, when
combined with all fees that may be characterized as interest, exceed the Maximum Rate, as defined in the Loan Agreement. All computations
of interest will be made on the basis of a 360-day year. The Borrowers will have the right to prepay any loan upon the payment
of a premium of at least 30 days of interest.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As security for the repayment of any loans
and the performance of the Borrowers' Obligations, as defined in the Loan Agreement, the Borrowers granted to Payplant a
security interest in the Collateral, as defined in the Loan Agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2019 and December 31,
2018, the principal amount outstanding under the Loan Agreement was approximately $168,000 and $96,000, respectively and is included
in Short Term Debt in the consolidated financial statements.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Note 10 — Credit Risk and Concentrations</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 27.5pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 27.5pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The following table sets forth the percentages
of revenue derived by the Company from those customers, which accounted for at least 10% of revenues during the years ended December
31, 2019 and 2018 (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="14" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">For
the Years Ended<br /> December 31</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2019</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="6" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">2018</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom">
<td style="font-size: 10pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">$</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">%</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">$</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">%</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; width: 52%; text-align: left">Customer A</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">3,305</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">49</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">%</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">2,005</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">38</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer B</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">999</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">15</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer C</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">672</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">10</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer D</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">633</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">12</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left">Customer E</td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">-</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">523</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="font: 10pt Times New Roman, Times, Serif; text-align: right">10</td><td style="font: 10pt Times New Roman, Times, Serif; text-align: left">%</td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0; text-indent: 0.5in"><font style="background-color: White">As of
December 31, 2019 and 2018, Customer A represented approximately 75% and 27%, of total accounts rec</font>eivable, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">For the year ended December 31, 2019, four
vendors represented approximately 31%, 23%, 15% and 10% of total purchases. Purchases from these vendors during the year ended
December 31, 2019 were $1.3 million, $1.0 million, $0.6 million and $0.4 million. For the year ended December 31, 2018, two vendors
represented approximately 20% and 11% of total purchases. Purchases from these vendors during the year ended December 31, 2018
were $0.4 million and $0.2 million. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As of December 31, 2019, three vendors
represented approximately 28%, 13% and 13% of total accounts payable. As of December 31, 2018, three vendors represented approximately
40%, 15% and 12% of total gross accounts payable .</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>Note 11 — Commitments and Contingencies
</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Operating Leases </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Our principal executive offices were located
at 2355 Dulles Corner Blvd., Suite 600, Herndon, Virginia 20171. We leased these premises, which consisted of approximately 11,000
square feet, pursuant to a 29-month lease that expired on September 30, 2018. Our gross monthly rent was approximately $30,000
through December 31, 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On October 1, 2018, the Company's
principal executive offices moved to 13880 Dulles Corner Lane, Suite 175, Herndon, Virginia 20171. We lease these premises, which
consists of approximately 5,800 square feet, pursuant to a lease that expires on November 30, 2021. Provided that there is no
event of default under this lease, rent will be abated for the last 8 calendar months of the term prior to the expiration date.
The total amount of rent expense under the leases is recognized on a straight-line basis over the term of the leases. As of December
31, 2019 and 2018, prepaid rent was $22,590 and $5,300, respectively. Rent expense under the operating leases for the years ended
December 31, 2019 and 2018 was approximately $100,000 and $288,000, respectively.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Future minimum lease payments under the
above operating lease commitments at December 31, 2019 are as follows (in thousands of dollars):</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"> </p>
<table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
<tr style="vertical-align: bottom">
<td style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: left">For the Years
Ending December 31,</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td colspan="2" style="border-bottom: Black 1.5pt solid; font: bold 10pt Times New Roman, Times, Serif; text-align: center">Operating
Lease<br /> Amounts</td><td style="font: bold 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; width: 88%; text-align: left">2020</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%"> </td>
<td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left">$</td><td style="font: 10pt Times New Roman, Times, Serif; width: 9%; text-align: right">122</td><td style="font: 10pt Times New Roman, Times, Serif; width: 1%; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: White">
<td style="font: 10pt Times New Roman, Times, Serif; text-align: left; padding-bottom: 1.5pt">2021</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt"> </td>
<td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: left"> </td><td style="border-bottom: Black 1.5pt solid; font: 10pt Times New Roman, Times, Serif; text-align: right">116</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 1.5pt; text-align: left"> </td></tr>
<tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
<td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left">Total</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt"> </td>
<td style="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: left">$</td><td style="border-bottom: Black 4pt double; font: 10pt Times New Roman, Times, Serif; text-align: right">238</td><td style="font: 10pt Times New Roman, Times, Serif; padding-bottom: 4pt; text-align: left"> </td></tr>
</table>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i> </i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Litigation</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 24pt"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">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.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On February 20, 2019, Inpixon, the Company
and Atlas Technology Group, LLC ("Atlas") entered into a settlement agreement (the "Settlement Agreement")
in connection with the satisfaction of an arbitration award in an aggregate amount of $1,156,840 plus pre-judgment interest equal
to an aggregate of $59,955 (the "Award") granted to Atlas following arbitration proceedings arising out of an engagement
agreement, dated September 8, 2016, by and between Atlas and Inpixon as well as its subsidiaries, including the predecessor to
the Company (the "Engagement Agreement").</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Pursuant to the Settlement Agreement, Atlas
agreed to (a) reduce the Award by $275,000 resulting in a net award of $941,795 (the "Net Award") and (b) accept an
aggregate of 749,440 shares of freely-tradable common stock of Inpixon (the "Settlement Shares"), in satisfaction
of the Award, which was determined by dividing 120% of the Net Award by $1.508, which was the "minimum price," as
defined under Nasdaq Listing Rule 5635(d), of Inpixon's common stock. The closing occurred on February 21, 2019.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Award is deemed satisfied in full and
the parties are deemed to have released each other from any claims arising out of the Engagement Agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In connection with the Spin-off, the Company
and Inpixon each agreed pursuant to the terms and conditions of that certain Separation and Distribution Agreement, dated August
7, 2018, as amended, that 50% of the costs and liabilities related to the arbitration action arising from the Engagement Agreement
would be shared by each party following the spin-off. As a result, the Company is obligated to indemnify Inpixon for half of the
total amount paid by Inpixon to satisfy the Award.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">In the event that the total net proceeds
received by Atlas or its designees from the sale of the Settlement Shares (exclusive of brokerage fees) exceeds the amount of
the Net Award, Atlas agreed to deliver an amount equal to the difference between the sale proceeds and the Net Award to the legal
counsel for Inpixon and the Company to be applied against fees incurred in connection with the arbitration and the Settlement
Agreement.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company has reclassified its obligation
of $565,081 in its financial statements from Accounts Payable at December 31, 2018 to Payable to related party. The balance of
this obligation as of December 31, 2019 including interest is $616,000.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">   </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Gain on Earnout</i></b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Under the terms of the asset purchase agreement
between Integrio and Emtec Federal, LLC (its wholly owned subsidiary) (collectively, the "Seller") and Inpixon and
SGS (collectively, the "Buyer"), the Seller was eligible for an earnout that was included as part of the purchase
consideration. During 2019 the Company determined that the Seller was ineligible for a portion of the earnout as the Seller did
not meet the terms of the earnout provisions under the agreement and therefore recorded a gain on earnout of $62,000 which is
included in the operating expenses section of the consolidated statement of operations.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Note 12 — Stockholders' Deficit</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Authorized capital</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The Company is authorized to issue 500,000,000
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 December 31, 2019, 500,000,000 common stock shares authorized; 482,923
shares were issued and 407,544 shares are outstanding. No preferred stock has been designated or issued. </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Equity incentive plan</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 30, 2018, the board of directors
of the Company and its sole director approved the Company's 2018 Equity Incentive Plan (the "2018 Plan"), which enables the Company
to grant stock options, share appreciation rights, restricted stock, restricted stock units, share awards, performance unit awards,
and cash awards to associates, directors, consultants, and advisors of the Company and its affiliates, and to improve the ability
of the Company to attract, retain, and motivate individuals upon whom the Company's sustained growth and financial success depend,
by providing such persons with an opportunity to acquire or increase their proprietary interest in the Company. Stock options
granted under the 2018 Plan may be non-qualified stock options or incentive stock options, within the meaning of Section 422(b)
of the Internal Revenue Code of 1986. Each option, or portion thereof, that is not an incentive stock option, shall be considered
a non-qualified option. The option price must be at least 100% of the fair market value on the date of grant and if an Incentive
Stock Option is issued to a 10% or greater shareholder the grant must be 110% of the fair market value on the date of the grant.
The 2018 Plan is to be administered by the Board, which shall have discretion over the awards and grants thereunder. The aggregate
maximum number of shares of common stock for which stock options or awards may be granted pursuant to the 2018 Plan is 8,000,000,
which number will be automatically increased on the first day of each quarter, beginning on January 1, 2019 and for each quarter
thereafter, by a number of shares of common stock equal to the least of (i) 1,000,000 shares,(ii) 10% of the shares of common
stock issued and outstanding on that date, or (iii) a lesser number of shares that may be determined by the board. No awards may
be issued after July 30, 2028. As of December 31, 2019, there were no awards outstanding under the plan. As of December 31, 2019,
there were 8,000,000 securities available for future issuance under the 2018 Plan.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">  </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Common stock</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 31, 2018, as part of the Spin-off,
the Company entered into a Trademark License Agreement with Sysorex Consulting, Inc. for use of the mark "Sysorex".
As consideration for the license, the Company issued 10,000 shares of its common stock with a fair value of $40,000 to Sysorex
Consulting, Inc. and has agreed to issue to Sysorex Consulting, Inc. 2,500 shares of its common stock on each anniversary of the
completion of the Spin-off until the License Agreement is terminated. The Company has expensed the licensing fee during the year
ended December 31, 2018.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">During the year ended December 31, 2018,
the Company issued 6,482 shares of common stock with an issuance date fair value of approximately of $25,000 for services provided.
The services being provided are debt consolidation funding and capital funding raise through securities issuance.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">During the year ended December 31, 2019,
the Company issued 59,023 shares of common stock with issuance date fair values of approximately 28,000 for payment of short-term
debt.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Stock options</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On August 31, 2018, as part of the Spin-off,
the Company issued replacement Sysorex stock options to employees of Sysorex who formerly held Inpixon stock options, to purchase
an aggregate of 19 shares of common stock with exercise prices ranging from $ 22.76 to $224.12 and expiration dates ranging from
March 2023 to February 2027. The options vest as follows: (i.) every month after the grant date up to 4 years or (ii.) 25% upon
the issuance and every year thereafter after on the grant date.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><u>Treasury stock</u></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">As part of the Spin-off, and in connection
with the initial Distribution of its common stock, the Company has 117,917 shares of common stock reserved for issuance in treasury
(a) for the holders of certain Parent warrants who will be entitled to receive shares of the Company's common stock if the
warrants are exercised, and (b) for the holders of Parent securities that were subject to beneficial ownership limitations in
connection with the distribution and for future issuances.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">During the year ended December 31,
2019 and 2018, the Company reissued 5,871 shares and 36,667 shares, respectively, of common stock from treasury in connection
with the exercise of Parent warrants.</p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Reverse Stock Split</b></p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"> </p>
<p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">On July 25, 2019, the Company filed a
Certificate of Amendment to its Articles of Incorporation with the Secretary of State of the State of Nevada to affect a
1-for-100 reverse stock split of the Company's issued and outstanding shares of common stock, effective as of July 30,
2019. The financial statements and accompanying notes give effect to the 1-for-100 reverse stock split as if they occurred at
the first period presented. There was no change to reported net loss in any period presented.</p>
On February 20, 2019, Inpixon, the Company and Atlas Technology Group, LLC ("Atlas") entered into a settlement agreement (the "Settlement Agreement") in connection with the satisfaction of an arbitration award in an aggregate amount of $1,156,840 plus pre-judgment interest equal to an aggregate of $59,955 (the "Award") granted to Atlas following arbitration proceedings arising out of an engagement agreement, dated September 8, 2016, by and between Atlas and Inpixon as well as its subsidiaries, including the predecessor to the Company (the "Engagement Agreement"). Pursuant to the Settlement Agreement, Atlas agreed to (a) reduce the Award by $275,000 resulting in a net award of $941,795 (the "Net Award") and (b) accept an aggregate of 749,440 shares of freely-tradable common stock of Inpixon (the "Settlement Shares"), in satisfaction of the Award, which was determined by dividing 120% of the Net Award by $1.508, which was the "minimum price," as defined under Nasdaq Listing Rule 5635(d), of Inpixon's common stock. The closing occurred on February 21, 2019.
0.50
565081
616000
5300
22590
100000
288000
30000
62000
We leased these premises, which consisted of approximately 11,000 square feet, pursuant to a 29-month lease that expired on September 30, 2018.
1659000
2540000
-4778000
-4778000
Chicago Venture Convertible Note Payable On December 31, 2018, the Company issued a $625,000 principal face amount convertible promissory note (the "Convertible Note") to an investor, which yielded net proceeds of $500,000 to the Company pursuant to a Securities Purchase Agreement, dated as of December 31, 2018, by and between the Company and the investor. The Convertible Note bears interest at the rate of 10% per year and is due and payable 10 months after the date of issuance. The Convertible Note carries an original issue discount of $105,000 and the Company agrees to pay $20,000 to the Lender to cover its transaction costs incurred with the purchase and sale of the Convertible Note. The agreement states that the Lender has the right to convert all or part of the outstanding balance into fully paid and non-assessable common stock. The conversion formula is as follows: The number of shares will equal the amount of the outstanding note balance being converted divided by $0.05 per share. The Company determined since the value of the underlying equity on the commitment date was $0.0229 per share, was less than the Lender Conversion Price $0.05, the Company determined there was no beneficial conversion feature. The Lender Conversion Price is subject to certain adjustment such as down-round features whereby the agreement notes that if the Company were to sell, issue or grant any common stock, option to purchase common stock, right to reprice, preferred shares convertible into common stock, or debt, warrants, options or other securities which are convertible, exercisable, or exchangeable for shares of common stock at a price per share less than the Lender Conversion Price, then the Lender Conversion Price shall be reduced to equal the new lower price, subject to a floor of $0.01 per share. When and if there is an adjustment under the down-round provision, the Company will analyze the accounting treatment of the adjustment. Redemption Redemptions may occur at any time after the 6-month anniversary of the date of issuance of the Convertible Note with a minimum redemption price equal to the Conversion Price. If the conversion rate is less than the market price, then the redemptions must be made in cash. On July 5, 2019, the Company issued 22,857 shares of common stock for the settlement of approximately $20,000 of short-term debt. On October 15, 2019, the Company and an accredited investor (the "Lender") entered into a waiver agreement (the "Waiver Agreement") in connection with the Lender's delivery of a redemption notice for $7,600 (the "Redemption Amount") in accordance with that certain Securities Purchase Agreement, dated as of December 31, 2018, and that certain Convertible Promissory Note issued to the Lender by the Company on December 31, 2018 (the "Note"). Pursuant to the Waiver Agreement, the Lender agreed to waive certain Equity Conditions Failures (as defined in the Note) in order to receive shares of common stock of the Company instead of cash to satisfy the Redemption Amount. In addition, the Company and the Lender agreed to issue such shares below the minimum redemption conversion price of $1.00 at a modified redemption conversion price equal to $0.210140, which is equal to 70% multiplied by the lowest closing bid price during the twenty (20) trading days immediately preceding this redemption. Accordingly, the Company issued the Lender 36,166 shares of common stock to satisfy the Redemption Amount. Short-Term Note Extension On December 31, 2019, Chicago Venture Partners, LP agreed to extend the previously agreed to pursuant to the terms of the Convertible Promissory Note dated as of December 31, 2018 whereby Chicago Venture Partners, LP will not be entitled to redeem all or any portion of the principal amount of the original December 31, 2018 Note until March 31, 2020, and the maturity date of the Original Note was extended to March 31, 2020.
Revolving Credit Facility On August 31, 2018, the Company entered in an agreement with Payplant Alternatives Funds LLC, pursuant to which Payplant may purchase from the Borrowers, in Payplant's sole and absolute discretion, Eligible Receivables, as that term is defined in the agreement, in exchange for cash advances, subject to the terms and conditions in the agreement. On September 21, 2018, the Company entered into the Payplant Loan and Security Agreement (the "Loan Agreement") with Payplant LLC as agent for Payplant Alternatives Fund LLC ("Payplant"). Pursuant to the Loan Agreement and the terms set forth in the form of promissory note attached as Exhibit A to the Loan Agreement, (the "Note"), Payplant, in its sole and absolute discretion, may loan money to the Borrowers on the basis of purchase orders or invoices issued by the Borrowers to customers for goods and services provided. The term of any loan made to the Borrowers may not exceed 360 days. The principal amount of any loan will accrue interest at a 30-day rate of 2%, calculated per day. Upon the occurrence and during the continuance of an Event of Default, as defined in the Loan Agreement, interest will accrue at a rate equal to the interest rate plus 0.42% per 30 days. In no event will interest, when combined with all fees that may be characterized as interest, exceed the Maximum Rate, as defined in the Loan Agreement. All computations of interest will be made on the basis of a 360-day year. The Borrowers will have the right to prepay any loan upon the payment of a premium of at least 30 days of interest. As security for the repayment of any loans and the performance of the Borrowers' Obligations, as defined in the Loan Agreement, the Borrowers granted to Payplant a security interest in the Collateral, as defined in the Loan Agreement. As of December 31, 2019 and December 31, 2018, the principal amount outstanding under the Loan Agreement was approximately $168,000 and $96,000, respectively and is included in Short Term Debt in the consolidated financial statements.