Equity

9 Months Ended

Sep. 30, 2021

Stockholders' Equity Note [Abstract]

Equity

Note 12 — Equity

As discussed in Note 2 Basis of Presentation the Company completed a reverse merger of Sysorex and TTM Digital with TTM Digital being the accounting acquirer and reporting entity. In a reverse merger, the capital accounts of the reporting entity (TTM Digital) are restated to reflect the legal capital structure of the legal acquirer (Sysorex). As a result, the share data of the reporting entity has been retroactively restated for all periods presented to the equivalent share values of Sysorex for the capital transaction activity of TTM Digital, as if the reverse merger occurred on January 1, 2020. The share data of the reporting entity has been retroactively stated for all periods presented to the equivalent share values of Sysorex. The Company is authorized to issue 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 September 30, 2021, 500,000,000 common stock shares were authorized; 146,269,591 shares were issued, and 146,194,212 shares were outstanding. No preferred stock has been designated or issued.

As of December 31, 2019, the Company had 55,776,240 shares outstanding. During the quarter ended September 30, 2020, the Company issued 10,655,680 shares. As of December 31, 2020, the Company had 66,431,290 shares outstanding.

During the quarter ended March 31, 2021, the Company issued to Moon Manager LLC, 14,607,980 shares and issued the rights to an additional 2,000,000 shares.

Effective on April 1, 2021, TTM Digital entered into an Asset Contribution and Exchange Agreement (Mining Equipment) to acquire approximately 4,500 GPUs with CoreWeave. In connection with the Contribution and Exchange Agreement, TTM Digital issued equity representing 28.65% of the pre-merger equity outstanding for TTM Digital. In settlement of the Contribution and Exchange Agreement the Company issued 35,588,548 shares valued at $12 million.

On April 14, 2021, the reverse merger of Sysorex and TTM Digital closed. As a result of the reverse merger, the Company recognized the 494,311 shares outstanding of the existing Sysorex Shareholders and the 75,379 shares of Treasury stock of Sysorex that are part of the legal capital structure. The Company recorded $0.03 million as purchase consideration on the recognition of the existing Sysorex Shareholders share by the reporting entity.

As discussed in Note 2, the majority of the Sysorex debt, certain liabilities classified as current and a forward consulting contract with a former Sysorex Board Member (the “Debt Items”) aggregating $19.4 million were converted to 34,097,255 Sysorex shares when fully issued (the “Sysorex Recapitalization”). 25,985,633 shares were immediately issued, prefunded rights were exchanged from an investor’s issued shares for 5,111,622 shares and the right to receive 3,000,000 shares of Sysorex stock at a future date at the option of the holder subject to certain events.

During the three months ended June 30, 2021, the Company additionally issued an aggregate of 404,820 shares, comprised of 339,820 pre-merger shares for corporate advisory expertise and consulting services to be provided in relation to the Merger at a value of $1.9 million, and 65,000 shares in exchange for consulting and legal services at a value of $0.04 million.

During the three months ended September 30, 2021, the Company issued an aggregate of 1,025,000 shares for corporate advisory expertise and consulting services at a value of $0.5 million. The Company as noted in Note 10 – Debt, issued convertible debt and warrants. The Company used a ‘With and Without’ valuation method to obtain a fair value for the warrants as of the July grant date. This valuation method yielded a fair value of $0.18 warrant share. The warrants were valued at $0.8 million and recorded in equity. The Warrants are exercisable for five years from the original issue date.

Stock Options  

A summary of stock option activity for the nine-month period ended September 30, 2021 is as follows:

	Number of Options (in Shares)		Weighted Average Exercise Price
Outstanding, January 1, 2020		-		-
Granted		1,656,000	$	2.00
Exercised		-		-
Forfeited or cancelled		-		-
Outstanding, September 30, 2021		1,656,000	$	2.00
Exercisable, September 30, 2021		1,656,000	$	2.00

The Company’s valued the stock options based on the Monte Carlo valuation methodology on July 20, 2021, the stock options grant date. The stock options were immediately vested and have a life of ten years. The value of the awards was determined to be approximately $0.4 million over the derived service period. The fair value of the common stock as of the grant date was determined to be $0.24 per share. The Company recognized approximately $0.03 million of stock-based compensation for the quarter ended September 30, 2021. The unrecognized stock-based compensation of $0.3 million will be recorded over the derived service period ending in the second quarter 2024.