UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of
earliest event reported):
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (I.R.S. Employer Identification No.) |
(Address of Principal Executive Offices)
Registrant’s telephone number, including area code
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
| None | N/A | N/A |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth
company
If an emerging growth company, indicate by check
mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act.
Item 2.02. Results of Operations and Financial Condition.
On November 16, 2022, Sysorex, Inc. (the “Company”) issued a press release regarding its financial results for the quarter ended September 30, 2022. A copy of this press release is attached hereto as Exhibit 99.1 and incorporated herein by reference. The information contained in the website is not a part of this current report on Form 8-K.
The information included in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing. The information set forth under this Item 7.01 shall not be deemed an admission as to the materiality of any information in this Current Report on Form 8-K that is required to be disclosed solely to satisfy the requirements of Regulation FD.
Item 8.01. Other Events.
As previously reported, on March 24, 2022, the Company executed Heads of Terms (“Heads of Terms”) with Ostendo Technologies, Inc. (“Ostendo”) which included certain binding and non-binding provisions. Pursuant to the Heads of Terms, the Company and Ostendo agreed to certain terms related to the Company’s sale of its Ethereum mining assets and certain associated real property (“Assets”) to Ostendo for Ostendo preferred stock. The parties agreed that the Assets to be sold would not include the Company’s Ether funds generated prior to and held at Closing. The definitive terms of the sale of Assets were to be set forth in definitive transaction agreements to be executed by the parties. Additionally, pursuant to the Heads of Terms, the Company has agreed to make a non-refundable deposit of $1,600,000 (“Deposit”) to be credited toward the purchase of an additional 166,667 shares of Ostendo’s preferred stock.
The Company has in good faith worked with Ostendo to ensure all closing terms and closing conditions were mutually agreed upon, however, the parties have not entered into definitive transaction agreements and accordingly, it was determined in November 2022 that the Ostendo transaction will not proceed. Pursuant to the terms of the Heads of Terms, Ostendo is required to issue to the Company shares equal to the initial deposit made by the Company of $1,600,000. In November 2022, the Company received a certificate, dated November 14, 2022, for the shares, but the Company has not received confirmation that the Certificate of Designations for the preferred stock has been filed and accepted by the California Secretary of State. Ostendo has indicated that it is expected this week.
If the Company receives this document and it is dated on or before November 14, 2022, then the preferred stock will have been validly issued as of that date. If it is dated after November 14, 2022, the certificate for the shares is invalid since it purports to issue something that did not exist at the time. Accordingly, the Company is unable to determine definitively whether it currently holds these shares or not.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |
| 99.1 | Press release issued by the registrant on November 16, 2022. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| 1 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| SYSOREX, INC. | ||
| Date: November 16, 2022 | By: | /s/ Wayne Wasserberg |
| Wayne Wasserberg | ||
| Chief Executive Officer | ||
2
Exhibit 99.1
SYSOREX REPORTS GROWTH IN GOVERNMENT SERVICES BUSINESS
AND BROADENING OF ITS DATA CENTER BUSINESS
Sysorex Government Services reports over $13 million in new orders
HERNDON, Va., November 16, 2022 (GLOBE NEWSWIRE) -- Sysorex (OTCQB: SYSX) today provided a business update to its shareholders.
Wayne Wasserberg, CEO of Sysorex, commented, “I am pleased to report our revenue for the third quarter increased by over 85% to $3.5 million, while at the same time, we reduced our operating expenses by nearly 15%. We are more confident than ever in the outlook for our government services business, as illustrated by the rapid growth in our sales pipeline. As a result, we believe our government services business is on a path to long-term, positive cash flow. Moreover, we have broadened and diversified the business model for our TTM Digital Assets & Technology (TTM) subsidiary, following the transition of Ethereum mining from Proof-of-Work to Proof-of-Stake during the third quarter of 2022. We are repurposing certain assets to offer Artificial Intelligence/Machine Learning (AI/ML) processing and general server hosting, which we believe will also provide long-term and sustainable cash flow. Meanwhile, we continue to explore the sale of certain TTM assets, which has the potential to drive significant value for shareholders.”
Sysorex Government Services Update
Sysorex Government Services, Inc. (SGS) continues to grow its government business. As of September 30, 2022, the Company generated year-to-date revenues of approximately $12 million, with approximately $2.1 million in profit. Heading into the fourth quarter of 2022, SGS has already booked nearly $13 million in new orders, expected to be recognized as revenue over the next four quarters.
SGS has achieved significant year-over-year margin improvement, attributable to expansion of SGS´s supplier network, and cost savings measures implemented by management, including a systems automation upgrade. The new systems integration provides end-to-end automation and has enabled SGS to provide more efficient order processing and invoicing.
With the improved system, SGS has been able to optimize complex project implementation management, which has been well received by its government clients. Efficiencies realized by SGS´s investment in this technology also facilitated a reduction in headcount, whereas the quotation entry system has been streamlined and key employees are able to spend more time dedicated to direct customer interaction.
TTM Digital Assets & Technologies Update
Since Proof of Stake, Ethereum mining companies have begun the process of changing their business model to continue utilization of their mining assets, as the GPUs can be repurposed for a number of other profitable business models. The TTM assets can be used for cloud computing, datacenter hosting, simulation & modeling, virtual reality, artificial intelligence, and gaming.
TTM is currently evaluating all its options including hosting client computing, Artificial Intelligence, Machine Language, Modeling & Simulation, Datacenter hosting, and the sale of its assets to mitigate the loss of revenue with the end of Eth mining.
TTM assets, which include a data center in Upstate New York and approximately 11,000 GPUs, were primarily performing Ethereum mining until Ethereum changed from Proof-of-Work to Proof-of-Stake on September 15, 2022. Thereafter, mining activities were temporarily shut down.
TTM facilities are designed for, and can support, numerous computer focused tasks, which may include AI/ML processing, and general server hosting. To support multi-tenant customer growth, TTM has automated many facility functions so the headcount can stay low to focus on revenue generation and margin.
TTM´s data center is located close to renewable power and can support significant growth for hosted customers, including positioning for Environmental, Social, and Governance (ESG) compliant operations in the future. The assets include substantial server class hardware resources, which are well suited to the rapidly growing AI/ML market, and may be utilized to support hosted computing for both private and marketplace customers.
TTM is currently bringing on a hosting client to diversify operations. With ample floor space and power costs below the industry average, TTM intends to develop a hosted customer business that is expected to generate recurring revenue and more predictable margins.
TTM management has put together a plan that is designed to allow for profitable mining that includes negotiating lower power costs for the data center and operating when power costs are at their lowest (overnight) via manual and automated monitoring.
The Company believes that until any eventual sale of TTM’s assets, TTM can continue utilizing its datacenter with activities that will likely be at a breakeven or profitable state with hosting and AI/ML processing expected to drive significantly higher margins over time.
The Company worked in good faith with Ostendo to ensure all closing terms and closing conditions were mutually agreed upon. As of November 2022, the parties have determined that the transaction will not proceed.
ABOUT SYSOREX, INC.
Sysorex, Inc. (Company) is a data center owner and operator. The Company operates its wholly owned subsidiary, Sysorex Government Services, Inc. (SGS), a business that provides information technology products, solutions and services to federal, state, and local government, including system integrators. The Company currently owns and operates approximately 11,000 NVIDIA GPUs at its datacenter in Locksport, NY.
Safe Harbor Statement
All statements in this release that are not based on historical fact are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While management has based any forward-looking statements included in this release on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties and other factors, many of which are outside of the control of Sysorex, Inc. and its subsidiaries, which could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not limited to, the fluctuation of economic conditions, the impact of COVID-19 on Sysorex’s results of operations, Sysorex’s ability to integrate the products and business from recent acquisitions into its existing business, the performance of management and employees, the regulatory landscape as it relates to privacy regulations and their applicability to Sysorex’s technology. Other factors that are detailed in Sysorex’s periodic and current reports available for review at sec.gov. Furthermore, Sysorex operates in a highly competitive and rapidly changing environment where new and unanticipated risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. Sysorex disclaims any intention to, and undertakes no obligation to, update or revise forward-looking statements.
Investor Relations
Crescendo Communications, LLC
David Waldman/Natalya Rudman
Tel: (212) 671-1020
Email: SYSX@crescendo-ir.com
Cover |
Nov. 16, 2022 |
|---|---|
| Cover [Abstract] | |
| Document Type | 8-K |
| Amendment Flag | false |
| Document Period End Date | Nov. 16, 2022 |
| Entity File Number | 000-55924 |
| Entity Registrant Name | SYSOREX, INC. |
| Entity Central Index Key | 0001737372 |
| Entity Tax Identification Number | 68-0319458 |
| Entity Incorporation, State or Country Code | NV |
| Entity Address, Address Line One | 13880 Dulles Corner Lane |
| Entity Address, Address Line Two | Suite 120 |
| Entity Address, City or Town | Herndon |
| Entity Address, State or Province | VA |
| Entity Address, Postal Zip Code | 20171 |
| City Area Code | (800) |
| Local Phone Number | 929-3871 |
| Written Communications | false |
| Soliciting Material | false |
| Pre-commencement Tender Offer | false |
| Pre-commencement Issuer Tender Offer | false |
| Entity Emerging Growth Company | true |
| Elected Not To Use the Extended Transition Period | false |