Discontinued Operations

3 Months Ended

Mar. 31, 2023

Discontinued Operations [Abstract]

Discontinued Operations

Note 5 — Discontinued Operations

In the fall of 2021, the Company made the decision to divest certain mining equipment and the data center of the TTM Digital reporting unit and commenced discussions with a third party to execute an asset sale in the spring of 2022. On March 24, 2022, the Company executed Heads of Terms (“Heads of Terms”) with Ostendo Technologies, Inc. (“Ostendo”). Pursuant to the Heads of Terms, the Company and Ostendo agreed to certain terms related to the Company’s sale of its Ethereum mining assets and certain associated real property (“Assets”) to Ostendo for Ostendo preferred stock. The Company agreed to make a non-refundable deposit of $1,600,000 (“Deposit”) to be credited toward the purchase of an additional 166,667 shares of Ostendo’s preferred stock. The Company has in good faith worked with Ostendo to ensure all closing terms and closing conditions were mutually agreed upon, however, the parties have not entered into definitive transaction agreements and accordingly, it was determined in November 2022 that the transaction will not proceed. In November 2022, the Company received a certificate, dated November 14, 2022, for the shares, and thereafter, the Company received confirmation that the Certificate of Designations for the preferred stock had been filed and accepted by the California Secretary of State on November 14, 2022.

Subsequent to the Ostendo transaction not proceeding, TTM Digital explored alternate long-term uses for its assets and concluded that mining other coins was not a feasible path forward due to the volatility in crypto prices, and repurposing its assets was not a viable path forward as it would require significant upfront investments to its datacenter infrastructure. TTM Digital is currently exploring sales opportunities for its GPU assets and datacenter located in Lockport, NY.

As a result of the decision to divest certain operating assets of the TTM Digital reporting unit, the Company has determined that subject assets met the definition of assets held for sale as defined by ASC 205-20 – Presentation of Financial Statements – Discontinued Operations. The Company determined the TTM Assets represented discontinued operations as it constituted a disposal of a significant component and a strategic shift that will have a material effect on the Company’s operations and financial results. As a result, the Company reclassified the balances and activities of the TTM Assets from their historical presentation to assets held for sale and to loss from discontinued operations on the consolidated statements of operations for the periods presented.

The carrying value of the TTM Digital asset disposal group was $3.9 million and $4.7 million as of March 31, 2023, and December 31, 2022, and the Company recorded approximately $0.8 million and $4.1 million of impairment of fixed assets in its discontinued operations. The following table details the assets and liabilities of the Company’s TTM Assets that were classified as assets held for sale and discontinued operations for the periods presented (in thousands):

	March 31,		December 31,
	2023		2022
Current Assets
Mining facilities, net		1,083		1,083
Mining equipment, net		2,691		3,491
Total Current Assets	$	3,774	$	4,574
Intangible assets, net		89		89
Total Assets associated with discontinued operations	$	3,863	$	4,663

The following table presents the TTM Digital assets statement of operations line items classified as discontinued operations included within loss from discontinued operations for the three-months ended March 31, 2023, and 2022 (in thousands):

	2023			2022
Revenues
Mining income	$	-		$	2,040
Total revenues		-			2,040
Operating costs and expenses
Mining cost		17			527
General and administrative		48			256
Impairment of fixed assets		800			-
Depreciation		-			457
Total operating costs and expenses		865			1,240
Income (Loss) from Operations		(865	)		800
Income (Loss) before taxes and equity method investee		(865	)		800
Provision for income taxes		-			-
Net income (loss) from discontinued operations	$	(865	)	$	800

The following table summarizes the net cash flows from discontinued operations of TTM Digital (in thousands):

	For the Three Months Ended March 31,
	2023			2022
Net cash used in operating activities – discontinued operations		(65	)		(616	)