Equity

3 Months Ended

Mar. 31, 2023

Stockholders' Equity Note [Abstract]

Equity

Note 10 — Equity

On September 22, 2022, the Company’s stockholders voted to approve an amendment to the Articles of Incorporation to increase the total number of authorized shares of the Company’s capital stock from 510,000,000 shares, par value $0.00001 per share, to 3,010,000,000 shares, of which 3,000,000,000 shares will be designated as common stock and 10,000,000 shares will be designated as preferred stock, in accordance with the voting results listed below. As of March 31, 2023 and December 31, 2022, 2,484,501,880 shares were issued, 2,484,426,501 shares were outstanding. No preferred stock has been designated or issued.

Private Placement Agreement

On October 18, 2022, the Company sold to the Investors an aggregate of 500,000,000 Units, consisting of 500,000,000 shares of common stock, warrant 1s to acquire 500,000,000 shares of common stock, and warrant 2s to acquire 500,000,000 shares of common stock, for total consideration paid to the Company of $500,000. Pursuant to the terms of the SPA, the Company agreed to sell to each Investor a number of Units of securities of the Company (each, a “Unit”), at a purchase price of $0.001 per Unit, with each Unit being comprised of: (i) one share of common stock (each, a “Purchased Share” and collectively, the “Purchased Shares”); (ii) a warrant to acquire one share of common stock at an exercise price of $0.001 per share, which exercise price will not be subject to adjustment as a result of any forward or reverse split of the common stock (each, a “Warrant 1”); and (iii) a warrant to acquire one share of common stock at an exercise price of $0.001 per share, which exercise price will not be subject to adjustment as a result of any forward or reverse split of the common stock (each, a “Warrant 2”). Pursuant to the terms of the SPA, the Company agreed to use all commercially reasonable efforts to have the registration statement declared effective by the SEC within 90 days of October 18, 2022 (the “Registration Deadline”). If such registration statement has not become effective by the Registration Deadline, and provided that the Registrable Securities cannot otherwise be sold pursuant to Rule 144 pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as of the Registration Deadline, then, subject to the provisions of the SPA and the Initial Registration Rights Agreement, the Company agreed to issue to each Investor:

(i) A number of additional shares of common stock equal to 10% of the Purchased Shares acquired by such Investor on the closing date, with such number of Purchased Shares being adjusted for any forward or reverse splits of the common stock between the closing date and the date of such issuance (the “Additional Shares”); and

(ii) A new warrant (each, a “Warrant 3”) equal to the number of Additional Shares in the applicable issuance.

The Additional Shares and the Warrant 3 will, if applicable, be issuable to the Investors for each 30-day period, or portion thereof, that the registration statement registering the Registrable Securities has not become effective by the Registration Deadline. The Company’s obligation to issue the Additional Shares and the Warrant 3, if applicable, will not arise until the Company has amended its articles of incorporation, via a reverse split of the common stock, an increase of the number of authorized shares of common stock, or some combination thereof, such that the Company has a number of authorized but unissued shares of equal to (1) the number of Additional Shares that are otherwise to be issued plus (2) the number of shares of common stock that may be issuable pursuant to the Warrant 3.

The Company was unable to have the registration statement become effective by January 16, 2023, 90 days past October 18, 2022. The additional shares and Warrant 3 will be issuable for each 30-day period, or portion thereof, that the registrable securities have not become effective. As of June 29, 2023, the Company is obligated to issue an additional 319 million shares of common stock and warrant 3 to purchase an additional 319 million shares of common stock.  For the three months ended March 31, 2023, the Company recorded $0.16 million of penalties as described in the Securities Purchase Agreement, recorded in share derivative liability on the condensed consolidated balance sheets.

Stock Options  

A summary of stock option activity for the three months ended March 31, 2023, is as follows:

	Number of Options (in Shares)		Weighted Average Exercise Price
Outstanding, December 31, 2022		1,607,500	$	2.00
Granted		-	$	-
Exercised		-		-
Forfeited or cancelled		-		-
Outstanding, March 31, 2023		1,607,500	$	2.00
Exercisable, March 31, 2023		1,607,500	$	2.00

Warrants

The following table represents the activity related to the Company’s warrants during the three-month ended March 31, 2023:

	Number of Warrants (in Shares)		Weighted Average Exercise Price
Outstanding, December 31, 2022		1,010,084,263	$	.001	*
Granted		-		-
Exercised		-		-
Outstanding, March 31, 2023		1,010,084,263	$	.001

The weighted average contractual term as of March 31, 2023, is 4.5 years.  

* The exercise price will be determined by a 5-day VWAP price calculation on the exercise date.

Prefunded Warrants

In connection with the Company’s merger with TTM Digital in April 2021 three TTM Digital shareholders accepted prefunded warrants aggregating the right to receive 12,361,622 shares of Company stock. The prefunded warrants were converted to common stock of the Company during the quarter ended March 31, 2022. In addition, a Company debt holder agreed to convert certain of the Company obligations to a fully paid right to receive 3,000,000 shares of Company stock. As the rights to receive shares have been fully paid by the holders, the rights to receive the shares are considered to be issued for the purpose of determining Company Basic shares outstanding. The activity for the Prefunded warrants during the three months ended March 31, 2023 is shown in the table below:

	Prefunded Warrants
Outstanding, December 31, 2022		3,000,000
New issuances		-
Exercised		-
Outstanding, March 31, 2023		3,000,000

Restricted Stock Units

The Company’s restricted stock awards granted to employees and directors of 1,100,000 restricted stock units are fully vested.

Share Derivative Liabilities

As the amount of common stock on an as converted basis as of March 31, 2023, exceeded our authorized share amount, the Company’s outstanding warrants, stock options and vested but unissued restricted stock shares (“RSUs”) were reclassified to derivative liabilities in the consolidated financial statements. This results in non-cash gains or losses each period during the term of the warrants, stock options, RSU vesting period and convertible debt. We will report a noncash loss if our common stock price from the first to last day of a period increase. Conversely, we will report a gain if our common stock price decreases. The losses or gains may be substantial. The table below summarizes the reclassified share derivative liabilities as of March 31, 2023 (dollars in thousands):

	March 31,		December 31,
	2023		2022
Warrants	$	436	$	272
Stock options		1		1
Total share derivative liability	$	437	$	273

Reverse Stock Split

On September 22, 2022, the shareholders of Sysorex, Inc. have approved the Reverse Split and have granted to the Board of Director’s the power to determine the final ratio for the Reverse Split. On November 1, 2022, the Board of Director’s determined the ratio for the Reverse Split is to be 1,000 for 1, with one share of Common Stock being issued for each 1,000 shares of Common Stock issued and outstanding, with any fractional shares of Common Stock resulting therefrom being rounded up to the nearest whole share of Common Stock. The company has submitted the reverse stock split plan for review to FINRA on November 4, 2022. The effective date of the reverse stock will be determined after FINRA’s review.

The Company has included below certain data points that are reported in the unaudited financial statements (“as stated”) and have been disclosed herein as if the effect of the reverse stock split (1000 for 1) has been implemented (“proforma effect”).

			Proforma
	As Stated		Effect
Balance Sheet
Common stock:
Shares Issued:
3/31/2023		2,484,501,880		2,484,502
12/31/2022		2,484,501,880		2,484,502
Shares Outstanding:
3/31/2023		2,484,426,501		2,484,427
12/31/2022		2,484,426,501		2,484,427
Treasury Stock:		75,379		75

		Three Months Ended March 31,
EPS		2023			2022
Weighted Average Shares
Outstanding – basic and diluted	As stated		2,487,426,501			174,980,542
	Proforma		2,487,427			174,981
Net income (loss) per share:
Continuing operations	As stated		(0.0004	)		(0.021	)
	Proforma		(0.40	)		(21.0	)
Discontinued Operations	As stated		(0.0003	)		0.004
	Proforma		(0.30	)		4.0