As filed with the Securities and Exchange Commission on ~~December~~November 2117, ~~2018~~ 2022

Registration ~~Statement~~ No. 333- __________

UNITED ~~STATES SECURITIES~~ ~~AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549~~STATES

~~FORM S-1 REGISTRATION~~SECURITIES ~~STATEMENT~~AND ~~UNDER THE~~EXCHANGE ~~SECURITIES ACT OF 1933~~COMMISSION

~~SYSOREX~~Washington, ~~INC~~ D.C. ~~(Exact name of Registrant as specified in its charter)~~20549

Nevada		7371		68-0319458
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification No.)

Form S-1

~~13880 Dulles~~REGISTRATION ~~Corner Lane, Suite 175 Herndon, VA 20171 (800) 929-3871 (Address and telephone number of principal executive offices)~~STATEMENT

~~Zaman Khan Chief~~UNDER ~~Executive~~THE ~~Officer Sysorex,~~SECURITIES ~~Inc. 13880~~ACT ~~Dulles~~OF ~~Corner Lane, Suite 175 Herndon, VA 20171 (800) 929-3871 (Name, address and telephone number of agent for service)~~1933

SYSOREX, INC.

(Exact name of registrant as specified in its charter)

Nevada		7371		68-0319458
(State or other jurisdiction of incorporation or organization)		(Primary Standard Industrial Classification Code Number)		(I.R.S. Employer Identification Number)

13880 Dulles Corner Lane, Suite 120

Herndon, Virginia 20171

Telephone: (800) 929-3871

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Wayne Wasserberg

Chief Executive Officer

13880 Dulles Corner Lane, Suite 120

Herndon, Virginia 20171

Telephone: (800) 929-3871

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

~~Melanie~~Laura ~~Figueroa~~Anthony, Esq. ~~Mitchell Silberberg & Knupp LLP 437 Madison Avenue, 25th Floor New York, NY 10017 Telephone: (917) 546-7707 Facsimile: (917) 546-7677~~

~~Approximate Date~~Craig ofD. ~~Proposed~~Linder, ~~Sale to the Public: As soon as practicable after the effective date of this registration statement~~Esq.

~~If any~~Anthony ~~of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933~~L.G., ~~check the following box. ☒~~PLLC

~~If this~~625 ~~Form~~N. isFlagler ~~filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act~~Drive, ~~check~~Suite ~~the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐~~600

West Palm Beach, Florida 33401

Telephone: (561) 514-0936

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 check the following box. ☒

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☐☒ Smaller reporting company ☒ ~~(Do not check if a smaller reporting company)~~ 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 7(a)(2)(B) of the Securities Act. ☐

~~CALCULATION~~The registrant hereby amends this registration OFstatement ~~REGISTRATION~~on ~~FEE~~such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission, acting pursuant to Section 8(a) may determine.

Title of Each Class of Securities to be Registered	Proposed Maximum Aggregate Offering Price(1)		Amount of Registration Fee
Class A Units, each consisting of:
(i) shares of common stock, par value $0.00001 per share(3)
(ii) Series 1 warrants to purchase common stock(2)(4)
Class B Units, each consisting of:
(i) shares of Series 1 convertible preferred stock, par value $0.00001 per share(2)(4)
(ii) shares of common stock issuable upon conversion of the Series 1 convertible preferred stock(3)(4)(5)
(iii) Series 1 warrants to purchase common stock(2)(4)
Shares of common stock issuable upon exercise of Series 1 warrants to purchase common stock(3)
Total	$	13,500,000	$	1,636.20

The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities, and it is not soliciting an offer to buy these securities, in any jurisdiction where the offer or sale is not permitted.

(1)	Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(o) of the Securities Act of 1933, as amended (the “Securities Act”).
(2)	No registration fee required pursuant to Rule 457(g) under the Securities Act.
(3)	Pursuant to Rule 416 under the Securities Act, the securities being registered hereunder include such indeterminate number of additional shares of common stock as may be issued after the date hereof as a result of stock splits, stock dividends or similar transactions.
(4)	No additional consideration is payable upon conversion of the Series 1 convertible preferred stock or upon issuance of the Series 1 warrants.
(5)	No registration fee required pursuant to Rule 457(i) under the Securities Act.

PRELIMINARY PROSPECTUS

SUBJECT TO COMPLETION

DATED November 17, 2022

The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange CommissionSYSOREX, ~~acting pursuant to said Section 8(a), may determine~~INC.

~~The information~~ 500,000,000 inShares ~~this~~of ~~prospectus~~Common isStock ~~not complete and may be changed. We may not sell these securities until the registration statement~~for ~~filed~~Resale ~~with~~by ~~the~~Selling Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.Securityholders

~~PRELIMINARY~~500,000,000 ~~PROSPECTUS~~Shares ~~SUBJECT~~of TOCommon ~~COMPLETION~~Stock ~~DATED~~Underlying Warrants ~~DECEMBER~~for ~~21,~~Resale ~~2018~~by Selling Securityholders

~~Class~~This prospectus relates to Athe ~~Units~~resale ~~Consisting~~of up to 500,000,000 shares of our common stock, par value $0.00001 per share (the “Common Stock”) ~~and~~held ~~Series~~by ~~1 Warrants~~the ~~Class~~selling Bsecurityholders ~~Units~~named ~~Consisting~~in ofthis ~~Series~~prospectus 1or ~~Convertible~~their ~~Preferred~~permitted ~~Stock~~transferees ~~and~~(the ~~Series~~“Selling ~~1 Warrants~~Securityholders”).

~~We are~~In ~~offering~~addition, upthis prospectus relates to ~~Class~~ ~~A Units (~~the ~~“Class~~resale ~~A Units”), with each Class A Unit consisting~~ of ~~one~~up ~~share~~to ~~of our common stock~~500, ~~par value $0.00001 per share~~000,000 ~~and~~shares ~~one Series 1 warrant to purchase share~~ of ~~our~~Common ~~common~~Stock ~~stock~~ (~~each~~the a “~~Series 1~~ Warrant~~”, and~~ ~~collectively, the “Series 1 Warrants~~Shares”). ~~The~~upon ~~Series~~the ~~1 Warrants will have an~~ exercise ~~price per whole share~~ of ~~not~~500,000,000 ~~less~~warrants ~~than % of~~ (the ~~public~~“Warrants”) ~~offering~~held ~~price~~by ofSelling ~~the Class A Units~~Securityholders, ~~will~~which beentitle ~~exercisable~~them ~~upon~~to ~~issuance~~purchase ~~and~~Common ~~will~~Stock ~~expire~~at ~~five~~exercise ~~years~~price ~~from the date~~ of ~~issuance~~ $0.001 ~~Each~~per share ~~of common stock and Series 1 Warrant that are part of a Class A Unit are immediately separable and will be issued separately in this offering~~.

~~We are~~The ~~also~~Selling ~~offering~~Securityholders will tosell ~~those~~their ~~purchasers,~~shares ifregistered ~~any,~~for ~~whose~~resale ~~purchase of Class A Units~~ in this ~~offering~~prospectus ~~would~~at ~~otherwise~~fixed ~~result in the purchaser~~prices, ~~together~~at ~~with~~prevailing ~~its~~market ~~affiliates~~prices ~~and certain related parties, beneficially owning more than 4.99% (or,~~ at the ~~election of~~time ~~such purchaser, 9.99%)~~ of ~~our outstanding common stock immediately following the consummation of this offering~~sale, orat ~~to those~~prices ~~purchasers~~related ~~that elect~~ to ~~purchase~~the ~~such~~prevailing ~~securities~~market ~~in their sole discretion~~price, ~~the~~at ~~opportunity,~~varying inprices ~~lieu~~determined ofat ~~purchasing~~the ~~Class~~time ~~A Units, to purchase an aggregate~~ of ~~Class~~ Bsale ~~Units~~or ~~(the~~at ~~“Class~~negotiated Bprices. ~~Units”~~To ~~and, together with~~ the ~~Class~~extent Arequired by ~~Units,~~ the ~~“Units”). Each~~Securities ~~Class~~Act ~~B Unit will consist~~ of ~~one~~1933, ~~share~~as ofamended ~~our newly designated Series 1 convertible preferred stock~~ (the ~~“Series~~”Securities ~~1 Preferred~~Act”) ~~with a stated value of $1,000~~ and ~~convertible into that number of shares of our common stock determined by dividing~~ the ~~stated~~rules ~~value~~and ofregulations $1thereunder,~~000~~ by the ~~conversion~~Selling ~~price equal to the public offering price of the Class A Units, together~~Securityholders ~~with one~~will ~~Series~~be 1deemed ~~Warrant~~ to ~~purchase~~be a“underwriters” ~~number~~within ofthe ~~shares~~meaning of ~~common stock as would have been issued to such purchaser if such purchaser had purchased Class A units based on~~ the ~~public~~Securities ~~offering price~~Act. The shares of Series 1 Preferred do not generally having any voting rights but are convertible into shares of common stock. The shares of Series 1 Preferred and Series 1 Warrants that are part of a Class B Unit are immediately separable and will be issued separately in this offering.

We ~~are~~ ~~issuing~~will innot ~~this~~receive ~~offering~~any ~~(i)~~of the upproceeds tofrom anthe ~~aggregate~~sale of ~~shares~~ ofthe ~~our~~securities ~~common~~owned ~~stock~~by ~~and~~the ~~Series~~Selling 1Securityholders. ~~Warrants~~We towill ~~purchase~~receive ~~shares~~the proceeds of ~~common~~ ~~stock~~any ascash ~~components~~exercise of the ~~Class~~Warrants. ASee ~~Units,~~“Use ~~and~~of ~~(ii)~~Proceeds” upbeginning toon anpage ~~aggregate~~28 of ~~shares~~ ofthis ~~our~~prospectus. ~~Series~~We 1will ~~Preferred~~bear ~~and~~all ~~Series~~costs, 1expenses ~~Warrants~~and tofees ~~purchase~~in upconnection towith ~~shares~~the registration of ~~our~~these ~~common~~securities, ~~stock.~~including ~~The~~with ~~Series~~regard 1to ~~Preferred~~compliance ~~included~~with instate ~~the~~securities ~~Class~~or B“blue sky” ~~Units~~laws. ~~will~~The beSelling ~~convertible into~~Securityholders anwill ~~aggregate~~bear ~~of shares~~all ofcommissions ~~common stock~~ and ~~the~~discounts, ~~Series~~if 1any, ~~Warrants~~attributable ~~included~~to intheir ~~the~~sale ~~Class~~of Bsecurities. See ~~Units~~“Plan ~~will~~of beDistribution” ~~exercisable~~beginning ~~for~~on ~~an aggregate of~~page ~~shares~~96 of ~~common~~this ~~stock~~prospectus.

Our ~~shares~~Common ofStock ~~common stock~~is ~~are~~currently quoted on the ~~OTCQB market of the~~ OTC ~~Markets~~Market Group, Inc.’s OTCQB tier under the symbol “SYSX.” On ~~December~~ 19November 16, ~~2018~~2022, the last reported ~~bid~~sale price of our ~~common~~Common ~~stock~~Stock ~~on the OTCQB~~ was $0.~~0268 per share~~0009. None of the Units, Series 1 Preferred or the Series 1 Warrants will be listed on any national securities exchange or other trading market. Without an active trading market, the liquidity of these securities will be limited.

~~For a~~Our ~~more~~principal ~~detailed description of the Units, see the section entitled “Description of Securities We Are Offering” beginning~~executive onoffices ~~page~~are ~~69.~~located Weat ~~refer~~13880 toDulles ~~the~~Corner ~~common stock offered hereunder~~Lane, ~~the~~Suite ~~Series 1 Preferred~~120, ~~the Series 1 Warrants issued hereunder and the shares of common stock issuable upon conversion of the Series 1 Preferred and upon exercise of the Series 1 Warrants issued hereunder~~Herndon, ~~collectively,~~Virginia ~~as the securities~~20171.

~~We are~~Investing ~~an “emerging growth company” as that term is used~~ in ~~the~~our common ~~Jumpstart~~stock ~~Our~~involves ~~Business~~a ~~Startups~~high ~~Act~~degree of ~~2012,~~risk. ~~and~~See we“Risk ~~have elected~~Factors” tobeginning ~~comply~~on ~~with~~page ~~certain~~10 ~~reduced~~of ~~public~~this ~~company reporting requirements~~prospectus.

~~Investing~~Neither the Securities inand ~~our~~Exchange Commission (the “SEC”) nor any state securities ~~involves~~commission ahas ~~high~~approved ~~degree~~or disapproved of ~~risk~~these securities or determined if this prospectus is truthful or complete. ~~See~~Any ~~“Risk~~representation ~~Factors”~~to ~~beginning~~the oncontrary ~~page~~is ~~6 of~~a ~~this prospectus~~criminal offense.

~~Neither the~~The ~~Securities~~date ~~and Exchange Commission nor any state securities commission has approved or disapproved~~ of ~~these securities or determined if~~ this prospectus is ~~truthful~~___________, ~~or complete~~2022. ~~Any representation to the contrary is a criminal offense.~~

Per Class A Unit

Per Class B Unit

Total

Public offering price

Placement agent fees(1)

Proceeds to us, before expenses

(1) We have agreed to reimburse the placement agent for certain expenses. See “Plan of Distribution” on page 28 of this prospectus for a description of the compensation payable to the placement agent.

We have engaged (the “placement agent”) to act as our exclusive placement agent in connection with this offering. The placement agent is not purchasing or selling the securities offered by us, and is not required to sell any specific number or dollar amount of securities, but will use its reasonable best efforts to arrange for the sale of the securities offered. We have agreed to pay the placement agent a placement fee equal of up to 7.0% of the aggregate gross proceeds to us from the sale of the securities in the offering, plus additional compensation as set forth under “Plan of Distribution”. The placement agent may engage one or more sub-agents or selected dealers in connection with this offering.

We expect to deliver the Units against payment on or about , 2019, subject to satisfaction of certain conditions.

Prospectus dated , 2019

TABLE OF CONTENTS

	Page No.
	Page
ABOUT THIS PROSPECTUS	ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	ii
CAUTIONARY NOTE CONCERNING FORWARD-LOOKING STATEMENTS	iii
INDUSTRY AND MARKET DATA	iii
TRADEMARKS AND COPYRIGHTS	iii
PROSPECTUS SUMMARY	1
RISK FACTORS	6
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA	9
USE OF PROCEEDS	23
RISK FACTORS	10
DIVIDEND POLICY	24
USE OF PROCEEDS	28
CAPITALIZATION	2528
DILUTION	26
DETERMINATION OF OFFERING PRICE	28
MARKET PRICE OF OUR COMMON STOCK AND RELATED STOCKHOLDER MATTERS	27
DIVIDEND POLICY	29
PLAN OF DISTRIBUTION	28
MARKET PRICE FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS	29
OUR BUSINESS	30
DESCRIPTION OF BUSINESS	34
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	3856
MANAGEMENT	5774
EXECUTIVE COMPENSATION	5877
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT	6384
CERTAIN RELATIONSHIPS, RELATED PARTY TRANSACTIONS AND DIRECTOR INDEPENDENCE	64
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	86
DESCRIPTION OF SECURITIES	6589
DESCRIPTION OF SECURITIES WE ARE OFFERING	69
SELLING SECURITYHOLDERS	93
LEGAL MATTERS	71
PLAN OF DISTRIBUTION	96
EXPERTS	72
SHARES ELIGIBLE FOR FUTURE SALE	99
WHERE YOU CAN FIND MORE INFORMATION	72
MATERIAL UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS	100
LEGAL MATTERS	105
EXPERTS	105
DISCLOSURE OF COMMISSION’S POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES	105
WHERE YOU CAN FIND ADDITIONAL INFORMATION	105
INDEX TO FINANCIAL STATEMENTS	F-1

No dealer, salesperson or other individual has been authorized to give any information or to make any representation other than those contained in this prospectus in connection with the offer made by this prospectus and, if given or made, such information or representations must not be relied upon as having been authorized by us or the selling stockholder. This prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so, or to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in our affairs or that information contained herein is correct as of any time subsequent to the date hereof.

For investors outside the United States: We have not, and the selling stockholder has not, done anything that would permit this offering or possession or distribution of this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside the United States who come into possession of this prospectus must inform themselves, and observe any restrictions relating to, the offering of the shares of our common stock and the distribution of this prospectus outside the United States.

~~Table~~Cautionary Note ofRegarding ~~Contents~~ Forward-Looking Statements

~~ABOUT~~This prospectus contains forward-looking ~~THIS~~statements. ~~PROSPECTUS~~Specifically, forward-looking statements may include statements relating to:

~~You should~~● ~~rely~~our ~~only~~future onfinancial ~~the~~performance; ~~information~~● ~~contained~~changes in ~~this~~the ~~prospectus~~market ~~and~~for ~~any~~our ~~free~~products ~~writing~~and ~~prospectus~~services; ~~prepared~~● ~~by us or on~~ our ~~behalf. We~~expansion ~~have~~plans ~~not,~~ and ~~the~~opportunities; ~~placement agent has not, authorized anyone to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not,~~ and ~~the~~● ~~placement~~other ~~agent~~statements ispreceded ~~not~~by, ~~making an~~followed ~~offer~~by ~~to sell~~ or ~~soliciting an offer to buy the securities offered hereby in any jurisdiction where the offer or sale is not permitted. The information contained in this prospectus and any free writing prospectus~~ that weinclude ~~have authorized for use in connection with this offering is accurate only as of~~ the ~~date~~words of“estimate,” ~~those~~“plan,” ~~respective~~“project,” ~~documents~~“forecast,” ~~regardless~~“intend,” of“expect,” ~~the~~“anticipate,” ~~time of delivery of this prospectus or any authorized free writing prospectus or the time of issuance or sale of any securities. Our business~~“believe,” ~~financial condition~~“seek, ~~results~~” of operations and prospects may have changed since those dates. You should read this prospectus and any free writing prospectus that we have authorized for use in connection with this offering in their entirety before making an investment decision. You should also read and consider the information in the documents to which we have referred you in the section of this prospectus entitled “~~Where~~target” ~~You~~or ~~Can~~similar ~~Find More Information~~expressions.”

WeThese forward-looking statements are ~~offering~~based toon ~~sell,~~information ~~and~~available ~~seeking~~as ~~offers~~of ~~to buy,~~ the ~~securities~~date ~~only in jurisdictions where offers and sales are permitted. The distribution~~ of this prospectus and ~~the~~current ~~offering~~expectations, offorecasts ~~the~~and ~~securities~~assumptions, inand ~~certain~~involve a ~~jurisdictions~~number ~~may~~of bejudgments, ~~restricted~~risks byand ~~law~~uncertainties. ~~Persons outside~~Accordingly, ~~the~~forward-looking ~~United~~statements ~~States~~should ~~who~~not ~~come~~be ~~into~~relied ~~possession~~upon ofas ~~this~~representing ~~prospectus~~our views ~~must~~as ~~inform~~of ~~themselves about, and observe~~ any ~~restrictions relating~~subsequent todate, ~~the~~and ~~offering~~we ofdo ~~the~~not ~~securities~~undertake ~~and~~any ~~the~~obligation ~~distribution~~to ofupdate ~~this~~forward-looking ~~prospectus~~statements ~~outside~~to ~~the~~reflect ~~United~~events ~~States.~~or ~~This prospectus~~circumstances ~~does~~after ~~not~~the ~~constitute,~~date ~~and~~they ~~may~~were ~~not be used in connection with~~made, anwhether ~~offer~~as ~~to sell, or~~ a ~~solicitation~~result of annew ~~offer to buy~~information, ~~any~~future ~~securities offered~~events byor ~~this~~otherwise, ~~prospectus~~except byas ~~any~~may ~~person~~be inrequired ~~any~~under ~~jurisdiction in which it is unlawful for such person to make such an offer or~~applicable ~~solicitation~~securities laws.

~~This prospectus~~As ~~contains~~a ~~summaries~~result of ~~certain~~a ~~provisions~~number ~~contained in some~~ of known ~~the~~and ~~documents~~unknown ~~described~~risks ~~herein~~and uncertainties, ~~but~~our ~~reference is made to the~~ actual ~~documents~~results ~~for~~or ~~complete~~performance ~~information.~~may ~~All~~be ofmaterially ~~the~~different ~~summaries~~from ~~are~~those ~~qualified~~expressed inor ~~their entirety~~ implied by ~~the~~these ~~actual~~forward-looking ~~documents~~statements. ~~Copies~~ ofSome ~~some~~factors ofthat ~~the~~could ~~documents~~cause ~~referred~~actual toresults ~~herein have been filed, will be filed, or will be incorporated by reference as exhibits~~ to ~~the~~differ ~~registration statement of which this prospectus is a part, and you may obtain copies of those documents as described below under the section entitled “Where You Can Find More Information.”~~include:

~~The representations,~~● ~~warranties~~the ~~and~~level ~~covenants~~of ~~made~~demand byfor usour inproducts ~~any~~and ~~agreement~~services; ~~that~~● iscompetition ~~filed~~in asour anmarkets; ~~exhibit~~● toour ~~any~~ability ~~document~~to ~~that~~grow isand ~~incorporated by~~manage ~~reference~~growth inprofitably; ~~this~~● ~~prospectus~~our ~~were~~ability ~~made~~to ~~solely~~access ~~for~~additional ~~the~~capital; ~~benefit~~● ofchanges ~~the~~in ~~parties~~applicable tolaws ~~such~~or ~~agreement,~~regulations; ~~including,~~● inour ~~some~~ability ~~cases,~~to ~~for the~~attract ~~purpose~~and ofretain ~~allocating~~qualified ~~risk~~personnel; ~~among~~● the ~~parties~~possibility tothat ~~such~~we ~~agreements,~~may ~~and should not~~ be ~~deemed~~adversely toaffected beby aother ~~representation~~economic, ~~warranty or covenant to you. Moreover~~business, ~~such representations, warranties~~ and/or ~~covenants~~competitive ~~were~~factors; ~~accurate~~and ~~only~~● asother ofrisks ~~the~~and ~~date~~uncertainties ~~when~~indicated ~~made.~~in ~~Accordingly, such~~this ~~representations~~prospectus, ~~warranties~~including ~~and~~those ~~covenants~~under ~~should~~“Risk ~~not be relied on as accurately representing the current state of our affairs~~Factors.”

This prospectus contains market data and industry statistics and forecasts that are based on independent industry publications and other publicly available information. Although we believe that these sources are reliable, we do not guarantee the accuracy or completeness of this information, and we have not independently verified this information. Although we are not aware of any misstatements regarding the market and industry data presented in this prospectus, these estimates involve risks and uncertainties and are subject to change based on various factors, including those discussed under the heading “Risk Factors” and any related free writing prospectus. Accordingly, investors should not place undue reliance on this information.

Our logo and some of our trademarks used in this prospectus remain our intellectual property. This prospectus also includes trademarks, tradenames, and service marks that are the property of other organizations. Solely for convenience, our trademarks and tradenames referred to in this prospectus appear without the TM symbol, but those references are not intended to indicate, in any way, that we will not assert, to the fullest extent under applicable law, our rights, or the right of the applicable licensor to these trademarks and tradenames.

Unless otherwise stated or the context otherwise requires, the terms “Sysorex,” “we,” “us,” “our,” and the “Company” refer collectively to Sysorex, Inc., and, where appropriate, Sysorex Government Services, Inc., its wholly-owned subsidiary (“Sysorex Government”).

~~Table~~INDUSTRY ofAND ~~Contents~~ MARKET DATA

~~CAUTIONARY~~We are responsible for the ~~NOTE~~disclosure ~~CONCERNING~~in ~~FORWARD~~this prospectus. However, this prospectus includes industry data that we obtained from internal surveys, market research, publicly available information and industry publications. The market research, publicly available information and industry publications that we use generally state that the information contained therein has been obtained from sources believed to be reliable. The information therein represents the most recently available data from the relevant sources and publications and we believe remains reliable. We did not fund and are not otherwise affiliated with any of the sources cited in this prospectus. Forward-~~LOOKING~~looking ~~STATEMENTS~~information obtained from these sources is subject to the same qualifications and additional uncertainties regarding the other forward-looking statements in this prospectus.

~~This prospectus~~TRADEMARKS ~~contains~~AND forward-looking statements that involve risks and uncertainties. You should not place undue reliance on these forward-looking statements. Our actual results could differ materially from those anticipated in the forward-looking statements for many reasons, including the reasons described in the “Prospectus Summary,” “Use of Proceeds,” “Risk Factors,” “Management Discussion and Analysis of Financial Condition and Result of Operations,” and “Our Business” sections. In some cases, you can identify these forward-looking statements by terms such as “anticipate,” “believe,” “continue,” “could,” “depends,” “estimates,” “expects,” “intends,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would” or the negative of those terms or other similar expressions, although not all forward-looking statements contain those words.COPYRIGHTS

We own or have ~~based~~rights ~~these~~to ~~forward~~trademarks ~~looking~~or ~~statements~~trade ~~largely~~names that onwe use in connection with the operation of our ~~current~~business, ~~expectations~~including our corporate names, logos and ~~projections~~website ~~about~~names. ~~future~~In ~~events~~addition, we own or have the rights to copyrights, trade secrets and ~~financial trends~~other proprietary rights that weprotect ~~believe~~the ~~may~~content ~~affect~~of our ~~financial~~products ~~condition,~~and ~~results~~the offormulations for ~~operations~~such products. This prospectus may also contain trademarks, ~~business~~service ~~strategy~~marks and ~~financial~~trade ~~needs.~~names ~~These forward~~of ~~looking~~other ~~statements~~companies, which are ~~subject~~the toproperty of atheir ~~number~~respective owners. Our use or display of ~~known~~third ~~and~~parties’ ~~unknown~~trademarks, ~~risks~~service marks, ~~uncertainties~~trade names or products in this prospectus is not intended to, and ~~assumptions~~should not be read to, ~~including~~imply ~~risks~~a relationship with or endorsement or sponsorship of us. Solely for convenience, ~~described~~some inof the ~~section~~copyrights, ~~titled~~trade ~~“Risk~~names ~~Factors”~~ and ~~elsewhere~~trademarks referred to in this prospectus are listed without their ©, ~~regarding~~® and ™ symbols, but ~~among~~we will assert, to the fullest extent under applicable law, our rights to our copyrights, trade names and trademarks. All other ~~things:~~trademarks are the property of their respective owners.

● our limited cash and our history of losses; ● our ability to achieve profitability; ● customer demand for solutions we offer; ● the impact of competitive or alternative products, technologies and pricing; ● our ability to resale products without terms, without wholesale suppliers, on a prepay basis; ● general economic conditions and events and the impact they may have on us and our potential customers; ● our ability to obtain adequate financing in the future; ● our ability to continue as a going concern; ● lawsuits and other claims by third parties; ● our ability to realize some or all of the anticipated strategic, financial, operational, marketing or other benefits from our separation from Inpixon; and ● our success at managing the risks involved in the foregoing items.

These risks are not exhaustive. Other sections of this prospectus may include additional factors that could adversely impact our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. You should read this prospectus with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this prospectus or to conform these statements to actual results or to changes in our expectations.

We qualify all of our forward-looking statements by these cautionary statements.

iii

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PROSPECTUS SUMMARY

~~The following~~This summary highlights certain information about ~~contained~~us, ~~elsewhere~~this offering, and selected information contained in this prospectus. This summary ~~may~~is not complete and does not contain all of the information that ~~may~~you beshould ~~important~~consider before deciding whether to ~~you~~invest in our common stock. ~~You~~For ~~should~~a ~~read~~more ~~this~~complete ~~entire~~understanding ~~prospectus~~of the ~~carefully~~company and this offering, ~~including~~we encourage you to read and consider the ~~sections~~more ~~titled~~detailed information in this prospectus, including “Risk Factors” and ~~“Management’s~~the ~~Discussion~~financial statements and ~~Analysis~~related ofnotes. ~~Financial~~Unless ~~Condition~~the ~~and~~context ~~Results~~otherwise ofrequires, ~~Operations~~“we,” ~~and~~ “us,” “our,” ~~financial statements~~“Sysorex” or the “Company” refers to “Sysorex, Inc.,” a Nevada corporation, and its ~~related~~subsidiaries ~~notes~~TTM ~~included~~Digital ~~elsewhere~~Assets in& ~~this~~Technologies, ~~prospectus~~Inc. (“TTM Digital”) and Sysorex Government Services, Inc. (“SGS”).

~~Corporate History and Structure~~Overview

Sysorex, ~~was~~Inc. ~~incorporated~~through inits ~~California~~wholly onowned ~~January~~subsidiary, 3Sysorex Government Services, ~~1994~~Inc. as(“SGS”), ~~Lilien~~provides ~~Systems~~information ~~and~~technology ~~was~~solutions primarily ~~acquired~~to bythe ~~Inpixon,~~public asector. ~~Nevada~~These ~~corporation~~solutions ~~(“Inpixon”)~~include cybersecurity, on ~~March~~professional 20services, ~~2013.~~engineering ~~Effective~~support, ~~January~~IT 1consulting, ~~2016~~enterprise level technology, ~~Inpixon~~networking, ~~consummated~~wireless, ahelp ~~reorganization~~desk ~~transaction~~and ~~pursuant~~custom toIT ~~which~~solutions. ~~certain~~In ~~Inpixon subsidiaries~~addition to SGS, ~~including~~the Company has another wholly owned subsidiary, TTM ~~AirPatrol~~Digital ~~Corporation~~Assets ~~and~~&Technologies, ~~Shoom~~Inc. ~~were~~(“TTM ~~merged~~Digital”). ~~with~~TTM ~~and~~Digital ~~into~~is ~~Lilien~~a ~~and~~digital ~~Lilien~~asset ~~changed~~technology ~~its~~and ~~name~~mining tocompany ~~“Sysorex~~that ~~USA,”~~owns and ~~all~~operates ~~outstanding~~specialized ~~shares~~cryptocurrency ofmining ~~capital~~processors ~~stock~~and ofwas ~~Sysorex~~previously ~~Government~~focused ~~were~~on ~~assigned~~the toEthereum ~~Lilien,~~blockchain ~~pursuant~~ecosystem. toAs ~~which Sysorex~~of ~~Government~~September ~~became~~15, a2022, ~~direct~~Ethereum ~~subsidiary~~switched offrom ~~Lilien.~~a ~~Sysorex~~Proof ~~USA~~of ~~changed~~Work ~~its~~model ~~name~~ to ~~Inpixon~~a ~~USA~~Proof onof ~~March~~Stake 1,model ~~2017.~~and Onas ~~July~~a 26result, ~~2018, Inpixon~~the ~~USA~~Company ~~merged~~is ~~into~~no ~~Sysorex,~~longer amining Ethereum. ~~wholly-owned~~TTM ~~subsidiary~~is ofcurrently ~~Inpixon,~~exploring ~~for~~alternative ~~the~~uses ~~purpose~~and ofsales ~~changing~~opportunities for its ~~name~~Graphics ~~and~~Processing ~~moving~~Units ~~its~~(“GPU”) ~~state~~assets ofand ~~formation~~datacenter ~~from~~located ~~California~~in toLockport, ~~Nevada~~NY. ~~Lilien~~The ~~significantly~~Company ~~expanded~~had ~~Inpixon’s~~previously ~~operations~~been ~~providing~~in itdiscussions with a ~~Big~~third ~~Data analytics~~party ~~platform~~to sell its mining assets and certain ~~enterprise~~associated ~~infrastructure~~real ~~capabilities~~property.

~~On August~~Overview 31, 2018, Sysorex and Inpixon engaged in a spin-off transaction, whereby Sysorex, and its wholly owned subsidiary Sysorex Government, was separated from Inpixon and became a separate entity with a separate management team and separate boards of ~~directors, except that Nadir Ali, Chief Executive Officer and director of Inpixon also serves as a director of Sysorex. We refer to this transaction is referred to as~~ the ~~Spin-off~~Company’s ~~throughout this prospectus.~~Subsidiaries

~~Our Products~~Sysorex ~~and~~Government Services

~~Sysorex~~SGS ~~provides~~is a provider of information technology ~~and~~solutions ~~telecommunications~~from ~~solutions~~multiple ~~and~~vendors, including hardware products, software, services, toincluding ~~commercial~~warranty and maintenance support, offered through our dedicated sales force, ecommerce channels, existing federal contracts and ~~government~~service ~~customers~~team. ~~primarily~~Since inour ~~the~~founding, ~~United~~we ~~States.~~have ~~Sysorex~~served ~~offers~~our ~~cost~~customers ~~effective,~~by ~~right-fit~~offering ~~information~~products ~~technology~~and ~~solutions~~services ~~that~~from ~~help~~key ~~organizations~~industry ~~reach~~vendors such as Aruba, Cisco, Dell, GETAC, ~~their~~Lenovo, ~~next~~Microsoft, ~~level~~Panasonic, ofSamsung, ~~business~~Symantec, ~~advantage~~VMware and others. ToWe ~~that~~provide ~~end,~~our ~~Sysorex~~customers ~~provides~~with comprehensive solutions incorporating leading products and services across a variety of ITtechnology ~~services~~practices and~~/or~~ ~~technologies~~platforms ~~that~~such ~~enable customers~~as tocyber, ~~manage~~cloud, ~~protect~~networking, security, and ~~monetize~~mobility. We ~~their~~utilize ~~enterprise~~our ~~assets~~professional ~~whether on-premises~~services, consulting services and partners to develop and implement these solutions. Our sales and marketing efforts in ~~the~~collaboration ~~cloud~~with our vendor partners, orallow ~~via~~us ~~mobile~~to reach multiple customer public sector segments including federal, state and local governments, as well as educational institutions.

For the year ended December 31, 2021, our sales to federal, state and local governments accounted for approximately 100% of our SGS net sales. Our past customers have included, among others, federal and international government agencies and state and local governments. Although ~~products~~SGS has had many customers, two customers generated approximately 71% of SGS’s gross revenue during the year ended December 31, 2021. One customer accounted for 44% of SGS’s gross revenue in 2021; however, this customer may or may not continue to be a significant contributor to revenue in the future. We plan to continue to focus our efforts on existing and ~~services~~potential ~~include~~government customers. SGS revenues for the ~~following:~~three months ended September 30, 2022, and 2021, was approximately $3.5 million and $1.9 million, respectively. This includes approximately 71% of sales coming from the Company’s top two customers.

● Enterprise infrastructure solutions for business operations, continuity, data protection, software development, collaboration, IT security, and physical security needs, that help organizations tackle challenges and accelerate business goals. Our products include third party hardware, software and related maintenance and warranty products and services that we resell from some of the world most trusted brands such as Cisco, Hewlett Packard, Microsoft, Dell, and Oracle.

By partnering with our technology vendors, we offer our customers best-of-breed products and a team of technology certified subject matter experts and account representatives who serve commercial and federal clients and are ready to deploy and manage industry-leading solutions.

Working with our network of distribution partners, we have built a solid reputation of trust and knowledge with our customers, who look to end-to-end hardware and software solutions to optimize their performance. Solutions sets include:

● Data center

● Cloud computing

● Enterprise servers, storage, networking

● Virtualization/consolidation

● Client/Mobile computing

● Secure networking

● Cyber security

● Collaboration tools

● Security and data protection

● IT service management tools

● Big data analytics

~~Table~~SGS experiences variability in our net sales and operating results on a quarterly basis as a result of ~~Contents~~ many factors. SGS experiences some seasonal trends in our sales of technology solutions to government and educational institutions. For example, the fiscal year-ends of U.S. Public Sector customers vary for those in the federal government space and those in the state and local government and educational institution (“SLED”) space. SGS generally sees an increase in our second quarter sales related to customers in the U.S. SLED sector and in our third quarter sales related to customers in the federal government space as these customers close out their budgets for their fiscal year (June 30th and September 30th, respectively). SGS may also experience variability in our gross profit and gross profit margin as a result of changes in the various vendor programs we participate in and its effect on the amount of vendor consideration we receive from a particular vendor or their authorized distributor/wholesaler, may be impacted by a number of events outside of our control.

~~A full~~TTM range of information technology development and implementation professional services, from enterprise architecture design to custom application development. Our experienced IT professionals help meet evolving business needs by optimizing IT resources, application performance, and business processes. Our services span many emerging and hybrid enterprise technologies, and we offer a comprehensive suite of network performance, secure wireless access and cybersecurity products and services from leading manufacturers that improve overall network performance and business operations. Our professional services are focused in the following areas:Digital

●TTM Digital ~~Network~~is ~~Performance~~a ~~Management~~digital asset technology and mining company that owns and operates specialized cryptocurrency mining processors and was previously focused on the Ethereum blockchain ecosystem. Following the reverse merger on April 14, 2021, the business of TTM Digital became a business segment of the Company. TTM Digital was originally formed as a Delaware limited liability company on June 28, 2017, under the name of TTM Ventures LLC. Thereafter, on March 30, 2021, it filed a certificate of conversion to a non-Delaware entity with the Secretary of State of the State of Delaware together with Articles of Conversion and Articles of Incorporation with the Nevada Secretary of State filed on the same date. As a result of such conversion, TTM Digital has become a Nevada corporation under the name of “TTM Digital Assets & Technologies, Inc.”

●TTM Digital ~~Cyber~~has ~~Security~~an evolving business model which is subject to various uncertainties. As digital assets and blockchain technology become more widely utilized on a mass scale, we anticipate that the services and products associated with the technologies will continue to evolve. To successfully continue in the industry, our business model may need to evolve to reflect the trends of the industry. Over time, we may modify aspects of our business model relating to our strategy. We cannot offer any assurance that we will be successful or that the future industry or business operation changes will not result in harm to our business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. Management cannot provide any assurances that we will identify all emerging trends and growth opportunities in this business sector, and we may lose out on those opportunities to current or future competitors. As anticipated, any such circumstances could have a material adverse effect on our business, prospects, or operations.

●The Company ~~Secure~~made ~~Wireless~~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”) 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 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 requested that Ostendo issue, pursuant to the Heads of Terms, 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. 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.

●As IPof ~~Video~~September 15, 2022, Ethereum switched from a Proof of Work model to Proof of Stake model and as a result, the Company no longer mines Ethereum. TTM Digital is currently exploring alternative uses and sales opportunities for its Graphics Processing Unit (GPU) assets and datacenter located in Lockport, NY.

~~These~~TTM ~~products~~is ~~and~~exploring ~~services allow Sysorex to offer turnkey solutions, including delivery of insights from~~ the ~~data,~~future ~~when~~possibility ~~requested by customers. For the nine months ended September 30, 2018, approximately 42%, or $1.2 million,~~ of ~~our~~hosting ~~total~~client ~~revenues~~computing ~~were derived from product sales~~ and ~~58%,~~evaluating ~~or $1.7 million, of our total revenues were derived from service sales. For~~ the ~~nine months~~sale ~~ended September 30, 2017, approximately 82%, or $30.7 million,~~ of ~~our~~its ~~total revenues were derived from product sales and 18%, or $6~~assets.7 million, of our total revenues were derived from service sales. In 2016, approximately 76%, or $36.6 million, of our total revenues were derived from product solutions sales and 24%, or $11.6 million, of our total revenues were derived from professional services sales. In 2017, approximately 72%, or $29.5 million, of our total revenues were derived from product solutions sales and 28%, or $11.6 million, of our total revenues were derived from professional services sales. Now with all industry trends showing an increase in spending and our supplier credit issues improving we are poised to regain previous clients and new clients as spending increases and companies want to work closely with trusted providers.

Competition

We face substantial competition from other national, multi-regional, regional and local value-added resellers and IT service providers, some of which may have greater financial and other resources than we do or that may have more fully developed business relationships with clients or prospective clients than we do. Many of our competitors compete principally on the basis of price and may have lower costs or accept lower selling prices than we do and, therefore, we may need to reduce our prices. In addition, manufacturers may choose to market their products directly to end-users, rather than through IT solutions providers such as us, and this could adversely affect our business, financial condition and results of operations.

The U.S. government systems integration business is intensely competitive and subject to rapid change. We compete with a large number of systems integrators, hardware and software manufacturers, and other large and diverse companies attempting to enter or expand their presence in the U.S. government market. Many of the existing and potential competitors have greater financial, operating and technological resources than we have. The competitive environment may require us to make changes in our pricing, services or marketing. The competitive bidding process involves substantial costs and a number of risks, including significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us, or that may be awarded, but for which we do not receive meaningful revenues. Accordingly, our success depends on our ability to develop services and products that address changing needs and to provide people and technology needed to deliver these services and products. In the government services sector our competition includes large systems integrators and defense contractors as well as small businesses such as 8a, women-owned, veteran disabled, Alaskan native, etc. Some of these competitors include global defense and IT service companies including IBM Global Services, LogicaCMG, CSC, ATOS Origins, Northrop Grumman, Raytheon IT Services and SAIC.

This complex landscape of domestic and multi-national services companies creates a challenging environment. To remain competitive, we must consistently provide superior service, technology and performance on a cost-effective basis to our customers. While we believe that, due to the functionality of our products, we can successfully compete in all of these markets, at this time we do not represent a significant presence in any of these markets.

Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in Section 2(a) of the Securities Act of 1933, as amended, which we refer to as the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable, in general, to public companies that are not emerging growth companies. These provisions include:

● reduced disclosure about our executive compensation arrangements; ● no non-binding shareholder advisory votes on executive compensation or golden parachute arrangements; ● exemption from the auditor attestation requirement in the assessment of our internal control over financial reporting; and ● reduced disclosure of financial information in this prospectus, limited to two years of audited financial information and two years of selected financial information.

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We may take advantage of these exemptions as an emerging growth company until the earlier of (i) the last day of the fiscal year following the fifth anniversary of the first sale of our common equity securities in a public offering, (ii) we have more than $1.07 billion in annual revenues as of the end of a fiscal year, (iii) the date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission (the “SEC” or the “Commission”), or (iv) the date on which we issue more than $1.0 billion of non-convertible debt over a three-year-period.

The JOBS Act permits an emerging growth company to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use such extended transition period.

Corporate Information

~~The~~Our ~~Company~~office ~~was~~is ~~originally~~located ~~incorporated~~at in13880 ~~California~~Dulles onCorner ~~January 3~~Lane, ~~1994~~STE ~~under the name Lilien Systems. In connection with a reorganization of Inpixon effective as of January 1~~120, ~~2016~~Herndon, ~~Lilien~~Va. ~~Systems~~20171 ~~acquired~~which ~~100%~~is ofwhere ~~the~~our ~~issued~~records ~~and~~are ~~outstanding~~kept. ~~capital~~Our ~~stock~~website ~~of Sysorex~~addresses ~~Government~~are ~~and changed its name to Sysorex USA~~www.sysorexinc.com Onand ~~February, 27, 2017, the Company’s name was changed to Inpixon USA~~www.ttmdigitalassets.com. ~~On July~~The ~~26,~~inclusion ~~2018, solely for the purpose~~ of ~~reincorporating~~our ~~the~~website ~~Company~~addresses ~~into the State of Nevada, Inpixon formed a wholly owned subsidiary~~ in ~~the~~this ~~State~~prospectus ofdoes ~~Nevada~~not ~~named~~include ~~“Sysorex,~~or ~~Inc.” which was merged with the Company and resulted in the Company being reincorporated~~incorporate inby ~~the~~reference ~~state of Nevada under~~ the ~~name~~information ~~“Sysorex,~~on ~~Inc.” The address of~~ our ~~principal~~websites ~~executive~~into ~~offices~~this isprospectus. ~~13880~~Our ~~Dulles Corner Lane, Suite 175, Herndon, Virginia 20171 and our~~ telephone number ~~at that location~~ is (~~800~~703) ~~929~~961-~~3871~~1125.

Our Internet website is www.sysorexinc.com. The information contained on, or that may be obtained from, our website is not a part of this registration statement. We have included our website address in this registration statement solely as an inactive textual reference.2

COVID-19

In December 2019, a novel strain of coronavirus (COVID-19) emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. Various COVID-19-related restrictions on travel, work, and movement of goods and supplies, as well as the cumulative impact of the mounting number of lost working days as a result of COVID-19, has already put a strain on our manufacturing partners, suppliers, and logistics partners to produce and deliver a sufficient number of products needed to meet the global demand for miners. This has had a particularly strong impact on the global supply chain and availability of semiconductors, which are used in the manufacture of the ASIC chips used in the miners we operate. The strain on the global supply of semiconductors, largely stemming from manufacturing interruptions due to COVID-19-related disruptions, has resulted in decreased production across many industrial sectors.

The ultimate impact of the COVID-19 pandemic on the Company’s operations is unknown and will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the COVID-19 outbreak, new information which may emerge concerning the severity of the COVID-19 pandemic, and any additional preventative and protective actions that governments, or the Company, may direct, which may result in an extended period of continued business disruption, reduced customer traffic and reduced operations. Any resulting financial impact cannot be reasonably estimated at this time but is anticipated to have a material adverse impact on our business, financial condition and results of operations.

Selling Stockholders

On October 18, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”), dated as of October 18, 2022, by and among the Company and the following selling securityholders Brian M. Herman, James and Lidia Resnick, Andrew Resnick, Kantor Family Investments, Inc., B.K. Consulting Group LLC, Bigger Capital Fund, LP and District 2 Capital Fund LP (each an “Investor” and collectively, the “Investors”). 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”). The Investors, collectively, subscribed for a total 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 payable to the Company of $500,000. The SPA contains customary representations, warranties and closing conditions.

The transactions contemplated by the SPA closed on October 18, 2022. Accordingly, 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.

~~Table~~On October 18, 2022, pursuant to the terms of ~~Contents~~ the SPA, the Company and the Investors entered into the Initial Registration Rights Agreement (the “Initial Registration Rights Agreement”), which provides for the registration of all of the Purchased Shares and all of the shares of common stock that may be acquired by the Investors pursuant to the exercise of the Warrant 1s (the “Registrable Securities”). Pursuant to the terms of the Initial Registration Rights Agreement, the Company agreed to, within 30 calendar days of October 18, 2022, use its commercially reasonable efforts to file with the Securities and Exchange Commission (the “SEC”) a registration statement or registration statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration) covering the resale of all of the Registrable Securities, or amend any current registration statement to cover the Registrable Securities. 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 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:

~~The Offering~~(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

~~The following~~(ii) ~~summary~~a ~~contains~~new ~~basic~~warrant ~~information~~(each, ~~about~~a ~~the~~“Warrant ~~offering~~3”) ~~and~~equal ~~the securities we are offering and is not intended~~ to ~~be complete. It does not contain all~~ the ~~information~~number ~~that is important to you. For a more complete understanding~~ of ~~the~~Additional ~~securities~~Shares wein ~~are offering, please refer to~~ the ~~sections~~applicable ~~of this prospectus titled “Description of Securities” and “Description of Securities We Are Offering~~issuance.”

Class A Units offered	We are offering up to Class A Units. Each Class A Unit will consist of one share of our common stock and one Series 1 warrant to purchase share of our common stock (“Series 1 Warrant”). The Class A Units will not be certificated and the shares of common stock and Series 1 Warrants part of such Units are immediately separable and will be issued separately in this offering.
Class B Units offered	We are also offering to those purchasers, if any, whose purchase of Class A Units in this offering would otherwise result in the purchaser, together with its affiliates and certain related parties, beneficially owning more than 4.99% (or, at the election of the purchaser, 9.99%) of our outstanding common stock immediately following the consummation of this offering, or to those purchasers that elect to purchase such securities in their sole discretion, the opportunity, in lieu of purchasing Class A Units, to purchase Class B Units. Each Class B Unit will consist of one share of Series 1 convertible preferred stock (“Series 1 Preferred”), with a stated value of $1,000 per share and convertible into that number of shares of our common stock determined by dividing the stated value of $1,000 by the conversion price equal to the public offering price of the Class A Units, together with Series 1 Warrants to purchase a number of shares of common stock as would have been issued to such purchaser if such purchaser had purchased Class A units based on the public offering price. The Series 1 Preferred do not have any voting rights but are convertible into shares of common stock. The Class B Units will not be certificated and the shares of Series 1 Preferred and Series 1 Warrants part of such Units are immediately separable and will be issued separately in this offering.
Assumed Public Offering Price	$ per Class A Unit
Conversion price of Series 1 Preferred	Equal to the offering price of the Class A Units.
Shares of common stock underlying the shares of Series 1 Preferred Stock	(1)
Description of Series 1 Warrants	The Series 1 Warrants will have an exercise price not less than % of the public offering price of the Class A Units, will be immediately exercisable and will expire on the five year anniversary of the date of issuance. This prospectus also relates to the offering of shares of common stock issuable upon exercise of the Series 1 Warrants.
Shares of common stock underlying the Series 1 Warrants	(1)
Common Stock outstanding before this offering	shares as of , 2019
Common Stock to be outstanding after this offering, including shares of common stock underlying shares of Series 1 Preferred Stock	shares(1)(2

The Additional Shares and the Warrant 3s 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.

Pursuant to the terms of the SPA, the Company also entered into a Piggyback Registration Rights Agreement (the “Piggyback Registration Rights Agreement”), dated as of October 18, 2022, by and among the Company and the Investors. The Piggyback Registration Rights Agreement provides piggyback registration rights for the shares of common stock that may be acquired by the Investors pursuant to the Warrant 2s. In the event that the Warrant 3s are issued pursuant to the provisions of the SPA, then at the time of such issuances, the Company and the Investors agreed to amend the Piggyback Registration Rights Agreement such that the Piggyback Registration Rights Agreement will also apply with respect to the shares of common stock that may be acquired by the Investors pursuant to the Warrant 3s.

Recent Developments

For a detailed description of recent developments of the Company, see “Description of Business—Recent Developments” on page 36 of this prospectus.

Corporate History

For a detailed description of the corporate history of the Company, see “Description of Business—Corporate History” on page 52 of this prospectus.

~~Table~~Emerging ofGrowth ~~Contents~~Company and Smaller Reporting Company Status

Use of proceeds	We estimate that the net proceeds in this offering will be approximately $ million, based on the assumed public offering price of $ per Class A Unit, the last reported sale price of our common stock on the OTCQB Market on , 2019, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, and an offering price per Class B Unit of $ , excluding proceeds, if any, from exercise of the Series 1 Warrants, after deducting estimated placement agent fees and estimated offering expenses payable by us. We expect to use the net proceeds received from this offering for working capital and general corporate purposes (including research and development and sales and marketing). For a more complete description of our anticipated use of proceeds from this offering, see “Use of Proceeds.”
Limitations on beneficial ownership	Notwithstanding anything herein to the contrary, no holder will be permitted to convert its Series 1 Preferred or exercise its Series 1 Warrants if, after such conversion or exercise, such holder would beneficially own more than 4.99% (or, upon election of purchaser prior to issuance, 9.99%) of the shares of common stock then outstanding (subject to the right of the holder to increase or decrease such beneficial ownership limitation upon notice to us, provided that any increase of such beneficial ownership shall not be effective until 61 days following notice to us and provided that such limitation can never exceed 9.99% and such 61 day period cannot be waived).
Trading of Sysorex Common Stock	Our shares of common stock are quoted on the OTC Markets Group, Inc. under the symbol “SYSX.”
No market for the Series 1 Preferred Stock or Series 1 Warrants	The Units will not be certificated and the securities part of such Units are immediately separable and will be issued separately in this offering. There is no established public trading market for the Series 1 Preferred or the Series 1 Warrants underlying the Units issued in this offering, and we do not intend to apply to list such Series 1 Preferred or Series 1 Warrants on any securities exchange or automated quotation system.
Risk Factors	See “Risk Factors” beginning on page 6 and the other information included in this prospectus for a discussion of factors you should carefully consider before deciding whether to purchase our securities.

As a public reporting company with less than $1,235,000,000 in revenue during our last fiscal year, we qualify as an “emerging growth company” under the Jumpstart our Business Startups Act of 2012 (the “JOBS Act”). An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

(1)

Based on an assumed Series 1 Preferred conversion price of $ per share, the last reported sale price of our common stock on the OTCQB Market on , 2019. The number of shares of our common stock for which each Series 1 Warrant is exercisable equals the number of shares of our common stock under the Class A Units or issuable upon conversion of a share of Series 1 Preferred at the conversion price included in the Class B Units, as applicable.

(2)

The number of shares of our common stock outstanding after this offering is based on shares of common stock outstanding as of , 2018 and excludes, as of that date:

	●	are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act of 2002;

	●	are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

	●	are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

	●	are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

	●	may present only two years of audited financial statements and only two years of related Management’s Discussion & Analysis of Financial Condition and Results of Operations (“MD&A”); and

	●	are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act.

●We ~~shares~~intend ofto ~~common~~take ~~stock~~advantage of ~~issuable~~all ~~upon the exercise~~ of ~~outstanding~~these ~~stock~~reduced ~~options~~reporting ~~under~~requirements ~~our Amended~~ and ~~Restated 2018 Equity Incentive Plan~~exemptions, ~~having~~including athe ~~weighted~~longer ~~average~~phase-in ~~exercise~~periods ~~price~~for ofthe $adoption ~~per share and shares~~ of ~~common~~new ~~stock~~or ~~available~~revised financial ~~for~~accounting ~~issuance~~standards under ~~our~~§107 ~~2018 Equity Incentive Plan; ● shares~~ of ~~common stock issuable upon~~ the ~~exercise~~JOBS ofAct. ~~outstanding~~Our ~~warrants,~~election ~~having a weighted average exercise price of $ per share; ● shares of common stock are reserved for issuance from treasury~~ to ~~(i)~~use the ~~holders~~phase-in ofperiods ~~certain~~may ~~warrants~~make ~~issued~~it bydifficult ~~Inpixon~~to ~~who~~compare our ~~will~~financial bestatements ~~entitled~~ to ~~receive~~those ~~shares~~ of ~~common~~non-emerging ~~stock~~growth ifcompanies ~~the warrants are exercised~~ and ~~(ii)~~other ~~holders~~emerging ofgrowth ~~Inpixon~~companies ~~securities~~ that ~~are~~have ~~subject~~opted toout ~~beneficial~~of ~~ownership~~the ~~restrictions;~~phase-in periods ~~and~~under ●§107 ~~securities~~of tothe beJOBS ~~issued in this Offering~~Act.

~~Unless~~Certain of these reduced reporting ~~otherwise~~requirements ~~indicated~~and exemptions were already available to us due to the fact that we also qualify as a “smaller reporting company” under SEC rules. For instance, ~~all~~smaller ~~information~~reporting incompanies ~~this~~are ~~prospectus:~~not required to obtain an auditor attestation and report regarding management’s assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or Chief Executive Officer pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

●Under ~~assumes~~the JOBS Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our initial sale of common equity pursuant to a registration statement declared effective under the Securities Act of 1933, as amended (the “Securities Act”), or such earlier time that we no ~~exercise~~longer meet the definition of ~~any~~an ~~outstanding~~emerging ~~options~~growth company. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1,235,000,000 in annual revenues, have more than $700 million in market value of our Common stock held by non-affiliates, or ~~warrants~~issue more than $1.0 billion in principal amount of non-convertible debt over a three-year period. We would cease to ~~purchase~~be an emerging growth company on the last day of the fiscal year following the date of the fifth anniversary of our first sale of common ~~stock~~equity securities under an effective registration statement or a fiscal year in which we have $1 billion in gross revenues. Further, under current SEC rules we will continue to qualify as a “smaller reporting company” for so long as we have a public float (i.e., the market value of common equity held by non-affiliates) of less than $250 million as of the last business day of our most recently completed second fiscal quarter.

~~Table~~Summary ofRisk ~~Contents~~ Factors

~~RISK~~Our business is subject to ~~FACTORS~~numerous risks and uncertainties, including those in the section entitled “Risk Factors” and elsewhere in this prospectus. These risks include, but are not limited to, the following:

~~Investing in~~● We have a history of operating losses and our ~~securities~~auditors ~~involves~~have indicated that there is a ~~high~~substantial ~~degree~~doubt ofabout ~~risk.~~our ~~Prospective~~ability ~~investors~~to ~~should~~continue ~~carefully~~as ~~consider~~a ~~the~~going ~~risks~~concern; ~~described~~● ~~below~~We have material weaknesses in our internal control over financial reporting; ● The ongoing coronavirus outbreak, ~~together with~~and ~~all~~measures taken in response thereto, could continue to have a material adverse effect on our business, results of ~~the~~operations, ~~other~~and ~~information~~financial ~~included~~condition; in● ~~this~~We ~~prospectus~~are a holding company whose subsidiaries are given a certain degree of independence, ~~before~~and ~~purchasing~~our failure to integrate our ~~securities.~~subsidiaries ~~There~~may adversely affect our financial condition; ● We are ~~numerous~~a relatively small company with limited staff and ~~varied risks~~a ~~that~~limited accounting department. Our limited staff and resources may ~~prevent~~affect our internal controls over financial reporting. Our failure to implement measures that will ensure adequate controls over our financial and other reporting processes could cause us ~~from~~to ~~achieving~~fail to meet our ~~goals.~~financial Ifand ~~any~~other ofreporting ~~these~~obligations; ~~risks~~● ~~actually~~Adverse ~~occurs,~~judgments or settlements in legal proceedings could materially harm our business, financial condition, or operating results and cash flows; ● Future issuances of ~~operations~~our ~~may~~common bestock ~~materially~~pursuant ~~adversely~~to ~~affected.~~various Inexisting ~~such~~instruments ~~case~~including, but not limited to the ~~trading~~existing convertible debentures and right to shares letter agreements could result in additional significant dilution of the percentage ownership of our shareholders and could cause the price of our common stock ~~could~~to decline ; ● All our assets are encumbered to secure the payment of secured convertible debentures that will require payments if not previously converted to Common Stock; ● Our existing and ~~investors~~future indebt obligations could impair our ~~securities~~liquidity and financial condition, and if we are unable to meet our debt obligations, the lenders could ~~lose~~foreclose ~~all~~on orour ~~part~~assets; ● The Company has a number of convertible notes issued at this time that are currently in default; ● We are dependent upon our executive officers and directors and their ~~investment.~~departure could adversely affect our ability to operate; ● We rely on a few major customers, the loss of which could adversely affect our results of operations; ● The recent transition of Ethereum to proof-of-stake validation caused us to cease mining Ethereum;

Risks Related to Sysorex’s Business

We have a history of operating losses and working capital deficiency and there is no assurance that we will be able to achieve profitability or raise additional financing.

We have a history of operating losses and working capital deficiency. We have incurred recurring net losses of approximately $2.2 million and $16.9 million for the fiscal years ended 2016 and 2017, respectively and net losses of approximately $13.9 million and $5.4 million for the nine months ended September 30, 2017 and 2018, respectively. We had a working capital deficiency of approximately $13.6 million and $26.1 million as of December 31, 2016 and December 31, 2017, respectively. Our continuation is dependent upon attaining and maintaining profitable operations and raising additional capital as needed, but there can be no assurance that we will be able to raise any further financing.

Our ability to generate positive cash flow from operations is dependent upon sustaining certain cost reductions and generating sufficient revenues. In that regard, our revenues have declined by approximately 15.2% for the year ended December 31, 2017 as compared to the same period for the prior fiscal year as a result of our credit limitations with vendors and suppliers limiting our ability to process orders. Revenues continued to decline for the nine months ended September 30, 2018 as a result of credit limitations and the resulting adoption of the new ASC 606 revenue recognition policy beginning in January 2018. Inpixon has funded our operations primarily with proceeds from public and private offerings of its common stock and secured and unsecured debt instruments. Our history of operating losses, the amount of our debt and the potential for significant judgments to be rendered against us may impair our ability to raise capital on terms that we consider reasonable and at the levels that we will require over the coming months. We cannot provide any assurances that we will be able to secure additional funding from public or private offerings or debt financings on terms acceptable to us, if at all. If we are unable to obtain the requisite amount of financing needed to fund our planned operations, it would have a material adverse effect on our business and ability to continue as a going concern, and we may have to curtail, or even to cease, certain operations. If additional funds are raised through the issuance of equity securities or convertible debt securities, it will be dilutive to our stockholders and could result in a decrease in our stock price.

Our level of indebtedness could materially and adversely affect our financial position, including reducing funds available for other business purposes and reducing our operational flexibility, and we may have future capital needs and may not be able to obtain additional financing on acceptable terms.

In connection with the Spin-off, we entered into a new revolving credit facility to be provided by financial institutions to replace the revolving credit facility we currently have available. Although it is anticipated that our debt agreements will restrict the amount of our indebtedness, we may incur additional indebtedness in the future to refinance our existing indebtedness, to finance newly-acquired assets or for other purposes. Our governing documents do not contain any limitations on the amount of debt we may incur and we do not have a formal policy limiting the amount of debt we may incur in the future. Subject to the restrictions set forth in our debt agreements, our board of directors may establish and change our leverage policy at any time without stockholder approval. Any significant additional indebtedness could require a substantial portion of our cash flow to make interest and principal payments due on our indebtedness. Greater demands on our cash resources may reduce funds available to us to pay dividends, make capital expenditures and acquisitions, or carry out other aspects of our business strategy. Increased indebtedness can also limit our ability to adjust rapidly to changing market conditions, make us more vulnerable to general adverse economic and industry conditions and create competitive disadvantages for us compared to other companies with relatively lower debt levels. Increased future debt service obligations may limit our operational flexibility, including our ability to acquire assets, finance or refinance our assets, contribute assets to joint ventures or sell assets as needed.

Moreover, our ability to obtain additional financing and satisfy our financial obligations under our indebtedness outstanding from time to time will depend upon our future operating performance, which is subject to then prevailing general economic and credit market conditions, including interest rate levels and the availability of credit generally, and financial, business and other factors, many of which are beyond our control. A worsening of credit market conditions could materially and adversely affect our ability to obtain financing on favorable terms, if at all.

~~Table~~● We have had to restate our previously issued consolidated financial statements; ● We may face litigation and other risks as a result of ~~Contents~~ the Restatement and material weakness in our internal control over financial reporting; ● Trading on the OTC Markets is volatile and sporadic, which could depress the market price of our common stock and make it difficult for you to resell your common stock; ● The market price of our common stock is likely to be highly volatile because of several factors, including a limited public float; ● Our common stock is currently a “penny stock” under SEC rules. It may be more difficult to resell securities classified as “penny stock;” ● If the benefits of any proposed acquisition do not meet the expectations of investors, stockholders or financial analysts, the market price of our common stock may decline; ● Changes in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial statements, which could cause our stock price to decline; ● Being a public company results in additional expenses, diverts management’s attention and could also adversely affect our ability to attract and retain qualified directors; ● We have been notified of Non-Compliance with OTCQB Bid Price Standards, and our common stock may not be able to continue to trade on the OTCQB; and ● We do not currently have enough authorized shares of common stock under our Articles of Incorporation, as amended, to meet all of our potential obligations to third parties.

~~We may~~In beaddition, ~~unable~~our tomanagement has ~~obtain~~concluded ~~additional~~that ~~financing~~our orhistorical ~~financing~~recurring onlosses ~~favorable~~from ~~terms~~operations orand ~~our~~negative ~~operating~~ cash ~~flow~~flows ~~may~~from beoperations ~~insufficient~~as ~~to satisfy~~well ~~our~~as ~~financial obligations under~~ our ~~indebtedness~~dependence ~~outstanding~~on securing ~~from~~private ~~time~~equity toand ~~time, if any. Among~~ other ~~things,~~financings ~~the~~raise ~~absence of~~substantial andoubt ~~investment~~about ~~grade~~our ~~credit~~ability ~~rating~~to orcontinue ~~any~~as ~~credit~~a ~~rating~~going ~~downgrade~~concern ~~could increase our financing costs~~ and ~~could limit~~ our ~~access~~auditor tohas ~~financing~~included ~~sources.~~an Ifexplanatory ~~financing~~paragraph isrelating ~~not~~to ~~available~~our ~~when~~ability ~~needed, or is available on unfavorable terms, we may be unable~~ to ~~complete acquisitions~~continue oras ~~otherwise~~a ~~take~~going ~~advantage~~concern ofin ~~business~~its ~~opportunities~~audit orreports ~~respond~~for tothe ~~competitive~~fiscal ~~pressures, any of which could materially~~years ~~and~~ended ~~adversely~~December ~~affect our business~~31, ~~financial~~2021 ~~condition~~ and ~~results of operations~~2020.

The lender of our revolving credit facility is not and will not be obligated to make a loan under the credit facility and we may not be able to draw funds on the credit facility at the sole discretion of the lender which could have material adverse effect on our liquidity and financial condition.

We depend on our vendors to provide us with financing on our purchases of inventory and services. In 2016 and 2017, we did experience credit limitations imposed by vendors, which resulted in a significant disruption to our operation and access to merchandise. We use a revolving credit facility to finance invoices and purchase orders received to pre-pay vendors/suppliers to ensure shipment on our behalf to the end customer and will be dependent on our revolving credit facility in order to improve our credit limitations with our vendors, however, our lender is not and will not be obligated to make a loan under the credit facility and we may not be able to draw funds on the credit facility at the sole discretion of the lender which could have material adverse effect on our liquidity and financial condition.

Covenants in the credit facility we expect to enter into may limit our operational flexibility, and a covenant breach or default could materially and adversely affect our business, financial position or results of operations.

The agreements governing our indebtedness are expected to contain customary covenants, which may limit our operational flexibility. The notes are expected to have terms customary for revolving credit facilities of this type, including covenants relating to debt incurrence, liens, restricted payments, asset sales, transactions with affiliates, and mergers or sales of all or substantially all of our assets, and customary provisions regarding optional events of default. The credit agreement is expected to contain customary covenants that, among other things, restrict, subject to certain exceptions, our ability to grant liens on assets, incur indebtedness, sell assets, make investments, engage in acquisitions, mergers or consolidations and pay certain dividends and other restricted payments. We also anticipate that the credit agreement will contain customary events of default that may require us to comply with specified financial maintenance covenants. Breaches of certain covenants may result in defaults and cross-defaults under certain of our other indebtedness, even if we satisfy our payment obligations to the respective obligee. We may not be able to comply with these covenants in the future which could result in the declaration of an event of default and cause us to be unable to borrow under our credit facilities or result in the acceleration of the maturity of indebtedness outstanding under the such credit facilities, which would require us to pay all amounts outstanding. In addition, if the maturity of any indebtedness we incur is accelerated, we may not have sufficient funds available for repayment or we may not have the ability to borrow or obtain sufficient funds to replace the accelerated indebtedness on terms acceptable to us or at all. Our failure to repay such indebtedness could result in the foreclosing on all or a portion of our assets and force us to curtail, or even to cease, our operations.

Adverse judgments or settlements in legal proceedings could materially harm our business, financial condition, operating results and cash flows.

We are currently subject to pending claims and settlement amounts for non-payment by certain vendors in an aggregate amount of approximately $11.9 million as of December 15, 2018, which is approximately 213% of our total assets. We may also be a party to other claims that arise from time to time in the ordinary course of our business, which may include those related to, for example, contracts, sub-contracts, protection of confidential information or trade secrets, adversary proceedings arising from customer bankruptcies, employment of our workforce and immigration requirements or compliance with any of a wide array of state and federal statutes, rules and regulations that pertain to different aspects of our business. We may also be required to initiate expensive litigation or other proceedings to protect our business interests. There is a risk that we will not be successful or otherwise be able to satisfactorily resolve any pending or future litigation. In addition, litigation and other legal claims are subject to inherent uncertainties and management’s view of currently pending legal matters may change in the future. Those uncertainties include, but are not limited to, litigation costs and attorneys’ fees, unpredictable judicial or jury decisions and the differing laws and judicial proclivities regarding damage awards among the states in which we operate. Unexpected outcomes in such legal proceedings, or changes in management’s evaluation or predictions of the likely outcomes of such proceedings (possibly resulting in changes in established reserves), could have a material adverse effect on our business, financial condition, results of operations and cash flows. Due to recurring losses and net capital deficiency, our current financial status may increase our default and litigation risks and may make us more financially vulnerable in the face of pending or threatened litigation.

~~Table~~The ~~of Contents~~ Offering

~~Our business depends on experienced and skilled personnel~~500, ~~and if we are unable to attract and integrate skilled personnel~~000,000 itShares ~~will be~~of ~~more~~Common ~~difficult~~Stock ~~for us to manage our business and complete contracts.~~Underlying Warrants

~~The success of our business depends on the skill of our personnel. Accordingly~~500, ~~it is critical that we maintain~~000,000 ~~and~~Shares ~~continue~~of toCommon ~~build, a~~Stock ~~highly experienced management team and specialized workforce, including those who create software programs, and sales professionals. Competition~~ for ~~personnel, particularly those with expertise in government consulting and a security clearance, is high, and identifying~~Resale ~~candidates~~by ~~with~~Selling the appropriate qualifications can be costly and difficult. We may not be able to hire the necessary personnel to implement our business strategy given our anticipated hiring needs, or we may need to provide higher compensation or more training to our personnel than we currently anticipate. In addition, our ability to recruit, hire and indirectly deploy former employees of the U.S. government is subject to complex laws and regulations, which may serve as an impediment to our ability to attract such former employees.Securityholders

Our business is labor intensive and our success depends on our ability to attract, retain, train and motivate highly skilled employees. The increase in demand for consulting, technology integration and managed services has further increased the need for employees with specialized skills or significant experience in these areas. Our ability to expand our operations will be highly dependent on our ability to attract a sufficient number of highly skilled employees and to retain our employees. We may not be successful in attracting and retaining enough employees to achieve our desired expansion or staffing plans. Furthermore, the industry turnover rates for these types of employees are high and we may not be successful in retaining, training or motivating our employees. Any inability to attract, retain, train and motivate employees could impair our ability to adequately manage and complete existing projects and to accept new client engagements. Such inability may also force us to increase our hiring of independent contractors, which may increase our costs and reduce our profitability on client engagements. We must also devote substantial managerial and financial resources to monitoring and managing our workforce. Our future success will depend on our ability to manage the levels and related costs of our workforce.

Shares to be Issued upon Exercise of Warrants		500,000,000 shares of Common Stock underlying the warrants.

Shares Outstanding Prior to Exercise of Warrants		2,484,426,501 shares of Common Stock as of November 16, 2022.

Shares to be Outstanding Assuming Exercise of All Warrants		2,984,426,501 shares of Common Stock.

Common Stock Held by the Selling Securityholders		We are also registering 500,000,000 shares of Common Stock held by the Selling Securityholders named herein.

Terms of Warrants		Each warrant entitles the holder to purchase one share of our Common Stock at exercise prices of $0.001 per share. Each warrant may be exercised at any time commencing on the date of issuance until the fifth anniversary following the date of issuance. In the event that there is no effective registration statement registering the shares underlying the warrants, then the warrants may be exercised by means of a “cashless exercise” at the holder’s option to exercise the warrants without the payment of any cash.

Use of Proceeds		We expect to receive approximately $500,000.00 in gross proceeds assuming the cash exercise of all of the warrants being registered hereby. However, the warrants may be exercised on a cashless basis, in which case we would not expect to receive any gross proceeds from the cash exercise of the warrants. We intend to use any net proceeds from the cash exercise of the warrants for working capital and general corporate purposes. We will not receive any of the proceeds from the sale of shares of Common Stock by the Selling Securityholders

Trading Market		The Company’s Common Stock is currently quoted on the OTCQB under the symbols “SYSX.”

In the event we are unable to attract, hire and retain the requisite personnel and subcontractors, we may experience delays in completing contracts in accordance with project schedules and budgets, which may have an adverse effect on our financial results, harm our reputation and cause us to curtail our pursuit of new contracts. Further, any increase in demand for personnel may result in higher costs, causing us to exceed the budget on a contract, which in turn may have an adverse effect on our business, financial condition and operating results and harm our relationships with our customers.

Insurance and contractual protections may not always cover lost revenue, increased expenses or liquidated damages payments, which could adversely affect our financial results.

Although we maintain insurance and intend to obtain warranties from suppliers, obligate subcontractors to meet certain performance levels and attempt, where feasible, to pass risks we cannot control to our customers, the proceeds of such insurance or the warranties, performance guarantees or risk sharing arrangements may not be adequate to cover lost revenue, increased expenses or liquidated damages payments that may be required in the future.

The loss of our Chief Executive Officer or other key personnel may adversely affect our operations.

Our success depends to a significant extent upon the operation, experience, and continued services of certain of our officers, including our Chief Executive Officer, as well as other key personnel. While our Chief Executive Officer is employed under an employment contract, there is no assurance we will be able to retain his services. The loss of our Chief Executive Officer or other key personnel could have an adverse effect on us. If our Chief Executive Officer or other executive officers were to leave we would face substantial difficulty in hiring qualified successors and could experience a loss in productivity while any successor obtains the necessary training and experience. Furthermore, we do not maintain “key person” life insurance on the lives of any executive officer and their death or incapacity would have a material adverse effect on us. The competition for qualified personnel is intense, and the loss of services of certain key personnel could adversely affect our business.

Internal system or service failures could disrupt our business and impair our ability to effectively provide our services and products to our customers, which could damage our reputation and adversely affect our revenues and profitability.

Any system or service disruptions on our hosted Cloud infrastructure or disruptions caused by ongoing projects to improve our information technology systems and the delivery of services, if not anticipated and appropriately mitigated, could have a material adverse effect on our business including, among other things, an adverse effect on our ability to bill our customers for work performed on our contracts, collect the amounts that have been billed and produce accurate financial statements in a timely manner. We are also subject to systems failures, including network, software or hardware failures, whether caused by us, third-party service providers, cyber security threats, natural disasters, power shortages, terrorist attacks or other events, which could cause loss of data and interruptions or delays in our business, cause us to incur remediation costs, subject us to claims and damage our reputation. In addition, the failure or disruption of our communications or utilities could cause us to interrupt or suspend our operations or otherwise adversely affect our business. Our property and business interruption insurance may be inadequate to compensate us for all losses that may occur as a result of any system or operational failure or disruption and, as a result, our future results could be adversely affected.

~~Table~~SELECTED ofHISTORICAL ~~Contents~~ CONSOLIDATED FINANCIAL DATA

~~Customer~~The following table presents ~~systems~~our ~~failures~~selected ~~could~~historical ~~damage~~consolidated ~~our~~financial ~~reputation~~data for the periods indicated. The selected historical consolidated financial data for the years ended December 31, 2021 and ~~adversely~~2020 ~~affect~~and ~~our~~the ~~revenues~~balance sheet data as of December 31, 2021 and ~~profitability~~2020 are derived from the audited financial statements. The summary historical financial data for the nine months ended September 30, 2022 and 2021 and the balance sheet data as of September 30, 2022 and 2021 are derived from our unaudited financial statements.

~~Many of~~Historical ~~the~~results ~~systems~~are ~~and networks that we develop, install and maintain~~ included for ~~our~~illustrative ~~customers on premise or host on our infrastructure involve managing~~ and ~~protecting~~informational ~~personal~~purposes ~~information~~only and ~~information~~are ~~relating~~not tonecessarily ~~national~~indicative ~~security~~of ~~and~~results ~~other sensitive government functions. While~~ we ~~have~~expect ~~programs~~in ~~designed~~future toperiods, ~~comply with relevant privacy~~ and ~~security laws and restrictions, if a system or network that~~results weof ~~develop,~~interim ~~install~~periods orare ~~maintain~~not ~~were~~necessarily toindicative ~~fail~~of orresults ~~experience~~for athe ~~security~~entire ~~breach~~year. orThe ~~service~~data ~~interruption, whether caused by us, third-party~~presented ~~service~~below ~~providers,~~should ~~cyber~~be ~~security~~read ~~threats~~in orconjunction ~~other events~~with, weand ~~may~~are ~~experience~~qualified ~~loss~~in oftheir ~~revenue,~~entirety ~~remediation~~by ~~costs~~reference ~~or face claims for damages or contract termination. Any such event could cause serious harm~~ to, ~~our~~“Management’s ~~reputation~~Discussion and ~~prevent us from having access~~ toAnalysis orof ~~being~~Financial ~~eligible~~Condition ~~for further work on such systems~~ and ~~networks.~~Results ~~Our~~of ~~errors~~Operations” and ~~omissions~~our ~~liability~~consolidated ~~insurance~~financial ~~may~~statements beand ~~inadequate to compensate us for all of~~ the ~~damages~~notes ~~that~~thereto weincluded elsewhere ~~may~~in ~~incur~~this ~~and, as a result, our future results could be adversely affected~~prospectus.

~~Our~~The ~~financial~~numbers ~~performance~~presented ~~could~~in bethis ~~adversely~~table ~~affected~~are byin ~~decreases~~thousands inof ~~spending~~dollars, onexcept ~~technology~~number ~~products~~of shares and ~~services~~par byvalue ~~our government customers~~data.

Our sales to our government customers are impacted by government spending policies, budget priorities and revenue levels. Although our sales to federal, state and local government are diversified across multiple agencies and departments, they collectively accounted for approximately 40.1% and 14.4% of 2017 and 2016 net sales, respectively. An adverse change in government spending policies (including budget cuts at the federal level), budget priorities or revenue levels could cause our public sector customers to reduce their purchases or to terminate or not renew their contracts with us, which could adversely affect our business, results of operations or cash flows.

	Year Ended						Nine Months Ended
	December 31, 2021			December 31, 2020			September 30, 2022			September 30, 2021
	(as restated)						(unaudited)
Statement of Operations Data
Total revenues	$	12,666		$	-		$	12,032		$	3,878
Total operating expenses		25,205			145			18,825			12,382
Loss from continuing operations		(12,539	)		(145	)		(6,793	)		(8,504	)
Total other income expense		(41,827	)		(44	)		(3,241	)		(25,996	)
Loss before provision for taxes		(54,366	)		(101	)		(10,034	)		(34,500	)
Income tax provisions		0			0			0			0
Gain (Loss) from discontinued operations		5,236			533			(1,067	)		5,268
Net loss	$	(49,130	)	$	(452	)	$	(11,101	)	$	(29,232	)
Net loss per share – basic and diluted – continuing operations		(0.39	)		(0.0001	)		(0.031	)		(0.262	)
Net income (loss) per share – basic and diluted – discontinued operations	$	0.040		$	0.007		$	(0.003	)	$	0.040

Our business could be adversely affected by the loss of certain vendor partner relationships and the availability of their products.

Balance Sheet Data (at period end)	December 31, 2021			December 31, 2020			September 30, 2022			December 31, 2021
Cash and cash equivalents	$	659		$	67		$	141		$	659
Working capital (deficit) (1)		(21,524	)		(91	)		(21,609	)		(21,524	)
Total assets		25,282			2,024			14,620			25,282
Total liabilities		38,390			199			30,705			38,390
Stockholders’ equity (deficit)		(13,108	)		1,825			(16,085	)		(13,108	)

~~We purchase~~(1) ~~products~~Working ~~for~~capital ~~resale~~represents ~~from~~total ~~vendor~~current ~~partners,~~assets ~~which~~less ~~include~~total ~~OEMs,~~current ~~software publishers, and wholesale distributors~~liabilities. For the year ended December 31, 2017, approximately 81% of our revenue was from purchases from vendor partners. We are authorized by vendor partners to sell all or some of their products via direct marketing activities. Our authorization with each vendor partner is subject to specific terms and conditions regarding such things as sales channel restrictions, product return privileges, price protection policies and purchase discounts. In the event we were to lose one of our significant vendor partners, our business could be adversely affected.

We have entered into, and expect to continue to enter into, joint venture, teaming and other arrangements, and these activities involve risks and uncertainties. A failure of any such relationship could have a material adverse effect on our business and results of operations.

We have entered into, and expect to continue to enter into, joint venture, teaming and other arrangements. These activities involve risks and uncertainties, including the risk of the joint venture or applicable entity failing to satisfy its obligations, which may result in certain liabilities to us for guarantees and other commitments, the uncertainty created by challenges in achieving strategic objectives and expected benefits of the business arrangement, the risk of conflicts arising between us and our partners and the difficulty of managing and resolving such conflicts, and the difficulty of managing or otherwise monitoring such business arrangements. A failure of our business relationships could have a material adverse effect on our business and results of operations.

Our business and operations expose us to numerous legal and regulatory requirements and any violation of these requirements could harm our business.

We are subject to numerous federal, state and foreign legal requirements on matters as diverse as data privacy and protection, employment and labor relations, immigration, taxation, anticorruption, import/export controls, trade restrictions, internal control and disclosure control obligations, securities regulation and anti-competition. Compliance with diverse and changing legal requirements is costly, time-consuming and requires significant resources. We are also focused on expanding our business in certain identified growth areas, such as health information technology, energy and environment, which are highly regulated and may expose us to increased compliance risk. Violations of one or more of these diverse legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations.

~~Table~~RISK ~~of Contents~~ FACTORS

WeAn investment in our securities ~~rely~~carries ona ~~being~~significant ~~able~~degree toof ~~license~~risk. ~~technology~~You ~~from~~should ~~third~~carefully ~~parties~~consider the following risks, ~~however~~as well as the other information contained in this prospectus, weincluding ~~cannot~~our ~~assure~~historical ~~you~~financial ~~that~~statements ~~these~~and ~~licenses~~related ~~will~~notes ~~always~~included ~~be available~~elsewhere in this prospectus, before you decide to uspurchase our securities. AnAny ~~inability~~one of these risks and uncertainties has the potential to ~~license~~cause ~~technology~~material adverse effects on our business, prospects, financial condition and operating results which could cause actual results to differ materially from any forward-looking statements expressed by us and ~~adversely~~a ~~affect~~significant decrease in the value of our ~~business~~common shares and warrants. Refer to “Cautionary Statement Regarding Forward-Looking Statements.”

We ~~rely~~ onmay anot ~~variety~~be ofsuccessful in ~~technology~~preventing ~~that~~the wematerial ~~license~~adverse ~~from~~effects ~~third~~that ~~parties.~~any ~~There~~of ~~can~~the befollowing norisks ~~assurance~~and ~~that~~uncertainties ~~these~~may ~~third~~cause. ~~party~~These ~~technology licenses~~potential ~~will~~risks ~~continue~~and touncertainties may not be ~~available~~a tocomplete uslist onof ~~commercially~~the ~~reasonable~~risks ~~terms,~~and ifuncertainties atfacing ~~all~~us. ~~The~~There ~~loss~~may ofbe oradditional ~~inability~~risks toand ~~maintain or~~uncertainties ~~obtain~~that ~~upgrades~~we toare ~~any~~presently unaware of, ~~these~~or ~~technology~~presently ~~licenses~~consider ~~could~~immaterial, ~~result~~that inmay ~~delays~~become material in ~~completing~~the ~~software~~future ~~enhancements~~ and ~~new~~have ~~development until~~a ~~equivalent~~material ~~technology~~adverse ~~could~~effect beon ~~identified,~~us. ~~licensed~~You could lose all or ~~developed~~a ~~and~~significant ~~integrated.~~portion ~~Any~~of ~~such~~your ~~delays~~investment ~~could~~due ~~materially~~to ~~and~~any ~~adversely affect~~of ~~our~~these ~~business~~risks and uncertainties.

~~The growth~~Summary of ~~our~~Material ~~business is dependent on increasing sales to our existing clients and obtaining new clients, which, if unsuccessful, could limit our financial performance.~~Risks

~~Our ability~~Below tois ~~increase revenues from existing clients by identifying additional opportunities to sell more of our products and services and our ability to obtain new clients depends on~~ a ~~number~~summary of ~~factors, including our ability to offer high quality products and~~material ~~services at competitive prices~~risks, ~~the~~uncertainties ~~strength of our competitors~~ and ~~the~~other ~~capabilities~~factors ofthat ~~our~~could ~~sales~~have ~~and~~a ~~marketing~~material ~~departments.~~effect ~~If we~~on ~~are not able to continue to increase sales of our products and services to existing clients or to obtain new clients in~~ the ~~future,~~ weCompany ~~may not be able to increase our revenues~~ and ~~could~~its ~~suffer a decrease in revenues as well.~~operations:

● We have a history of operating losses and our auditors have indicated that there is a substantial doubt about our ability to continue as a going concern; ● We have material weaknesses in our internal control over financial reporting; ● The ongoing coronavirus outbreak, and measures taken in response thereto, could continue to have a material adverse effect on our business, results of operations, and financial condition; ● We are a holding company whose subsidiaries are given a certain degree of independence, and our failure to integrate our subsidiaries may adversely affect our financial condition; ● We are a relatively small company with limited staff and a limited accounting department. Our limited staff and resources may affect our internal controls over financial reporting. Our failure to implement measures that will ensure adequate controls over our financial and other reporting processes could cause us to fail to meet our financial and other reporting obligations; ● Adverse judgments or settlements in legal proceedings could materially harm our business, ~~depends~~financial oncondition, operating results and cash flows; ● Future issuances of our common stock pursuant to various existing instruments including, but not limited to the ~~continued~~existing ~~growth~~convertible debentures and right to shares letter agreements could result in additional significant dilution of the ~~market~~percentage ~~for~~ownership ITof ~~products~~our shareholders and ~~services~~could cause the price of our common stock to decline; ● All our assets are encumbered to secure the payment of secured convertible debentures that will require payments if not previously converted to Common Stock; ● Our existing and future debt obligations could impair our liquidity and financial condition, ~~which~~and isif ~~uncertain.~~we are unable to meet our debt obligations, the lenders could foreclose on our assets;

The storage and computing and professional services segments of our business include IT products and services solutions that are designed to address the growing markets for on and off-premises services (including migrations, consolidations, Cloud computing and disaster recovery), technology integration services (including storage and data protection services and the implementation of virtualization solutions) and managed services (including operational support and client support). These markets are continuously changing. Competing technologies and services, reductions in technology refreshes or reductions in corporate spending may reduce the demand for our products and services.

Our competitiveness depends significantly on our ability to keep pace with the rapid changes in IT. Failure by us to anticipate and meet our clients’ technological needs could adversely affect our competitiveness and growth prospects.

We operate and compete in an industry characterized by rapid technological innovation, changing client needs, evolving industry standards and frequent introductions of new products, product enhancements, services and distribution methods. Our success depends on our ability to develop expertise with these new products, product enhancements, services and distribution methods and to implement IT solutions that anticipate and respond to rapid changes in technology, the IT industry, and client needs. The introduction of new products, product enhancements and distribution methods could decrease demand for our current products or render them obsolete. Sales of products and services can be dependent on demand for specific product categories, and any change in demand for, or supply of such products, could have a material adverse effect on our net sales if we fail to adapt to such changes in a timely manner.

We operate in a highly competitive market and we may be required to reduce the prices for some of our products and services to remain competitive, which could adversely affect our results of operations.

Our industry is developing rapidly and related technology trends are constantly evolving. In this environment, we face significant price competition from our competitors. We may be unable to offset the effect of declining average sales prices through increased sales volumes and/or reductions in our costs. Furthermore, we may be forced to reduce the prices of the products and services we sell in response to offerings made by our competitors. Finally, we may not be able to maintain the level of bargaining power that we have enjoyed in the past when negotiating the prices of our services.

~~Table~~● The Company has a number of ~~Contents~~ convertible notes issued at this time that are currently in default; ● We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate; ● We rely on a few major customers, the loss of which could adversely affect our results of operations; ● The recent transition of Ethereum to proof-of-stake validation caused us to cease mining Ethereum; ● We have had to restate our previously issued consolidated financial statements; ● We may face litigation and other risks as a result of the Restatement and material weakness in our internal control over financial reporting; ● Trading on the OTC Markets is volatile and sporadic, which could depress the market price of our common stock and make it difficult for you to resell your common stock; ● The market price of our common stock is likely to be highly volatile because of several factors, including a limited public float; ● Our common stock is currently a “penny stock” under SEC rules. It may be more difficult to resell securities classified as “penny stock;” ● If the benefits of any proposed acquisition do not meet the expectations of investors, stockholders or financial analysts, the market price of our common stock may decline; ● Changes in accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial statements, which could cause our stock price to decline; ● Being a public company results in additional expenses, diverts management’s attention and could also adversely affect our ability to attract and retain qualified directors; ● We have been notified of Non-Compliance with OTCQB Bid Price Standards, and our common stock may not be able to continue to trade on the OTCQB; and ● We do not currently have enough authorized shares of common stock under our Articles of Incorporation, as amended, to meet all of our potential obligations to third parties.

Our profitability is dependent on the rates we are able to charge for our products and services. The rates we are able to charge for our products and services are affected by a number of factors, including:

● our clients’ perceptions of our ability to add value through our services; ● introduction of new services or products by us or our competitors; ● our competitors’ pricing policies; ● our ability to charge higher prices where market demand or the value of our services justifies it; ● procurement practices of our clients; and ● general economic and political conditions.

If we are not able to maintain favorable pricing for our products and services, our results of operations could be adversely affected.

Sales of our IT products and services are subject to quarterly and seasonal variations that may cause significant fluctuations in our operating results, therefore period-to-period comparisons of our operating results may not be reliable predictors of future performance.

The timing of our revenues can be difficult to predict. Our sales efforts involve educating our clients about the use and benefit of the products we sell and our services and solutions, including their technical capabilities and potential cost savings to an organization. Clients typically undertake a significant evaluation process that has in the past resulted in a lengthy sales cycle, which typically lasts several months, and may last a year or longer. We spend substantial time, effort and money on our sales efforts without any assurance that our efforts will produce any sales during a given period.

In addition, many of our clients spend a substantial portion of their IT budgets in the second half of the year. Other factors that may cause our quarterly operating results to fluctuate include changes in general economic conditions and the impact of unforeseen events. We believe that our revenues will continue to be affected in the future by cyclical trends. As a result, you may not be able to rely on period-to-period comparisons of our operating results as an indication of our future performance.

A delay in the completion of our clients’ budget processes could delay purchases of our products and services and have an adverse effect on our business, operating results and financial condition.

We rely on our clients to purchase products and services from us to maintain and increase our earnings, however, client purchases are frequently subject to budget constraints, multiple approvals and unplanned administrative, processing and other delays. If sales expected from a specific client are not realized when anticipated or at all, our results could fall short of public expectations and our business, operating results and financial condition could be materially adversely affected.

The profit margins from our IT products and services depend, in part, on the volume of products and services sold. A failure to achieve increases in our profit margins in the future could have a material adverse effect on our financial condition and results of operations.

Given the significant levels of competition that characterize the IT reseller market, it is unlikely that we will be able to increase gross profit margins through increases in sales of IT products alone. Any increase in gross profit margins from this operating sector in the future will depend, in part, on the growth of our higher margin businesses such as IT consulting and professional services. In addition, low margins increase the sensitivity of our results of operations to increases in costs of financing. Any failure by us to maintain or increase our gross profit margins could have a material adverse effect on our financial condition and results of operations.

~~Table~~Risks ofRelated ~~Contents~~ to Our Business

~~Any failures~~We orhave ~~interruptions~~a inhistory of operating losses and our ~~services~~auditors orhave ~~systems~~indicated ~~could~~that ~~damage~~there ~~our~~is ~~reputation~~a ~~and~~substantial ~~substantially~~doubt ~~harm~~about our ~~business~~ability ~~and~~to ~~results of~~continue ~~operations~~as a going concern.

~~Our~~As ~~success~~of ~~depends~~December in31, ~~part~~2021, onthe ~~our~~Company ~~ability~~had toan ~~provide~~approximate ~~reliable~~cash ~~remote~~balance ~~services~~of $0.6 million, ~~technology~~working ~~integration~~capital deficit of approximately $21.5 million, and ~~managed~~an ~~services~~accumulated todeficit ~~our~~of approximately $49.3 million. As of September 30, 2022, the Company had an approximate cash balance of $0.1 ~~clients~~million, a working capital deficit of approximately $21.6 million, and an accumulated deficit of approximately $60.4 million. The ~~operations~~aforementioned factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months following the issuance of our ITfinancial ~~products~~statements. ~~and~~The ~~services~~accompanying ~~are~~consolidated ~~susceptible~~financial tostatements ~~damage~~have orbeen ~~interruption~~prepared ~~from~~on ~~human~~a ~~error,~~going ~~fire,~~concern ~~flood~~basis, ~~power~~which ~~loss,~~contemplates ~~telecommunications~~the ~~failure,~~realization ~~terrorist~~of ~~attacks~~assets and ~~similar~~the ~~events.~~satisfaction Weof ~~could~~liabilities ~~also~~in ~~experience~~the ~~failures~~normal orcourse ~~interruptions~~ of ~~our~~business. ~~systems~~The consolidated financial statements do not include any adjustments relating to the recoverability and ~~services,~~classification of asset amounts or ~~other~~the ~~problems~~classification inof liabilities ~~connection~~that ~~with~~might ~~our~~be ~~operations,~~necessary should the Company be unable to continue as a ~~result~~going ~~of:~~concern within one year after the date the consolidated financial statements are issued.

●The ~~damage~~Company todoes ornot ~~failure~~believe ofthat ~~our~~its ~~computer~~capital ~~software~~resources oras ~~hardware~~of orSeptember 30, ~~our~~2022, ~~connections;~~its ●ability ~~errors~~to insettle ~~the~~convertible ~~processing~~debt ofobligations ~~data~~through byissuance ~~our~~of ~~systems;~~the ●Company’s ~~computer~~shares, ~~viruses~~availability oron ~~software~~the ~~defects;~~SouthStar facility ●to ~~physical~~finance orpurchase ~~electronic~~orders ~~break-ins,~~and ~~sabotage~~invoices, ~~intentional~~reauthorization ~~acts~~ of ~~vandalism~~key vendors and ~~similar~~credit ~~events;~~limitation ●improvements ~~increased~~will ~~capacity~~be ~~demands~~sufficient to orfund ~~changes~~planned inoperations ~~systems~~during ~~requirements~~the ofnext ~~our~~twelve ~~clients;~~months. ~~and~~As ●a ~~errors~~result, bythe ~~our~~Company ~~employees~~will orneed ~~third-party~~additional ~~service~~funds ~~providers~~to support its obligations.

~~Any~~The ~~interruptions~~Company inwill ~~our~~still ~~systems~~require oradditional ~~services~~funds ~~could~~to ~~damage~~support ~~our~~its ~~reputation~~obligations ~~and~~for ~~substantially~~the ~~harm~~next ~~our~~twelve ~~business~~months. ~~and~~The ~~results~~Company ofis ~~operations. While~~exploring wea ~~maintain~~number ~~disaster~~of possible ~~recovery~~solutions ~~plans~~to ~~and~~its ~~insurance~~financing ~~with~~needs, ~~coverage~~including weefforts ~~believe~~ to beraise ~~adequate~~additional capital as needed, ~~claims~~through ~~may~~the ~~exceed~~issuance ~~insurance~~of ~~coverage limits~~equity, ~~may~~equity-linked or ~~not~~debt besecurities, ~~covered~~as bywell ~~insurance~~as orpossible ~~insurance~~transactions ~~may~~with ~~not~~other ~~continue~~companies, tostrategic bepartnerships, ~~available~~and onother ~~commercially~~mechanisms ~~reasonable~~for ~~terms~~addressing our financial condition.

~~Some~~Our capital resources and operating results, as of ~~our~~and ~~services~~through December 31, 2021, consist of the following (i) an overall working capital deficit of $21.5 million, (ii) Cash and ~~solutions~~cash ~~involve~~equivalents ~~storing~~of $0.6 million, of (iii) Net cash used in operating activities of $(8.5) million, (iv) Net cash provided by investing activities of $2.2 million, and ~~replicating~~(v) ~~mission-critical~~Net ~~data~~cash ~~for~~provided ~~our~~by ~~clients~~financing activities of $6.9 million. Our capital resources and ~~are~~operating ~~highly~~results, ~~technical~~as inof and through September 30, 2022, consist of the following (i) an overall working capital ~~nature~~deficit of approximately $21.6 Ifmillion, ~~client~~(ii) ~~data~~Cash isand ~~lost~~cash orequivalents ~~corrupted~~of $0.1 million, ~~our~~of ~~reputation~~(iii) Net cash used in operating activities of $(6.9) million, (iv) Net cash provided by investing activities of $6.4 million, and ~~business~~(v) ~~could~~Net becash ~~harmed~~provided in financing activities of $0 million.

Our IT data center and technology integration services solutions include storing and replicating mission-critical data for our clients. The process of storing and replicating that data within their data centers or at our facilities is highly technical and complex. If any data is lost or corrupted in connection with the use of our products and services, our reputation could be seriously harmed and market acceptance of our IT solutions could suffer. In addition, our solutions have contained, and may in the future contain, undetected errors, defects or security vulnerabilities. Some errors in our solutions may only be discovered after a solution has been in use by clients. Any errors, defects or security vulnerabilities discovered in our solutions after use by clients could result in loss of revenues, loss of clients, increased service and warranty cost and diversion of attention of our management and technical personnel, any of which could significantly harm our business. In addition, we could face claims for product liability, tort or breach of warranty. Defending a lawsuit, regardless of its merit, is costly and may divert management’s attention and adversely affect the market’s perception of us and our service offerings and solutions.

We do not have long-term recurring revenue generating contracts with our clients that utilize our IT products and services, and such clients may cease providing new purchase orders at any time or reduce the amount of purchases they make. Any such action may result in a decline of revenues we receive from our IT products and services and harm our results of operations.

Our operations depend upon our relationships with our clients. Revenues from our IT products and services are typically driven by purchase orders received every month. The majority of revenues from our IT products and services come from one time purchase orders that do not guarantee any future recurring revenues. During the fiscal year ended December 31, 2017, approximately 45% of such revenues are recurring and based on contracts that range from 1-5 years for warranty and maintenance support. The Company’s performance obligation is to work with customers to identify the computer maintenance and warranty services that best suit the customer’s needs and sell them those products and services however the maintenance is provided to the customer by the manufacturer. For these contracts the customer is invoiced one time and pays up front for the full term of the warranty and maintenance contract. Prior to January 1, 2018 when the new Accounting Standards Codification (“ASC”) 606 revenue recognition standards were applied, revenue from these contracts was determined ratably over the contract period with the unearned revenue recorded as deferred revenue and amortized over the contract period. Clients with these types of contracts may cease providing new purchase orders at any time, and may elect not to renew such contracts. If clients cease providing us with new purchase orders, diminish the services purchased from us, cancel executed purchase orders or delay future purchase orders, revenues received from the sale of our IT products and services would be negatively impacted, which could have a material adverse effect on our business and results of operations. There is no guarantee that we will be able to retain or generate future revenue from our existing clients or develop relationships with new clients.

We rely on a limited number of key customers, the importance of which may vary dramatically from year to year, and a loss of one or more of these key customers may adversely affect our operating results.

Our top three customers accounted for approximately 24.7% and 39.8% of our gross revenue during the years ended December 31, 2017 and 2016, respectively. One customer accounted for 24% of our gross revenue in 2016 and 4% in 2017, however this customer may or may not continue to be a significant contributor to revenue in 2018. The loss of a significant amount of business from one of our major customers would materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost business. Significant clients or projects in any one period may not continue to be significant clients or projects in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced by that customer to the extent that such risks impede the customer’s ability to stay in business and make timely payments to us.

~~Table~~We ofhave ~~Contents~~ material weaknesses in our internal control over financial reporting.

~~Consolidation~~Section in404 of the ~~industries~~Sarbanes-Oxley Act requires annual management assessments of the effectiveness of our internal control over financial reporting. Our management assessed the effectiveness of our disclosure controls and procedures as of December 31, 2021 and concluded that we ~~serve~~had material weaknesses in orour ~~from~~internal ~~which~~control weover ~~purchase~~financial ~~could~~reporting ~~adversely~~and ~~affect~~therefore, our ~~business~~disclosure controls and procedures may not be effective in providing material information required to be included in any future periodic SEC filings on a timely basis and to ensure that information required to be disclosed in any future periodic SEC filings is accumulated and communicated to our management to allow timely decisions regarding required disclosure about our internal control over financial reporting. See “Item 9A: Controls and Procedures.” More specifically, our internal control over financial reporting was not effective due to the following material weaknesses:

~~Some of the clients we serve may seek to achieve economies of scale by combining with or acquiring other companies~~1. IfThe ~~two~~Company ordoes ~~more of~~not ~~our~~have ~~current clients combine their operations, it may decrease the amount of work that we perform for these clients. If one of our current clients merges or consolidates with~~ a ~~company~~formal ~~that~~top-down ~~relies~~risk onassessment ~~another~~process ~~provider~~to ~~for~~identify ~~its~~significant ~~consulting,~~process ~~systems integration and technology~~areas, orunderlying ~~outsourcing~~key ~~services~~controls, wenor ~~may~~does ~~lose work from that client or lose~~ the ~~opportunity~~Company tohave ~~gain~~a ~~additional~~monitoring ~~work.~~process ~~If two~~in ~~or more of our suppliers merge or consolidate operations, the increased market power of the larger company could also increase our product costs and~~ place ~~competitive~~to ~~pressures~~monitor oninternal ~~us.~~control ~~Any~~over offinancial ~~these possible results of industry consolidation could adversely affect our business~~reporting.

2. The ~~loss~~ ofCompany ~~any~~did ~~key~~not ~~manufacturer~~properly design or ~~distributor~~maintain ~~relationships,~~effective orentity ~~related~~level ~~industry~~monitoring ~~certifications~~controls over the financial close and reporting process. The Company’s controls surrounding the review of financial statements, ~~could~~vendor ~~have~~agreements, ankey ~~adverse~~reconciliations ~~effect~~and ~~on our~~accounting ~~business~~for complex transactions were not designed and did not operate at a level of precision that would prevent or detect a material misstatement.

~~As part~~3. ofThe ~~our~~Company ~~end-to-end~~did ITnot ~~solutions,~~design ~~we are authorized resellers of the products~~ and ~~services~~implement ofappropriate ~~leading~~user ITaccess ~~manufacturers~~controls ~~and distributors.~~to Inensure ~~many~~segregation ~~cases, we have achieved the highest level~~ of ~~relationship~~duties ~~the~~that ~~manufacturer~~would oradequately ~~distributor~~restrict ~~offers.~~user Inaccess ~~addition, our employees hold certifications issued by these manufacturers and by industry associations relating~~ to ~~the~~financially ~~configuration,~~significant ~~installation and~~information ~~servicing of these products. We differentiate ourselves from our competitors by the range of manufacturers and distributors we represent~~systems, ~~the relationship level we have achieved with these manufacturers~~ and distributors and the scope of the manufacturer and industry certifications our employees hold. There can be no assurance that we will be able to retain these relationships with our manufacturers and distributorsschedules, ~~that~~specifically wesurrounding ~~will~~mining berevenue ~~able to retain the employees holding these manufacturer~~ and ~~industry~~mining ~~certifications, or that our employees will maintain their manufacturer or industry certifications~~equipment. ~~The loss of any of these relationships or certifications could have a material adverse effect on our business.~~

~~We may~~4. ~~experience~~The aCompany ~~reduction~~did innot ~~the~~properly ~~incentive~~design ~~programs~~or ~~offered~~maintain toeffective uscontrols byover ~~our~~its service organizations and IT vendors. ~~Any~~More ~~such~~specifically, ~~reduction~~the ~~could~~Company ~~have~~did anot ~~material~~properly ~~adverse effect~~design onor ~~our~~implement ~~business,~~controls ~~results~~to ofensure ~~operations~~that data received from third parties is complete and accurate or have controls in place to review the applicable complementary user entity controls described in service organizations’ reports for their potential impact on the Company’s financial ~~condition~~reporting.

WeAlthough ~~receive~~management ~~payments~~has ~~and credits from vendors~~implemented, ~~including consideration pursuant to volume sales incentive programs~~ and ~~marketing~~continues ~~development funding programs. These programs are usually of finite terms and may not be renewed or may be changed in a way that has an adverse effect on us. Vendor funding is used~~ to ~~offset~~implement, ~~among~~actions ~~other~~to ~~things,~~remediate ~~inventory~~the ~~costs,~~underlying ~~cost~~causes of ~~goods~~the ~~sold,~~control ~~marketing~~deficiencies ~~costs~~that ~~and other~~gave ~~operating~~rise ~~expenses.~~the ~~Certain~~material ~~of these funds are based on our volume of net sales or purchases~~weaknesses, ~~growth rate of net sales or purchases and marketing programs. If~~ we docannot ~~not~~provide ~~grow~~any ~~our net sales or if we are not in compliance with the terms of these programs, there could be a material negative effect on the amount of incentives offered or paid to us by vendors. No~~ assurance ~~can be given~~ that we ~~will~~the ~~continue~~remediation toefforts ~~receive such incentives or that we~~ will be ~~able~~successful ~~to collect outstanding amounts relating to these incentives in a timely manner,~~ or atthat ~~all. Any sizeable reduction in, the discontinuance of, or a significant delay in receiving or the inability to collect such incentives, particularly related to incentive programs with one of~~ our ~~largest~~internal ~~partners, Hewlett-Packard Company,~~control ~~could~~over ~~have a material adverse effect on our business, results of operations and~~ financial ~~condition.~~reporting Ifwill webe ~~are~~effective ~~unable~~as to react timely to any fundamental changes in the programs of vendors, including the elimination of funding for some of the activities for which we have been compensated in the past, such changes would have a ~~material~~result ~~adverse effect on our business, results~~ of ~~operations~~ ~~and~~these ~~financial condition~~efforts.

WeOn ~~may~~May ~~need~~17, ~~additional~~2022, ~~cash~~subsequent ~~financing~~to the evaluation as of December 31, 2021, management, in agreement with the audit committee of the Company’s Board of Directors, determined that the previously issued financial statements for the Affected Periods (as hereinafter defined) should no longer be relied upon and ~~any~~required ~~failure~~restatement. toWe ~~obtain~~then ~~cash~~filed ~~financing~~Amendment ~~could~~No. ~~limit~~1 to our ~~ability~~Form 10-K for the year ended December 31, 2021 (the “Amendment No. 1”) on May 23, 2022 to ~~grow~~restate the Company’s previously issued consolidated financial statements and financial information as of and for the fiscal year ended December 31, 2021, as well as to provide restated interim financial information as of September 30, 2021 and for the three and nine months then ended (collectively, the “Affected Periods”), contained in our ~~business~~Annual Report on Form 10-K for the fiscal year ended December 31, 2021, with the Securities and ~~develop~~Exchange Commission (the “SEC”) oron ~~enhance~~April 14, 2022 (the “Original Form 10-K”) and in our ~~service~~Quarterly ~~offerings~~Report on Form 10-Q for the quarterly period ended September 30, 2021 (the “Form 10-Q”). On June 1, 2022 we filed Amendment No. 2 to ~~respond~~our Form 10-K because Amendment No. 1 contained a typographical error on the date of the audit report of Friedman LLP (“Friedman”). Although Friedman’s audit report was dated April 14, 2022, except for the effects of the restatement discussed in Note 1A, Note 12, Note 13, and Note 19 to ~~market~~the ~~demand~~consolidated financial orstatements, ~~competitive~~as ~~challenges~~to which the date is May 23, 2022, the copy of Friedman’s audit report that was included in Amendment No. 1 incorrectly included a date of April 13, 2022 (instead of April 14, 2022). Amendment No. 2 on Form 10-K (“Amendment No. 2”) was filed to correct the typographical error regarding the date on Friedman’s audit report, such that the date of Friedman’s audit report is April 14, 2022, except for the effects of the restatement discussed in Note 1A, Note 12, Note 13, and Note 19 to the consolidated financial statements, as to which the date is May 23, 2022.

We expect that we will need to raise funds in order to continue our operations and implement our plans to grow our business. However, if we decide to seek additional capital, we may be unable to obtain financing on terms that are acceptable to us or at all. If we are unable to raise the required cash, our ability to grow our business and develop or enhance our service offerings to respond to market demand or competitive challenges could be limited.

~~Table~~As discussed in Note 1A, “Restatement of ~~Contents~~ Consolidated Financial Statements,” of the notes to the accompanying consolidated financial statements as of and for the year ended December 31, 2021 included in Amendment No.1 and Amendment No. 2, the correction of certain errors, as discussed in Amendment No.1 and Amendment No. 2, from previously reported information for the year ended December 31, 2021, has resulted in an increase in net loss of $8.4 million, primarily as a result of a $6.3 million in expense related to the revaluation on the derivative conversion liability, an increase in interest expense of $0.9 million, and an increase in the loss contingency on debt default of $1.2 million.

WeIf ~~rely~~we onfail ~~inventory~~to ~~financing~~comply with the rules under the Sarbanes-Oxley Act related to disclosure controls and ~~vendor~~procedures ~~credit~~in ~~arrangements~~the ~~for~~future, or, if we continue to have material weaknesses or other deficiencies in our ~~daily~~internal ~~working~~control ~~capital~~and accounting procedures and ~~certain~~disclosure ~~operational~~controls ~~functions,~~and ~~the~~procedures, ~~loss~~our ofstock ~~which~~price could ~~have~~decline asignificantly and raising capital could be more difficult. If additional material ~~adverse~~weaknesses ~~effect~~or onsignificant deficiencies are discovered or if we otherwise fail to address the adequacy of our ~~future~~internal control over financial reporting and disclosure controls and procedures, our business may be harmed. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our securities could drop significantly.

~~We rely on inventory financing and vendor financing arrangements for daily working capital and to fund equipment purchases for our technology sales business.~~ The ~~loss~~ongoing ~~of any of our inventory financing or vendor credit financing arrangements, a reduction in~~coronavirus ~~the amount of credit granted to us by our vendors~~outbreak, orand ameasures ~~change~~taken in ~~any~~response ofthereto, ~~the material terms of these arrangements~~ could ~~increase our~~continue ~~need~~to ~~for, and the cost of, working capital and~~ have a material adverse effect on our ~~future~~business, results. ~~These credit arrangements are discretionary on the part~~ of ~~our creditors and require the performance of certain operational covenants. There can be no assurance~~operations, ~~that we will continue to meet those covenants~~ and ~~failure~~financial ~~to do so may limit availability of, or cause us to lose, such financing~~condition. ~~There can be no assurance that such financing will continue to be available to us in the future on acceptable terms.~~

IfOur webusiness ~~cannot~~is ~~collect~~highly ~~our~~susceptible ~~receivables~~to orchanges ifin ~~payment~~economic isconditions. ~~delayed~~Our products and services are directly tied to the production and sale of goods and, ~~our~~more ~~business~~generally, ~~may~~to bethe North American economy. The COVID-19 pandemic has adversely ~~affected~~impacted byeconomic ~~our~~activity ~~inability~~and conditions worldwide and created significant volatility and disruption to ~~generate~~financial markets. Efforts to control the spread of COVID-19 have led governments ~~cash~~and ~~flow~~other authorities to impose restrictions which have resulted in business closures and disrupted supply chains worldwide. As a result, transportation, ~~provide~~and ~~working~~supply ~~capital~~chain orcompanies such as ours have experienced slowdowns and reduced demand and could continue to negatively impact our business ~~operations~~.

~~Our~~Furthermore, ~~business~~quarantines, ~~depends~~shelter onin ~~our~~place ~~ability~~orders, tolabor ~~successfully~~shortages ~~obtain~~due ~~payment~~to ~~from~~illness ~~our~~and ~~clients~~otherwise, ofbusiness ~~the amounts they owe us for products received from us~~ and ~~any~~facility ~~work~~closures ~~performed~~or byother ~~us. The timely collection of our receivables allows us~~ disruptions to ~~generate cash flow, provide working capital and continue~~ our ~~business~~ operations., ~~Our clients may fail to pay~~ or ~~delay~~our ~~the~~customers’ ~~payment of invoices for a number of reasons~~operations, ~~including~~ ~~financial difficulties resulting from macroeconomic conditions or lack of an approved budget. An extended delay or default in payment relating to a significant account will~~ have aalso ~~material~~adversely ~~and~~impacted ~~adverse~~demand ~~effect~~for onour ~~the~~services ~~aging schedule~~ and ~~turnover days of~~ our ~~accounts~~ability ~~receivable.~~to Ifprovide services ~~we are unable~~ to ~~timely collect~~ our ~~receivables from our clients for any reason, our business and financial condition could be adversely affected~~customers.

We ~~depend~~ onare ~~the~~a ~~U.S.~~holding ~~government~~company ~~for~~whose subsidiaries are given a ~~substantial~~certain ~~portion~~degree of ~~our~~independence, ~~business~~ and ~~government~~our ~~budget~~failure ~~impasses~~to ~~together~~integrate ~~with~~our ~~changes~~subsidiaries ~~in government~~may ~~defense~~adversely ~~spending~~affect ~~could have adverse consequences on~~ our financial ~~position, results of operations and business~~condition.

AWe ~~substantial~~have ~~portion~~given of our ~~revenues~~subsidiary ~~from~~companies ~~our operations have been from~~ and ~~will~~their ~~continue~~executives toa becertain ~~from~~degree ~~sales~~of ~~and~~independence ~~services~~in ~~rendered directly~~decision-making. orOn ~~indirectly to~~ the ~~U.S.~~one ~~government. Consequently~~hand, ~~our~~this ~~revenues~~independence may ~~are~~increase ~~highly dependent on~~ the ~~government’s~~sense ~~demand for~~of ~~computer~~ownership ~~systems~~at ~~and~~all ~~related~~levels; ~~services.~~on ~~Our revenues from~~ the ~~U.S.~~other ~~government largely result from contracts awarded to us under various U.S. government programs~~hand, ~~primarily~~it ~~defense-related~~has ~~programs~~also ~~with~~increased the ~~Department~~difficulty of ~~Defense~~the ~~(DoD),~~integration asof ~~well as a broad~~operation ~~range~~and ofmanagement, ~~programs~~which ~~with~~has ~~Bureau~~resulted ofin ~~Prisons,~~increased ~~National~~difficulty ~~Institutes~~ of ~~Health~~management ~~(NIH),~~integration. ~~National~~In ~~Aeronautics and Space Administration (NASA),~~ the ~~intelligence~~event ~~community~~we ~~and~~are ~~other~~not ~~departments~~able ~~and~~to ~~agencies.~~successfully ~~Cost~~manage our ~~cutting~~subsidiaries, ~~including~~this ~~through~~will ~~consolidation~~result ~~and~~in ~~elimination~~operating ~~of duplicative~~difficulties ~~organizations~~ and ~~insurance,~~have ~~has become~~ a ~~major~~negative ~~initiative~~impact ~~for~~on ~~the government. The funding of~~ our ~~programs is subject to the overall U~~business.~~S. government budget and appropriation decisions and processes which are driven by numerous factors, including geo-political events and macroeconomic conditions.~~

~~The Budget~~We ~~Control Act of 2011 enacted 10-year discretionary spending caps which~~ are ~~expected to generate over $1 trillion in savings for the U.S. government,~~ a ~~substantial~~relatively ~~portion~~small ofcompany ~~which comes from DoD baseline spending reductions. In addition, the Budget Control~~with ~~Act~~limited ofstaff 2011 provides for additional automatic spending cuts (referred to as “sequestration”) totaling $1.2 trillion over nine years which were implemented beginning in the U.S. government fiscal year ending September 30, 2013 (GFY13). These reduction targets will further reduce DoD and ~~other~~a ~~federal~~limited ~~agency~~accounting ~~budgets~~department. ~~Although~~Our ~~the~~limited ~~Office~~staff ~~of Management~~ and ~~Budget~~resources ~~has~~may ~~provided~~affect guidance to agencies on implementing sequestration cuts, there remains much uncertainty about how exactly sequestration cuts will be implemented and the impact those cuts will have on contractors supporting the government. We are not able to predict the impact of future budget cuts if any, including sequestration, on our ~~Company~~internal orcontrols ~~our~~over financial ~~results~~reporting. Our ~~However,~~failure ~~we expect that concerns related~~ to ~~the~~implement ~~national~~measures ~~debt may impact DoD spending levels and~~ that ~~implementation of the automatic spending cuts without change~~ will ~~reduce,~~ ~~delay~~ensure oradequate ~~cancel~~controls ~~funding~~over ~~for certain of~~ our ~~contracts~~financial —and ~~particularly~~other ~~those~~reporting ~~with~~processes ~~unobligated~~could ~~balances~~cause —us ~~and~~to ~~programs~~fail ~~and~~to ~~could~~meet ~~adversely impact~~ our ~~operations,~~ financial ~~results~~ and ~~growth~~other ~~prospects~~reporting obligations.

AWhile ~~significant~~we ~~reduction~~continue into ~~defense~~evaluate ~~spending~~and ~~could~~improve ~~have long-term consequences for~~ our ~~size~~internal ~~and structure. In addition~~controls, ~~reduction in~~we ~~government~~are ~~priorities~~a ~~and~~relatively ~~requirements~~small ~~could~~company ~~impact~~with ~~the~~limited ~~funding~~staff, orparticularly ~~the~~with ~~timing~~a ~~of funding, of our programs, which could negatively~~limited ~~impact~~accounting ~~our results of operations and financial condition~~department. InThe ~~addition,~~Company wecurrently ~~are~~relies ~~involved~~on ~~in U.S. government programs which are classified by~~ the ~~U.S.~~part-time ~~government~~services ~~and~~of ~~our~~third-party ~~ability~~consultants to ~~discuss~~help ~~these~~us ~~programs,~~with ~~including~~our ~~any risks and disputes and claims associated with~~financial ~~and~~accounting, our ~~performance~~reporting ~~under such programs~~obligations, ~~could~~and beour ~~limited~~controls ~~due~~over tofinancial ~~applicable~~processes ~~security~~and ~~restrictions~~reporting.

~~The~~Internal Ucontrol over financial reporting cannot provide absolute assurance of achieving financial reporting objectives because of its inherent limitations.S. ~~government~~Internal ~~systems~~control ~~integration~~over ~~business~~financial reporting is ~~intensely~~a ~~competitive~~process that involves human diligence and wecompliance and is subject to lapses in judgment and breakdowns resulting from human failures. Internal control over financial reporting also can be circumvented by collusion or improper management override. Because of such limitations, there is a risk that material misstatements may not be ~~able~~prevented toor ~~win~~detected on ~~government~~a ~~bids~~timely ~~when~~basis ~~competing against~~by ~~much~~internal ~~larger~~control ~~companies~~over financial reporting. However, ~~which~~these ~~could~~inherent ~~reduce~~limitations ~~our~~are ~~revenues~~known features of the financial reporting process.

Large computer systems integration contracts awarded by the U.S. government are few in number and are awarded through a formal competitive bidding process, including indefinite delivery/indefinite quantity (IDIQ), GSA Schedule and other multi-award contracts. Bids are awarded on the basis of price, compliance with technical bidding specifications, technical expertise and, in some cases, demonstrated management ability to perform the contract. There can be no assurance that we will win and/or fulfill additional contracts. Moreover, the award of these contracts is subject to protest procedures and there can be no assurance that we will prevail in any ensuing legal protest. The failure to secure a significant dollar volume of U.S. government contracts in the future would adversely affect Sysorex Government, our subsidiary.

~~Table~~Due to ofour ~~Contents~~ current staffing limitations, we cannot be certain that the measures we implement in the future will ensure that we design, undertake, and maintain adequate controls over our financial processes and reporting. Any failure by us to hire and retain experienced accounting and financial reporting personnel, implement required new or improved controls, or any difficulties we encounter in their implementation, could cause us to fail to meet our reporting obligations.

~~The U.S.~~Adverse ~~government~~judgments systems integration business is intensely competitive and subject to rapid change. Sysorex competes with a large number of systems integrators, hardware and software manufacturers, and other large and diverse companies attempting to enter or ~~expand~~settlements ~~their presence~~ in ~~the U.S. government market. Many of the existing and potential competitors have greater financial,~~ ~~operating~~legal ~~and~~proceedings ~~technological~~could ~~resources~~materially ~~than~~harm ~~we have. The competitive environment may require us to make changes in~~ our ~~pricing~~business, ~~services~~ or marketing. The competitive bidding process involves substantial costs and a number of risks, including significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us, or that may be awarded, but for which we do not receive meaningful revenues. Accordingly, our success depends on our ability to develop services and products that address changing needs and to provide people and technology needed to deliver these services and products. To remain competitive, we must consistently provide superior service, technology and performance on a cost-effective basis to our customers. Our response to competition could cause us to expend significant financial ~~and other resources~~condition, ~~disrupt~~operating ~~our~~results ~~operations~~ and ~~strain~~cash ~~relationships with partners, any of which could harm our business and/or financial condition~~flows.

~~Sysorex~~We ~~Government’s~~are ~~financial~~subject ~~performance~~to pending claims for non-payment by certain vendors in an aggregate amount of approximately $0.7 million including interest as of December 31, 2021, which is ~~dependent~~approximately on2.7% of our ~~ability~~total assets. We may also be a party to ~~perform~~other onclaims that arise from time to time in the ordinary course of our Ubusiness, which may include those related to, for example, contracts, sub-contracts, protection of confidential information or trade secrets, adversary proceedings arising from customer bankruptcies, employment of our workforce and immigration requirements or compliance with any of a wide array of state and federal statutes, rules and regulations that pertain to different aspects of our business.S We may also be required to initiate expensive litigation or other proceedings to protect our business interests. There ~~government~~is ~~contracts~~a risk that we will not be successful or otherwise be able to satisfactorily resolve any pending or future litigation. In addition, litigation ~~which~~and other legal claims are subject to inherent uncertainties and management’s view of currently pending legal matters may change in the future. Those uncertainties include, but are not limited to, ~~termination~~litigation ~~for~~costs ~~convenience~~and attorneys’ fees, unpredictable judicial or jury decisions and the differing laws and judicial proclivities regarding damage awards among the states in which we operate. Unexpected outcomes in such legal proceedings, or changes in management’s evaluation or predictions of the likely outcomes of such proceedings (possibly resulting in changes in established reserves), could ~~harm~~have a material adverse effect on our business, financial condition, results of operations and cash flows. Due to recurring losses and net capital deficiency, our current financial ~~condition~~status may increase our default and litigation risks and may make us more financially vulnerable in the face of pending or threatened litigation.

~~Sysorex~~Future issuances ~~Government’s~~of ~~financial performance is dependent on~~ our ~~performance~~common ~~under~~stock ~~our~~pursuant ~~U.S. government contracts. Government customers have the right~~ to ~~cancel~~various ~~any~~existing ~~contract~~instruments ~~at their convenience. An unanticipated termination of~~including, orbut ~~reduced~~not ~~purchases~~limited ~~under, one of our major contracts whether due~~ to ~~lack of funding, for convenience or otherwise, or~~ the ~~occurrence~~existing ofconvertible ~~delays,~~debentures ~~cost overruns~~ and ~~product~~ ~~failures could adversely impact our results of operations and financial condition. If one of our contracts were terminated~~right ~~for convenience, we would generally be entitled~~ to ~~payments~~shares ~~for~~letter ~~our~~agreements ~~allowable~~could ~~costs~~result ~~and~~in ~~would~~additional ~~receive~~significant ~~some~~dilution ~~allowance for profit on the work performed. If one~~ of ~~our contracts were terminated for default, we would generally be entitled to payments for our work that has been accepted by~~ the ~~government.~~percentage Aownership ~~termination arising out~~ of our ~~default~~shareholders ~~could expose us to liability~~ and ~~have~~could acause ~~negative impact on our ability to obtain future contracts and orders. Furthermore, on contracts for which we are a subcontractor and not~~ the ~~prime~~price ~~contractor, the U.S. government could terminate the prime contract for convenience or otherwise, irrespective~~ of our ~~performance~~common asstock ato ~~subcontractor~~decline. ~~The termination or cancellation of U.S. government contracts, no matter what the reason, could harm our results of operations and financial condition.~~

~~Our~~In ~~failure~~the future, the Company will have an obligation to ~~comply~~issue ~~with~~its acommon ~~variety~~stock ofpursuant ~~complex~~to ~~procurement~~various ~~rules~~securities ~~and~~instruments ~~regulations~~entitling ~~could~~their ~~result~~holders to inreceive ~~our~~shares ~~being~~of ~~liable~~the ~~for~~Company’s ~~penalties~~common stock, including ~~termination~~but ofnot ~~our~~limited Uto rights to shares letter agreements and convertible debentures.S. ~~government~~Although ~~contracts~~such instruments typically provide for the limitation of the percentage of the common stock of the respective beneficial owners, ~~disqualification~~the holders of such instruments are expected to obtain shares of common stock from ~~bidding~~time-to-time onor, ~~future~~in ~~U.S.~~some ~~government~~instances, ~~contracts~~to ~~and~~direct ~~suspension~~the orCompany ~~debarment~~to ~~from~~issue Uthe shares of common stock to designated third parties.S. ~~government~~As ~~contracting~~a ~~that~~result, ~~could~~our ~~adversely~~shareholders ~~affect~~may be materially diluted, and the price of our ~~financial~~common ~~condition~~stock may decline.

~~We must~~All ~~comply with laws and regulations relating to the formation, administration and performance of U.S. government contracts, which affect how we do business with~~ our ~~customers~~assets ~~and may impose added costs on our business. U.S. government contracts generally~~ are ~~subject~~encumbered to: ~~(i) the Federal Acquisition Regulation (FAR), which sets forth policies, procedures and requirements for the acquisition~~secure ~~of goods and services by~~ the ~~U.S.~~payment government; (ii) department-specific regulations that implement or supplement FAR, such as the DoD’s Defense Federal Acquisition Regulation Supplement (DFARS); and (iii) other applicable laws and regulations. We are also subject to the Truth in Negotiations Act, which requires certification and disclosure of ~~cost~~secured and pricing data in connection with certain contract negotiations; the Procurement Integrity Act, which regulates access to competitor bid and proposal information and government source selection information, and our ability to provide compensation to certain former government officials; the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. government for payment or approval; and the U.S. Government Cost Accounting Standards, which impose accounting requirements convertible debentures that ~~govern~~will ~~our~~require ~~right~~payments toif ~~reimbursement~~not ~~under~~previously ~~certain~~converted ~~cost-based U.S. government contracts. These regulations impose a broad range of requirements, many of which are unique~~ to ~~government~~Common ~~contracting, including various procurement, import and export, security, contract pricing and cost, contract termination and adjustment, and audit requirements~~Stock. A contractor’s failure to comply with these regulations and requirements could result in reductions to the value of contracts, contract modifications or termination, and the assessment of penalties and fines and lead to suspension or debarment, for cause, from government contracting or subcontracting for a period of time. In addition, government contractors are also subject to routine audits and investigations by U.S. government agencies such as the Defense Contract Audit Agency (DCAA) and Defense Contract Management Agency (DCMA). These agencies review a contractor’s performance under its contracts, cost structure and compliance with applicable laws, regulations and standards. The DCAA also reviews the adequacy of and a contractor’s compliance with its internal control systems and policies, including the contractor’s purchasing, property, estimating, compensation and management information systems. During the term of any suspension or debarment by any U.S. government agency, contractors can be prohibited from competing for or being awarded contracts by U.S. government agencies. The termination of any of our significant government contracts or the imposition of fines, damages, suspensions or debarment would adversely affect the Company’s business and financial condition.

We encumbered all our assets to secure the payment of indebtedness and accrued interest due on secured convertible debentures required to be repaid by approximately July of 2022, subject to certain extensions, if not previously converted. In the event of default in repayment, our secured creditor could exercise its remedies, including the execution on all our assets, which would result in the termination of our activities. Unless we generate enough cash, we may not have sufficient funds to pay our debentures and other indebtedness when due. In such event, we might be required to sell our assets and properties to meet our obligations, or to seek an extension to our debentures, or alternative debt or equity financing. If full repayment, conversion, sale, extension, or refinancing is not obtained or consummated, we could default in our obligations.

Even if we are not in default of the debentures, the existence of these secured obligations and the terms of securities purchase agreement may impair our ability to obtain capital from external sources in a certain manner.

~~Table~~Our ofexisting ~~Contents~~ and future debt obligations could impair our liquidity and financial condition, and if we are unable to meet our debt obligations, the lenders could foreclose on our assets.

~~The~~All ~~U.S.~~of ~~government~~our ~~may~~assets ~~adopt~~are ~~new~~encumbered ~~contract~~to ~~rules~~secure ~~and~~the ~~regulations~~payment orof ~~revise~~secured ~~its~~convertible ~~procurement~~debentures ~~practices~~that inwill arequire ~~manner~~payments ~~adverse~~if tonot uspreviously atconverted ~~any~~to ~~time~~common stock. Our debt and financial obligations:

~~Our industry~~● has experienced, and we expect it will continue to experience, significant changes to business practices as a result of an increased focus on affordability, efficiencies, and recovery of costs, among other items. U.S. government agencies may face restrictions or pressure regarding the type and amount of services that they may obtain from private contractors. Legislation, regulations and initiatives dealing with procurement reform, mitigation of potential conflicts of interest and environmental responsibility or sustainability, as well as any resulting shifts in the buying practices of U.S. government agencies, such as increased usage of fixed price contracts, multiple award contracts and small business set-aside contracts, could ~~have adverse effects on government contractors, including us. Any of these changes could~~ impair our ability to obtain new contracts or renew our existing contracts when those contracts expire and are subject to a renewed bidding process. Any new contracting requirements or procurement methods could be costly or administratively difficult for us to implement and could adversely affect our future revenues, profitability and prospects.liquidity;

~~We may~~● ~~incur~~could ~~cost~~make ~~overruns~~it asmore adifficult ~~result~~for ofus ~~fixed~~to ~~priced~~satisfy ~~government contracts, which would have a negative impact on~~ our ~~operations.~~other obligations;

~~Most of~~● ~~our~~require U.S. government contracts are multi-award, multi-year IDIQ task order based contracts, which generally provide for fixed price schedules for products and services, have no pre-set delivery schedules, have very low minimum purchase requirements, are typically competed over among multiple awardees and force us to ~~carry~~dedicate ~~the~~cash ~~burden~~flow ~~of any cost overruns. Due~~ to ~~their~~payments ~~nature, fixed-priced contracts inherently have more risk than cost reimbursable contracts. If we are unable to control costs or if our initial cost estimates are incorrect, we can lose money~~ on ~~these contracts. In addition, some of~~ our ~~contracts~~debt ~~have provisions relating to cost controls~~ and ~~audit~~financial ~~rights~~obligations, ~~and~~which ifwould wereduce ~~fail to meet~~ the ~~terms~~availability ~~specified~~of ~~in those contracts, we may not realize their full benefits. Lower earnings caused by cost overruns and cost controls would have a negative impact on~~ our ~~results~~cash offlow ~~operations. The U.S. government has the right~~ to ~~enter~~fund ~~into~~working ~~contracts with other suppliers~~capital, ~~which~~capital ~~may~~expenditures ~~be competitive with our IDIQ contracts. We also perform fixed priced contracts under which we agree to provide specific quantities of products~~ and ~~services~~other ~~over~~corporate time for a fixed price. Since the price competition to win both IDIQ and fixed price contracts is intense and the costs of future contract performance cannot be predicted with certainty, there can be no assurance as to the profits, if any, that we will realize over the term of such contracts.requirements;

~~Misconduct of~~● ~~employees,~~impose ~~subcontractors,~~restrictions ~~agents~~on ~~and~~our ~~business~~ability ~~partners~~to ~~could~~incur ~~cause~~other usindebtedness, togrant ~~lose~~liens ~~existing~~on ~~contracts~~our orassets, ~~customers~~ and ~~adversely affect~~could ~~our~~impede ~~ability~~us tofrom ~~obtain~~obtaining ~~new~~additional ~~contracts~~financing ~~and~~in ~~customers~~the ~~and~~future ~~could~~for ~~have~~working acapital, ~~significant~~capital ~~adverse~~expenditures, ~~impact~~acquisitions onand ~~our~~general ~~business~~corporate ~~and reputation.~~purposes;

~~Misconduct could~~● ~~include fraud or other improper activities such as falsifying time or other records and violations of laws, including the Anti-Kickback Act. Other examples~~ could ~~include~~adversely ~~the~~affect ~~failure to comply with~~ our ~~policies~~ability ~~and~~to ~~procedures~~enter orinto ~~with~~strategic ~~federal~~transactions, ~~state or~~public ~~local government procurement regulations, regulations regarding the use and safeguarding of classified~~ or ~~other~~private ~~protected~~equity ~~information~~offerings, ~~legislation~~ ~~regarding the pricing of labor~~ and ~~other costs in government contracts, laws and regulations relating to environmental, health or safety matters, bribery of foreign government officials, import-export control, lobbying or~~ similar ~~activities~~agreements, ~~and any other applicable laws~~ or ~~regulations.~~require Any data loss or information security lapses resulting in the compromise of personal information or the improper use or disclosure of sensitive or classified information could result in claims, remediation costs, regulatory sanctions against us, ~~loss of current and future contracts and serious harm~~ to ~~our~~obtain ~~reputation.~~the ~~Although~~consent ~~we have implemented policies, procedures and controls~~ to ~~prevent~~enter ~~and~~into ~~detect~~such these activities, these precautions may not prevent all misconduct, and as a result, we could face unknown risks or losses. Our failure to comply with applicable laws or regulations or misconduct by any of our employees, subcontractors, agents or business partners could damage our reputation and subject us to fines and penalties, restitution or other damages, loss of security clearance, loss of current and future customer contracts and suspension or debarment from contracting with federal, state or local government agencies, any of which would adversely affect our business, reputation and our future results.transactions;

~~We may~~● ~~fail~~make tous ~~obtain~~more ~~and~~vulnerable ~~maintain~~in ~~necessary~~the ~~security~~event ~~clearances,~~of ~~which~~a ~~may~~downturn ~~adversely~~in ~~affect~~our business prospects and could limit our ~~ability~~flexibility to ~~perform~~plan onfor, ~~certain~~or ~~U.S. government~~react ~~contracts~~to, ~~and~~changes ~~depress~~in our ~~potential~~industry ~~revenues.~~and markets; and

~~Many U.S.~~● government programs require contractors to have security clearances. Depending on the level of required clearance, security clearances can be difficult and time-consuming to obtain. If we or our employees are unable to obtain or retain necessary security clearances, we may not be able to win new business, and our existing clients could ~~terminate~~place ~~their contracts with~~ us orat ~~decide not to renew them. To the extent we are not able to obtain and maintain facility security clearances or engage employees with the required security clearances for~~ a ~~particular~~competitive ~~contract,~~disadvantage wewhen ~~may~~compared ~~not be able~~ to ~~bid on or win new contracts, or effectively rebid on expiring contracts, or we could lose existing contracts, any of which may adversely affect~~ our ~~operating results and inhibit the execution of our growth strategy~~competitors.

Should we fail to make pay our obligations or fail to comply with any covenants contained in any related agreements, we could be in default regarding that indebtedness. Since we have pledged substantially all of our assets to secure our obligations under the secured convertible debentures, a debt default could enable the lenders to foreclose on the assets securing such debt and could significantly diminish the market value and marketability of our common stock and could result in the acceleration of other payment obligations or default under other contracts.

As further described in the financial statements included herein, we believe we are currently in default under the terms of our secured convertible notes.

The Company has a number of convertible notes issued at this time that are currently in default.

As of September 30, 2022, $15,985,489 worth of the Company’s convertible promissory notes, including interest accrued thereon, are past due and in default. As of September 30, 2022, $13,650,573 of the principal amount of the notes in default encumber all our assets which secure the payment of this indebtedness. In the event of default in repayment of the secured notes, our secured creditor could exercise its remedies, including the execution on all our assets, which would result in the termination of our activities. These notes being in default, and our inability to pay these obligations will result in a loss of investor confidence, and more generally impact our business, operating results, and financial condition. We do not plan to use any of the proceeds of this offering that we may receive from the non-cash exercise of the warrants held by the selling security holders to repay these loans and to date the loan holders have not exercised their default rights under these convertible promissory notes.

We are dependent upon our executive officers and directors and their departure could adversely affect our ability to operate.

Our operations are dependent upon a relatively small group of individuals and, in particular, our executive officers and directors. We believe that our success depends on the continued service of our executive officers and directors. We do not have key-man insurance on the life of any of our directors or executive officers. The unexpected loss of the services of one or more of our directors or executive officers could have a detrimental effect on us.

~~Table~~We are an emerging growth company within the meaning of ~~Contents~~ the Securities Act, and if we take advantage of certain exemptions from disclosure requirements available to emerging growth companies, this could make our securities less attractive to investors and may make it more difficult to compare our performance with other public companies.

~~Our~~We are an “emerging ~~future~~growth ~~revenues~~company” within the meaning of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth ~~prospects~~companies including, but not limited to, not being required to comply with the auditor internal controls attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley Act”), reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. As a result, our stockholders may not have access to certain information they may deem important. We could be ~~adversely~~an ~~affected~~emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our Common Stock held by non-affiliates exceeds $700 million. We cannot predict whether investors will find our ~~dependence~~securities less attractive because we will rely on ~~other~~these ~~contractors~~exemptions. If some investors find our securities less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.

IfFurther, Section 102(b)(1) ~~other~~of ~~contractors~~the ~~with~~JOBS ~~whom~~Act weexempts ~~have~~emerging ~~contractual~~growth ~~relationships~~companies ~~either~~from asbeing arequired ~~prime~~to ~~contractor~~comply with new or ~~subcontractor~~revised ~~eliminate~~financial oraccounting ~~reduce~~standards until ~~their~~private ~~work~~companies ~~with~~(that usis, orthose ifthat ~~the~~have ~~U.S.~~not ~~government~~had ~~terminates~~a orSecurities ~~reduces~~Act ~~these~~registration ~~other~~statement ~~contractors’~~declared ~~programs,~~effective ~~does~~or do not ~~award~~have ~~them~~a class ~~new~~of ~~contracts~~securities orregistered ~~refuses~~under tothe ~~pay~~Securities ~~under~~Exchange aAct ~~contract~~of ~~our~~1934, ~~financial~~as ~~and~~amended ~~business~~(the ~~condition~~“Exchange ~~may~~Act”) beare ~~adversely~~required ~~affected~~to comply with the new or revised financial accounting standards. ~~Companies~~The JOBS Act provides that do ~~not~~a ~~have~~company ~~access~~can elect to ~~U.S.~~opt ~~government~~out ~~contracts~~of ~~may~~the ~~perform~~extended ~~services~~transition period asand ~~our~~comply ~~subcontractor~~with ~~and~~the requirements that ~~exposure~~apply ~~could~~to ~~enhance~~non-emerging growth companies but any such election to opt out is irrevocable. We ~~companies’~~have ~~prospect~~elected not to opt out of ~~securing~~such extended transition period which means that when a ~~future~~standard ~~position~~is issued or revised and it has different application dates for public or private companies, we, as aan ~~prime~~emerging Ugrowth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.S. ~~government~~This ~~contractor~~may make comparison of our financial statements with another public company which ~~could~~is ~~increase~~neither ~~competition~~an emerging growth company nor an emerging growth company which has opted out of using the extended transition period ~~for~~difficult ~~future~~or ~~contracts~~impossible ~~and~~because ~~impair~~of ~~our~~the ~~ability~~potential todifferences ~~perform~~in onaccounting ~~contracts~~standards used.

~~We may~~Compliance ~~have~~obligations disputes with our subcontractors arising from, among other things, the quality and timeliness of work performed by the subcontractor, customer concerns about the subcontractor, our failure to extend existing task orders or issue new task orders under ~~a subcontract, our hiring of a subcontractor’s personnel or~~ the ~~subcontractor’s failure to comply with applicable~~Sarbanes-Oxley ~~law.~~Act Ifmay ~~any~~require ofsubstantial ~~our subcontractors fail to timely meet their contractual obligations or have regulatory compliance,~~ financial ~~or other problems, our ability to fulfill our obligations as a prime contractor or higher tier subcontractor may be jeopardized. Significant losses could arise in future periods~~ and ~~subcontractor~~management ~~performance deficiencies could result in our termination for default~~resources. A termination for default could eliminate a revenue source, expose us to liability and have an adverse effect on our ability to compete for future contracts and task orders, especially if the customer is an agency of the U.S. government.

AsSection 404 of the Sarbanes-Oxley aAct Urequires that we evaluate and report on our system of internal controls.S. ~~defense~~As ~~contractor~~long as we ~~are~~remain ~~vulnerable~~an emerging growth company, we will not be required to ~~security~~comply ~~threats~~with ~~and~~the ~~other~~independent ~~disruptions~~registered ~~that~~public ~~could~~accounting ~~negatively~~firm ~~impact~~attestation requirement on our ~~business~~internal control over financial reporting.

As a U.S. defense contractor, we face certain security threats, including threats to our information technology infrastructure, attempts to gain access to our proprietary or classified information, and threats to physical security. These types of events could disrupt our operations, require significant management attention and resources, and could negatively impact our reputation among our customers and the public, which could have a negative impact on our financial condition, results of operations and liquidity. We ~~are~~rely continuously exposed to cyber-attacks and other security threats, including physical break-ins. Any electronic or physical break-in or other security breach or compromise may jeopardize security of information stored or transmitted through our information technology systems and networks. This could lead to disruptions in mission-critical systems, unauthorized release of confidential or otherwise protected information and corruption of data. Although we have implemented policies, procedures and controls to protect against, detect and mitigate these threats, we face advanced and persistent attacks on ~~our~~a ~~information~~few ~~systems~~major and attempts by others to gain unauthorized access to our information technology systems are becoming more sophisticated. These attempts include covertly introducing malware to our computers and networks and impersonating authorized userscustomers, among others, and may be perpetrated by well-funded organized crime or state sponsored efforts. We seek to detect and investigate all security incidents and to prevent their occurrence or recurrence. We continue to invest in and improve our threat protection, detection and mitigation policies, procedures and controls. In addition, we work with other companies in the ~~industry and government participants on increased awareness~~loss ~~and enhanced protections against cyber security threats. However, because~~ of ~~the evolving nature and sophistication of these security threats,~~ which can be difficult to detect, there can be no assurance that our policies, procedures and controls have or will detect or prevent any of these threats and we cannot predict the full impact of any such past or future incident. We may experience similar security threats to the information and technology systems that we develop, install or maintain under customer contracts. Although we work cooperatively with our customers and other business partners to seek to minimize the impacts of cyber and other security threats, we must rely on the safeguards put in place by those entities. Any remedial costs or other liabilities related to cyber or other security threats may not be fully insured or indemnified by other means. Occurrence of any of these security threats could ~~expose us to claims, contract terminations and damages and could~~ adversely affect our ~~reputation,~~results ~~ability~~of ~~to work on sensitive U.S. government contracts, business~~ operations ~~and financial results~~.

~~Difficult~~For the year ended December ~~conditions~~31, in2021, ~~the~~our ~~global~~sales ~~capital~~to ~~markets~~federal, state and local governments accounted for approximately 100% of our SGS net sales. Our past customers have included, among others, federal and international government agencies and state and local governments. Although SGS has had many customers, two customers, generated approximately 71% of SGS’s gross revenue during the ~~economy~~year ~~generally~~ended December 31, 2021. One customer accounted for 44% of SGS’s gross revenue in 2021; however, this customer may ~~materially~~or ~~adversely~~may ~~affect~~not continue to be a significant contributor to revenue in the future. We plan to continue to focus our efforts on existing and potential government customers. SGS revenues for the three months ended September 30, 2022, and 2021, was approximately $3.5 million and $1.9 million, respectively. This includes approximately 71% of sales coming from the Company’s top two customers. The loss of a significant amount of business from one of our major customers would materially and adversely affect our results of operations until such time, ~~and~~if ever, as we doare ~~not~~able ~~expect~~to ~~these~~replace ~~conditions~~the lost business. Significant clients or projects in any one period may not continue to ~~improve~~be significant clients or projects in other periods. To the ~~near~~extent that ~~future~~we are dependent on any single customer, we are subject to the risks faced by that customer to the extent that such risks impede the customer’s ability to stay in business and make timely payments to us.

~~Our results~~We ofrely ~~operations~~on ~~are~~a ~~materially~~few ~~affected~~major byvendors ~~conditions in~~ the ~~global capital markets and the economy generally, both in the~~loss ~~U.S. and elsewhere around the world. Sustained uncertainty about global economic conditions, concerns about future U.S. government budget impasses or a prolonged tightening~~ of ~~credit markets could cause our customers and potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices,~~ which could ~~have~~adversely anaffect ~~adverse effect on~~ our ~~business,~~ results of operations ~~or cash flows~~. Concerns over inflation, energy costs, geopolitical issues and the availability of credit in the U.S. have contributed to increased volatility and diminished expectations for the economy and the markets going forward. These events and market upheavals may have an adverse effect on our business. In the event of extreme prolonged market events, such as global economic recession, could result in significant losses for us.

SGS product and service costs for the year ended December 31, 2021 and three months ended September 30, 2022, and 2021, was approximately $6.9 million, $3.0 million and $1.5 million, respectively. This includes approximately 72% of product costs for the three months ended September 30, 2022, from the Company’s top two vendors. The loss of any of these vendors could materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost vendors. Significant vendors in any one period may not continue to be significant vendors in other periods. To the extent that we are dependent on any single vendor, we are subject to the risks faced by that vendor to the extent that such risks impede the vendor’s ability to stay in business and make timely payments to us.

~~Table~~Risks Related ofto ~~Contents~~ Acquired Cryptocurrency Mining Business

~~Risks~~The recent transition of Ethereum to ~~Related~~proof-of-stake validation caused us to ~~Sysorex’s~~cease ~~Common~~mining ~~Stock~~Ethereum.

WeProof-of-stake ~~are~~is an ~~“emerging~~alternative ~~growth~~method ~~company”~~in asvalidating ~~defined~~cryptocurrency intransactions. ~~the~~Now ~~Jumpstart~~that ~~Our~~Ethereum ~~Business~~has ~~Startups~~transitioned ~~Act~~to proof-of ~~2012~~-stake, ~~and~~our wedata ~~cannot~~mining assets becan ~~certain if~~no ~~the~~longer ~~reduced~~mine ~~disclosure~~Ethereum ~~requirements~~as ~~applicable~~of toSeptember ~~emerging~~15, ~~growth~~2022, ~~companies~~and ~~will~~as ~~make~~such, ~~our~~all ~~common~~revenues ~~stock~~from ~~less~~mining ~~attractive~~operations tohave ~~investors~~ceased.

We ~~are~~ ~~an “emerging growth company”, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. For as long as we continue to be an emerging growth company, we~~ may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including (1) not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended (the “Sarbanes-Oxley Act”), (2) reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and (3) exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. In addition, as an emerging growth company, we are only required to provide two years of audited financial statements and two years of selected financial data in this registration statement We could be anclassified emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700.0 million as ~~of any June 30 before that time or if we have total annual gross revenue of $1.07 billion or more during any fiscal year before that time, in which cases we would no longer be~~ an ~~emerging growth company as of the following December 31 or, if we issue more than $1.0 billion in non-convertible~~inadvertent ~~debt~~investment ~~during any three-year period before that time, we would cease to be an emerging growth~~ company ~~immediately~~. Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company” which would allow us to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, not being required to provide selected financial data in the registration statements and periodic reports that we file with the SEC, and reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

~~Our~~We ~~independent~~are ~~registered~~not ~~public~~engaged ~~accounting~~in ~~firm~~the ~~will~~business ~~not~~of beinvesting, ~~required~~reinvesting, toor ~~formally~~trading ~~attest~~in tosecurities, ~~the~~and ~~effectiveness~~we ofdo ~~our~~not ~~internal~~hold ~~control over~~ourselves ~~financial~~out ~~reporting~~as ~~until~~being ~~the~~engaged in ~~later~~those ofactivities. ~~our~~Under ~~second~~the ~~annual~~Investment ~~report~~Company orAct ~~the~~of ~~first~~1940, ~~annual~~as ~~report~~amended ~~required~~(the to“Investment beCompany ~~filed~~Act”), ~~with~~however, ~~the~~a company ~~SEC~~may ~~following~~be ~~the~~deemed ~~date~~an weinvestment ~~are~~company nounder ~~longer~~section an3(a)(1)(C) ~~“emerging~~of ~~growth~~the ~~company”~~Investment asCompany ~~defined~~Act inif the ~~JOBS~~value ~~Act.~~of Weits ~~cannot~~investment ~~assure~~securities is ~~you~~more ~~that~~than ~~there~~40% ~~will~~of ~~not~~its betotal ~~material~~assets ~~weaknesses~~(exclusive orof ~~significant~~government ~~deficiencies~~securities inand ~~our~~cash ~~internal~~items) ~~controls~~on ina ~~the~~consolidated ~~future~~basis.

~~Under~~We ~~the~~commenced ~~JOBS~~operations ~~Act~~of digital asset mining, ~~emerging~~the ~~growth~~output ~~companies~~of ~~can~~which ~~also~~is ~~delay~~cryptocurrencies. ~~adopting~~We ~~new~~cannot guarantee that such cryptocurrencies or ~~revised~~digital ~~accounting~~assets ~~standards~~we ~~until~~will ~~such~~mine ~~time~~are deemed as ~~those~~commodities ~~standards~~and not as securities. If the digital assets held by us exceed 40% of our total ~~apply~~assets, toexclusive ~~private~~of ~~companies~~cash, we inadvertently become an investment company. WeAn ~~have~~inadvertent ~~irrevocably~~investment ~~elected~~company tocan ~~take~~avoid ~~advantage~~being classified as an investment company if it can rely on one of ~~this~~the ~~extended~~exclusions ~~transition~~under ~~period~~the Investment Company Act. One such exclusion, ~~and~~Rule ~~therefore~~3a-2 under the Investment Company Act, ~~our~~allows an inadvertent investment company a grace period of one year from the earlier of: (a) the date on which ~~financial~~an ~~statements~~issuer ~~may~~owns ~~not~~securities beand/or ~~comparable~~cash having a value exceeding 50% of the issuer’s total assets on either a consolidated or unconsolidated basis, and (b) the date on which an issuer owns or proposes to ~~those~~acquire investment securities having a value exceeding 40% of ~~companies~~the value of such issuer’s total assets (exclusive of government securities and cash items) on an unconsolidated basis. We expect to establish policies that ~~comply~~we would work to keep the investment securities held by us at less than 40% of our total assets, which may include acquiring assets with ~~such~~our ~~new~~cash, liquidating our investment securities, or ~~revised~~seeking ~~accounting~~a ~~standards~~no-action letter from the Commission if we are unable to acquire sufficient assets or liquidate sufficient investment securities in a timely manner.

WeAs Rule 3a-2 is available to a company no more than once every three years, and assuming no other exclusion were available to us, we would have to keep within the 40% limit for at least three years after we cease being an inadvertent investment company. This may limit our ability to make certain investments or enter into joint ventures that could otherwise have a positive impact on our earnings. In any event, we do not intend to ~~pay~~become ~~cash~~an ~~dividends~~investment tocompany ~~our~~engaged ~~stockholders~~in the business of investing and trading securities.

WeClassification doas ~~not~~an ~~intend~~investment company under the Investment Company Act requires registration with the Commission. If an investment company fails to register, ~~pay~~it ~~cash~~would ~~dividends~~have to stop doing almost all business, and its contracts would become voidable. Registration is time-consuming and restrictive and would require a restructuring of our ~~common~~operations, ~~stockholders~~and we would be very constrained in the kind of business we could do as a ~~public~~registered investment company. WeFurther, ~~currently~~we ~~intend~~would become subject to ~~retain~~substantial ~~any~~regulation ~~future~~concerning ~~earnings~~management, operations, transactions ~~for~~with ~~funding~~affiliated ~~growth~~persons, and, ~~therefore~~portfolio composition, doand ~~not~~would ~~expect~~need to ~~pay~~file ~~any~~reports ~~cash~~under ~~dividends~~the Investment Company Act regime. The cost of such compliance would result in our incurring substantial additional expenses, and the ~~foreseeable~~failure ~~future~~to register if required would have a materially adverse impact on our operations.

~~In the~~Changes ~~event~~in ~~our~~laws, regulations, ~~board~~or ofrequirements ~~directors~~applicable ~~effects~~to aour ~~reverse~~software ~~stock~~and ~~split~~services ~~within~~could ~~the~~impose ~~reverse~~increased ~~stock~~costs ~~split~~on ~~range~~us, ~~the~~delay ~~proposed~~or ~~reverse~~prevent ~~stock~~our introduction ~~split~~of ~~may~~new ~~decrease~~products ~~the~~and ~~liquidity~~services ofor impair the ~~shares~~function or value of our ~~common~~existing ~~stock~~products and services.

~~Prior to~~Our ~~the~~digital ~~Spin-off,~~assets ~~our board of directors and our sole stockholder, Inpixon, approved an amendment to our Articles of Incorporation~~mining tooperations ~~effect a reverse stock split of our outstanding common stock at a ratio between 1-for-5 and 1-for-100, which~~ may bebecome ~~abandoned or~~subject ~~implement~~to byincreasing ~~our~~regulatory ~~board of directors within 12 months of July 30~~requirements, ~~2018,~~ and atas athese ~~specific~~requirements ~~ratio determined solely by our board of directors. In the event our board of directors effects a reverse stock split within the reverse stock split range~~proliferate, ~~the~~we ~~liquidity of the shares of our common stock~~ may be ~~affected~~required ~~adversely~~to ~~by the proposed reverse stock split given the reduced number of shares~~change ~~that~~or ~~will~~adapt ~~be outstanding following the proposed reverse stock split, especially if the market price of~~ our ~~common~~operations stock does not increase as a result of the proposed reverse stock split. In addition, the proposed reverse stock split may increase the number of stockholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such stockholders to ~~experience an~~comply ~~increase~~with ~~in the cost of selling their shares and greater difficulty effecting such sales~~them.

For example, the adoption of new money transmitter (“MT”) or money services business (“MSB”) statutes in jurisdictions or changes in regulators’ interpretation of existing state and federal money transmitter or money services business statutes or regulations, could subject us to registration or licensing, or limit business activities, cause us to enter relationships with one or more third parties for payment services until we are appropriately licensed. The activities of TTM Digital may cause it to be deemed a MSB under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, TTM Digital may be required to comply with FinCEN regulations, including those that would mandate TTM Digital to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.

Compliance and classifications are dependent on federal and state regulatory actions and our business activities. We do not believe that we are a money transmitter, because our activities do not cause us to hold, possess or control payment funds on behalf of a consumer or merchant. If we were deemed to be a money transmitter, we would be subject to significant additional regulation. This could increase our costs in operating our business. In addition, a regulator could act against us if it views our payment solution platform as a violation of existing law. Any of these outcomes would negatively affect the market price for our shares and could cause us to cease operations in the certain U.S. States.

Subsequently, on March 9, 2022, the President of the United States issues an executive order outlining a government-wide approach to reviewing six key policy priorities. This includes: protecting US consumers, investors and businesses; protecting US and global financial stability and mitigating economywide financial risks; mitigating money laundering, other illicit finance activity and national security risks; reinforcing US leadership in the global financial system, and technological and economic competitiveness; promoting equitable access to safe and affordable financial services; and Supporting technological advances that promote responsible development and use of digital assets. Unlike China, which has banned all cryptocurrency activities that ultimately pushed more mining investments to the United States, eventual regulation of the cryptocurrency industry may potentially disrupt or temporarily stop mining activities until we conform with new regulatory requirements.

~~Table~~Additionally, we are not licensed to conduct a virtual currency business in New York and do not intend to become licensed in any other state that may require licensing in the future. We have taken the position that the New York State Department of ~~Contents~~ Financial Services (“NYSDFS”) BitLicense Regulatory Framework (23 NYCRR 200.2(q)) does not apply to our business. It is possible, however, that the NYSDFS could disagree with our position. If we were deemed to be conducting an unlicensed virtual currency business in New York, we could be subject to significant additional regulation and/or regulatory consequences. There are a number of states that review the adaptation that the Conference of State Bank Supervisors has proposed a model form of state-level “virtual currency” regulation. There are at least thirty-one states that have pending legislation in the 2021 legislative session regarding blockchain and cryptocurrency.

InThe ~~the~~recent ~~event~~New ~~our~~York ~~board~~Senate ofBill ~~directors~~6486C ~~effects~~seeks ato ~~reverse~~establish ~~stock~~a ~~split~~moratorium ~~within~~on ~~the~~consolidated ~~reverse~~operations ~~stock~~that ~~split~~use ~~range,~~proof-of-work ~~following~~authentication ~~such proposed reverse~~methods ~~stock~~to ~~split,~~validate ~~the~~blockchain ~~resulting~~transactions; ~~market~~provides ~~price~~that ofsuch ~~our~~operations ~~common~~will ~~stock~~be ~~may~~subject ~~not~~to ~~attract~~a ~~new~~full ~~investors,~~generic ~~including~~environmental ~~institutional~~impact ~~investors,~~statement review. ~~and~~Although ~~may~~the ~~not~~majority ~~satisfy~~of ~~the~~our ~~investing~~mining ~~requirements~~activity ofis ~~those~~operating ~~investors.~~using ~~Consequently~~hydroelectric power, ~~the~~New ~~trading~~York ~~liquidity~~Senate ofBill ~~our~~6486C ~~common~~may ~~stock~~require ~~may~~TTM Digital ~~not~~to ~~improve~~halt mining until an environmental impact assessment is completed.

~~Although we~~It ~~believe that a higher market price of our common stock~~ may ~~help~~be ~~generate~~illegal now, ~~greater~~ or ~~broader~~in ~~investor~~the ~~interest~~future, ~~there~~to ~~can~~acquire, ~~be no~~own, ~~assurance~~hold, ~~that~~sell ~~the~~or ~~proposed~~use ~~reverse~~digital ~~stock~~assets ~~split will result~~ in aone ~~share~~or ~~price~~more ~~that~~countries, ~~will~~and ~~attract~~ownership ~~new~~of, ~~investors~~holding, ~~including~~or ~~institutional~~trading ~~investors.~~in Inour ~~addition,~~securities ~~there~~may ~~can~~also be noconsidered ~~assurance~~illegal ~~that~~and ~~the~~subject ~~market~~to ~~price of our common stock will satisfy the investing requirements of those investors~~sanction. ~~As a result, the trading liquidity of our common stock may not necessarily improve.~~

~~Indemnification~~Although ofcurrently ~~our~~digital ~~officers~~assets are not regulated or are lightly regulated in most countries, including the United States, one or more countries such as China, India, and ~~directors~~Russia may ~~cause~~take usregulatory actions in the future that severely restricts the right to acquire, own, hold, sell, or use ~~corporate~~digital ~~resources~~assets or to exchange digital assets for fiat currency. Such an action may also result in the ~~detriment~~restriction of ownership, holding, or trading in our ~~stockholders~~securities. Such restrictions may adversely affect an investment in us. For example, the Bank of England, in June of 2021, issued a paper for comments in which it explains that stablecoins should have the same regulations as fiat currencies.

~~Our articles~~The ofprice ~~incorporation eliminate the personal liability~~ of our ~~directors for monetary damages arising from a breach of their~~ ~~fiduciary~~existing ~~duty~~mining asassets ~~directors~~are todictated ~~the fullest extent permitted~~ by ~~Nevada law. This limitation does not affect~~ the ~~availability~~volatile ~~of equitable~~market ~~remedies,~~for such asassets ~~injunctive~~to ~~relief~~determine ora ~~rescission.~~fair ~~Our~~market ~~articles~~price of ~~incorporation~~such ~~require us to indemnify our directors and officers to the fullest extent permitted by Nevada law, including in circumstances in which indemnification is otherwise discretionary under Nevada law~~assets.

~~Under~~Our ~~Nevada~~current ~~law,~~mining weassets ~~may~~can ~~indemnify~~no ~~our~~longer ~~directors~~mine orEthereum ~~officers~~as orof ~~other~~September ~~persons~~15, ~~who~~2022. ~~were,~~Pricing related to mining assets are ordetermined by the cryptocurrency they are ~~threatened~~able to bemine. ~~made~~As a ~~named~~result, ~~defendant or~~the ~~respondent~~price inof aour ~~proceeding~~assets ~~because~~may ~~the~~have ~~person~~decreased. isThe orCompany ~~was~~may have a lower value on our ~~director,~~mining ~~officer,~~assets based ~~employee~~on ormarket ~~agent,~~volatility if wethe ~~determine~~Company’s ~~that~~attempts ~~the person:~~to sell its mining assets.

●However, the ~~conducted~~Company ~~himself~~is orexploring ~~herself~~other inutilizations ~~good~~for ~~faith,~~its ~~reasonably~~mining ~~believed~~assets, innot ~~the~~limited ~~case~~to, ofsuch ~~conduct~~as inusing ~~his~~them orfor ~~her~~cloud ~~official~~computing, ~~capacity~~datacenter hosting, assimulation ~~our~~& ~~director~~modeling, orvirtual ~~officer~~reality, ~~that~~artificial ~~his~~intelligence, orand ~~her~~gaming. ~~conduct~~There ~~was~~is inno ~~our~~expectation ~~best~~that ~~interests,~~using ~~and,~~the inmining assets ~~all~~for ~~other~~such ~~cases~~applications will be profitable, ~~that~~which ~~his~~may orhave ~~her~~a ~~conduct~~negative ~~was~~impact aton ~~least~~the ~~not~~trading ~~opposed~~price toof our ~~best~~securities, ~~interests;~~which ~~and~~may have a materially adverse impact on investors’ investment in our Company.

●Our inmining operations, including the ~~case~~facilities ofin ~~any~~which ~~criminal~~our ~~proceeding,~~miners ~~had~~are nooperated, ~~reasonable~~may ~~cause~~experience todamages, ~~believe~~including damages that ~~his~~are ornot ~~her~~covered ~~conduct~~by ~~was unlawful~~insurance.

~~These~~Our ~~persons~~current ~~may~~mining beoperation ~~indemnified against expenses~~is, ~~including attorneys’ fees, judgments, fines, excise taxes~~ and ~~amounts~~any ~~paid in~~future ~~settlement,~~mines ~~actually~~we ~~and~~establish ~~reasonably incurred by the person in connection with the proceeding. If the person is found liable to the corporation, no indemnification~~ will be, ~~made~~subject ~~unless~~to ~~the~~a ~~court~~variety inof ~~which~~risks ~~the~~relating ~~action~~to ~~was~~physical ~~brought~~condition ~~determines that the person~~and isoperation, ~~fairly~~including, ~~and~~but ~~reasonably~~not ~~entitled~~limited to ~~indemnity in an amount that the court will establish.~~:

~~The obligations~~● ~~associated~~the ~~with~~presence ~~being~~of aconstruction ~~public~~or ~~company~~repair ~~require~~defects ~~significant~~or ~~resources~~other ~~and~~structural ~~management~~or ~~attention,~~building ~~which may divert resources and attention from our business operations.~~damage;

~~We are~~● ~~subject~~any tononcompliance ~~the~~with reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Sarbanes-Oxley Act. The Exchange Act requires us to file annual, quarterly and current reports, proxy statements, and other information. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal controls and procedures for financial reporting. Our Chief Executive Officer and Chief Financial Officer are required to certify that our disclosure controls and procedures are effective in ensuring that material information we are required to disclose in reports that we file or ~~submit~~liabilities under ~~the~~applicable ~~Exchange Act is recorded~~environmental, ~~processed~~health, ~~summarized~~or ~~and~~safety ~~reported~~regulations ~~within the time periods specified in the SEC’s rules and forms. We will need to hire~~ or ~~retain~~requirements ~~the services of financial reporting, internal controls experts and other financial personnel~~ or ~~consultants~~building inpermit order to establish and maintain appropriate internal controls and reporting procedures. As a result, we will incur significant legal, accounting and other expenses. Furthermore, the need to establish the corporate infrastructure demanded of a public company may divert management’s attention from improving our business, results of operations and financial condition.requirements;

~~Section 404~~● ofany ~~the~~damage ~~Sarbanes-Oxley~~resulting ~~Act~~from ~~requires~~natural ~~annual~~disasters, ~~management~~such ~~assessments~~as ofhurricanes, ~~the~~earthquakes, ~~effectiveness~~fires, ~~of our internal control over financial reporting. In connection with the implementation of the necessary procedures and practices related to internal control over financial reporting~~floods, ~~we may identify deficiencies. This may preclude us from keeping our filings with the SEC current~~ and ~~interfere~~windstorms; ~~with the ability of investors to trade our securities.~~and

●

claims by employees and others for injuries sustained at our properties.

For example, our mine could be rendered inoperable, temporarily or permanently, as a result of a fire or other natural disaster or by a terrorist or other attack on the mine. The security and other measures we take to protect against these risks may not be sufficient. Additionally, our mine could be materially adversely affected by a power outage or loss of access to the electrical grid or loss by the grid of cost-effective sources of electrical power generating capacity. Given the power requirement, it would not be feasible to run miners on backup power generators in the event of a power outage. Our insurance covers the replacement cost of any lost or damaged miners but does not cover any interruption of our mining activities; therefore, our insurance, therefore, may not be adequate to cover the losses we suffer as a result of any of these events. In the event of an uninsured loss, including a loss in excess of insured limits, at any of the mines in our network, such mines may not be adequately repaired in a timely manner or at all and we may lose some or all of the future revenues anticipated to be derived from such mines. The potential impact on our business is currently magnified because we are only operating a single mine.

~~Table~~Risks Relating to Restatement of ~~Contents~~ Our Consolidated Financial Statements

We have had to restate our previously issued consolidated financial statements. As previously disclosed, and as disclosed in the Amendments to our Form 10-K for the year ended December 31, 2021, we have identified a material weakness in our internal control over financial reporting. If we ~~fail~~are unable to ~~establish~~develop and maintain an effective ~~system~~internal ofcontrol ~~internal~~over ~~controls~~financial reporting, we may not be able to accurately report our financial results ~~accurately~~ orin ~~prevent~~a ~~fraud.~~timely ~~Any~~manner, ~~inability~~which tomay ~~report~~adversely ~~and~~affect ~~file~~investor ~~our~~confidence ~~financial~~in ~~results~~us ~~accurately~~ and ~~timely~~may ~~could~~adversely ~~harm~~affect our ~~reputation~~business, financial condition and ~~adversely~~results ~~impact the trading price~~ of ~~our common stock~~operations.

~~Effective~~On ~~internal~~May ~~controls~~17, ~~are~~2022, ~~necessary~~subsequent ~~for~~to usthe toevaluation ~~provide~~as ~~reliable~~of December 31, 2021, management, in agreement with the audit committee of the Company’s Board of Directors, determined that the previously issued financial ~~reports~~statements for the Affected Periods (as hereinafter defined) should no longer be relied upon and ~~prevent~~required ~~fraud~~restatement. IfWe wethen ~~cannot~~filed ~~provide~~Amendment ~~reliable financial~~No. ~~reports~~1 orto ~~prevent~~our ~~fraud~~Form 10-K for the year ended December 31, we2021 (the ~~may~~“Amendment ~~not~~No. be1”) ~~able~~on May 23, 2022 to ~~manage~~restate ~~our~~the ~~business~~Company’s previously issued consolidated financial statements and financial information as ~~effectively~~of and for the fiscal year ended December 31, 2021, as wewell ~~would~~as ifto anprovide ~~effective~~restated ~~control~~interim financial information ~~environment~~as ~~existed~~of September 30, 2021 and ~~our~~for ~~business~~the three and ~~reputation~~nine months then ended (collectively, the “Affected Periods”), contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021, with ~~investors~~the ~~may~~Securities beand ~~harmed~~Exchange Commission (the “SEC”) on April 14, 2022 (the “Original Form 10-K”) and in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021 (the “Form 10-Q”). ~~Notwithstanding~~On June 1, 2022 we filed Amendment No. 2 to our ~~diligence~~Form 10-K because Amendment No. 1 contained a typographical error on the date of the audit report of Friedman LLP (“Friedman”). Although Friedman’s audit report was dated April 14, ~~certain~~2022, ~~internal~~except for the effects of the restatement discussed in Note 1A, Note 12, Note 13, and Note 19 to the consolidated ~~controls~~financial ~~deficiencies~~statements, ~~may~~as ~~not~~to bewhich ~~detected~~the date is May 23, 2022, the copy of Friedman’s audit report that was included in Amendment No. 1 Asincorrectly included a ~~result~~date of April 13, ~~any~~2022 ~~internal~~(instead ~~control~~of ~~deficiencies~~April ~~may~~14, ~~adversely~~2022). ~~affect~~Amendment ~~our~~No. ~~financial~~2 ~~condition~~on Form 10-K (“Amendment No. 2”) was filed to correct the typographical error regarding the date on Friedman’s audit report, such that the date of Friedman’s ~~results~~audit report is April 14, 2022, except for the effects of ~~operations~~the restatement discussed in Note 1A, Note 12, Note 13, and ~~access~~Note 19 to ~~capital~~the consolidated financial statements, as to which the date is May 23, 2022.

~~Public~~As ~~company~~discussed ~~compliance~~in ~~may~~Note ~~make~~1A, it“Restatement ~~more~~of ~~difficult~~Consolidated Financial Statements,” of the notes to ~~attract~~the accompanying consolidated financial statements as of and ~~retain~~for ~~officers~~the year ended December 31, 2021 included in Amendment No.1 and ~~directors~~Amendment No. 2, the correction of certain errors, as discussed in Amendment No.1 and Amendment No. 2, from previously reported information for the year ended December 31, 2021, has resulted in an increase in net loss of $8.4 million, primarily as a result of a $6.3 million in expense related to the revaluation on the derivative conversion liability, an increase in interest expense of $0.9 million, and an increase in the loss contingency on debt default of $1.2 million.

~~The~~As ~~Sarbanes-Oxley~~previously ~~Act~~disclosed ~~and~~in ~~rules~~the ~~implemented~~Company’s byCurrent ~~the~~Report ~~SEC~~on ~~have~~Form ~~required~~8-K ~~changes~~filed inon ~~corporate~~May ~~governance~~17, ~~practices~~2022 ofwith ~~public~~the ~~companies. As~~SEC, aon ~~public~~May ~~company~~17, ~~these~~2022, ~~rules~~the ~~and~~Company’s management ~~regulations~~determined ~~increase~~that ~~our~~its ~~compliance~~prior ~~costs~~conclusion ~~and~~that ~~make~~the ~~certain~~“conversion ~~activities~~feature” ~~more~~of ~~time~~the ~~consuming and~~Company’s ~~costly~~12.5% Assenior asecured convertible ~~public~~debentures ~~company,~~(the ~~these~~“Debentures”) ~~rules~~qualified ~~and~~for ~~regulations~~equity ~~may~~classification ~~make it more difficult~~ and, ~~expensive~~therefore, qualified for usthe ~~to maintain our director~~application ~~and~~of ~~officer~~the ~~liability~~guidance ~~insurance~~in ~~and~~the weFinancial ~~may~~Accounting beStandards ~~required~~Board’s to(the ~~accept~~“FASB”) ~~reduced~~Accounting ~~policy~~Standards ~~limits~~Update ~~and~~(ASU) ~~coverage~~2020-06 was orincorrect. ~~incur~~Management ~~substantially~~has ~~higher costs~~determined tothat ~~obtain~~ the ~~same~~conversion orfeature ~~similar~~was ~~coverage. As~~ a ~~result,~~liability itclassified ~~may~~derivative beunder ~~more~~the ~~difficult~~FASB’s ~~for~~Accounting Standards usCodification to(ASC) ~~attract~~815-40, Derivatives and ~~retain~~Hedging ~~qualified~~– ~~persons to~~Contracts ~~serve~~in onEntity’s ~~our~~Own ~~board~~Equity offrom ~~directors~~the orinception asrequiring recognition ~~executive officers, and to maintain insurance~~ at ~~reasonable~~fair ~~rates,~~value orfor ateach ~~all~~reporting period.

Our stock price may be volatile.

The market price of our common stock is highly volatile and fluctuates widely in price in response to various factors, many of which are beyond our control, including the following:

● our ability to execute our business plan;

● changes in our industry;

● competitive pricing pressures;

● our ability to obtain working capital financing;

● additions or departures of key personnel;

● sales of our common stock;

● operating results that fall below expectations;

● regulatory developments;

● economic and other external factors;

● period-to-period fluctuations in our financial results;

● our inability to develop or acquire new or needed technologies;

● the public’s response to press releases or other public announcements by us or third parties, including filings with the SEC;

● changes in financial estimates or ratings by any securities analysts who follow our common stock, our failure to meet these estimates or failure of those analysts to initiate or maintain coverage of our common stock;

● the development and sustainability of an active trading market for our common stock; and

● any future sales of our common stock by our officers, directors and significant stockholders.

In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of the companies. These market fluctuations may also materially and adversely affect the market price of our common stock.

~~Table~~The Company’s management, in agreement with the audit committee of ~~Contents~~ the Company’s Board of Directors, have determined that the previously issued financial statements for the Affected Periods should no longer be relied upon due to this error and require restatement. Amendment No. 1 and Amendment No. 2 (i) reflect the changes discussed above for the Affected Periods, (ii) restates the Company’s consolidated financial statements as and for the year ended December 31, 2021, and (iii) provides restated unaudited financial information as of September 30, 2021, and for the three and nine months then ended. The error does not impact the Company’s consolidated financial statements for the quarters ended March 31, 2021, or June 30, 2021.

~~Our~~As ~~shares~~a result of ~~common~~the ~~stock~~factors ~~are~~described ~~thinly traded~~above, ~~and~~ the ~~price~~Company ~~may~~has ~~not~~included ~~reflect~~in ~~our~~Amendment ~~value~~No.1 ~~There~~and ~~can~~Amendment beNo. no2 ~~assurance~~the ~~that~~restated ~~there~~consolidated ~~will be~~financial anstatements ~~active~~as ~~market~~of and for ~~our~~the ~~shares~~year ended December 31, 2021, and restated financial information as of ~~our~~September ~~common~~30, ~~stock~~2021, inand for the ~~future.~~three and nine months then ended, to restate the following items:

~~Our shares~~● ofTotal ~~common~~other ~~stock~~income ~~are~~(expense) ~~thinly traded~~ and ~~the~~net ~~price~~loss ~~per~~– ~~share~~Restated ~~may~~to ~~not~~ reflect ~~our actual or perceived value. There can be no assurance that there will be an active market for our shares of common stock in~~ the ~~future.~~understatement ~~The market liquidity is dependent on the perception~~ of ~~our~~total ~~operating business, among~~ other ~~things.~~income ~~We plan to take certain steps including utilizing investor awareness campaigns~~(expense), ~~investor relations firms, press releases, road shows~~ and ~~conferences~~net toloss ~~increase~~by ~~awareness of our business~~$8.4 ~~Any~~million ~~steps that~~for ~~we might take to bring us to~~ the ~~awareness~~year ofended ~~investors~~December ~~may~~31, ~~require~~2021, ~~that we compensate consultants with cash~~ and~~/or~~ ~~equity securities.~~by ~~There can be no assurance that there will be any awareness generated or the results of any efforts will result in any impact on our trading volume~~$1.2 ~~Consequently,~~million ~~investors~~for ~~may not be able to liquidate their investment or to liquidate it at a price that reflects~~ the ~~value~~three ofand ~~the~~nine ~~business.~~months Ifended anSeptember ~~active market should develop~~30, ~~the price may be highly volatile. If there is a relatively low per-share price for our common stock~~2021, ~~many~~and ~~brokerage firms or clearing firms may not be willing to effect transactions in our common stock or accept our shares for deposit in an account. Many lending institutions will not permit~~ the ~~use~~ ofrelated ~~low~~impacts ~~priced~~on ~~shares~~net ofloss ~~common~~per ~~stock as collateral for any loans.~~share

~~There may~~● beLiabilities ~~future~~and ~~sales~~accumulated ordeficit ~~other~~– ~~dilution~~Restated ofto ~~our~~reflect ~~equity,~~the ~~which~~understatement ~~may~~of ~~adversely~~liabilities ~~affect~~and ~~the~~accumulated ~~market~~deficit ~~price~~by $8.4 million as of ~~our~~December ~~common~~31, ~~stock~~2021, and by $1.2 million as of September 30, 2021

WeA ~~are~~material ~~generally~~weakness ~~not~~is ~~restricted~~a ~~from~~deficiency, ~~issuing~~or ~~additional~~a ~~common~~combination ~~stock~~of deficiencies, ~~including~~in ~~any~~internal ~~securities~~control ~~that~~over ~~are~~financial ~~convertible~~reporting, ~~into~~such orthat ~~exchangeable~~there is ~~for,~~a orreasonable possibility that ~~represent~~a ~~the~~material ~~right~~misstatement toof ~~receive,~~our ~~common~~annual ~~stock.~~or ~~The~~interim ~~market~~financial ~~price~~statements ofwill ~~our~~not ~~common~~be ~~stock~~prevented ~~could~~or ~~decline~~detected on as a ~~result~~timely ofbasis. ~~sales of~~Effective ~~common~~internal ~~stock~~control orover ~~securities~~financial ~~that~~reporting ~~are~~is ~~convertible~~necessary ~~into~~for orus ~~exchangeable~~to ~~for,~~provide orreliable ~~that~~financial ~~represent~~reporting ~~the~~and prevent ~~right~~fraud. We continue to ~~receive,~~evaluate ~~common~~steps ~~stock or~~to remediate the ~~perception~~material weaknesses. These remediation measures may be time consuming and costly and there is no assurance that ~~such~~these ~~sales~~initiatives ~~could~~will ~~occur~~ultimately have the intended effects.

WeAny ~~cannot~~failure ~~assure~~to ~~you~~maintain ~~that~~effective ~~the~~internal ~~common~~control ~~stock~~over ~~will~~financial ~~become~~reporting ~~liquid~~could adversely impact our ability to report our financial position and results from operations on a timely and accurate basis. If our financial statements are not accurate, investors may not have a complete understanding of our operations. Likewise, if our financial statements are not filed on a timely basis, we could be subject to sanctions or ~~that~~investigations itby ~~will~~the SEC or other regulatory authorities. In either case, there could be ~~listed~~a material adverse affect on our business, financial condition and results of operations. Ineffective internal control over financial reporting could also cause investors to lose confidence in our reported financial information which could have a ~~securities~~negative ~~exchange~~effect on the trading price of our stock.

We ~~cannot~~can ~~assure~~give ~~you~~no assurance that the measures we ~~will~~are ~~ever~~taking beand ~~able~~plan to ~~meet~~take in the ~~initial~~future ~~listing~~will ~~standards~~remediate ofthe ~~any~~material ~~stock~~weaknesses ~~exchange,~~ identified or that ~~we will be able to maintain~~ any ~~such~~additional ~~listing.~~material ~~Until~~weaknesses ~~the~~or ~~common~~restatements ~~stock~~of isfinancial ~~listed~~results onwill annot ~~exchange,~~arise wein ~~expect~~the ~~that~~future itdue ~~would~~to bea ~~eligible~~failure to ~~be quoted~~implement onand ~~the~~maintain ~~OTC~~adequate ~~Markets~~internal ~~(including~~control ~~the OTCQB), another~~ over~~-the-counter~~ ~~quotation~~financial ~~system,~~reporting or incircumvention ~~the~~of ~~“pink~~these ~~sheets~~controls.” In ~~those venues~~addition, ~~however,~~even anif ~~investor~~we ~~may~~are ~~find~~successful in itstrengthening ~~difficult~~our tocontrols ~~obtain~~and ~~accurate quotations as to the market value of the common stock. In addition~~procedures, ifin ~~we failed to meet~~ the ~~criteria~~future ~~set~~those ~~forth in SEC regulations~~controls, ~~various~~and ~~requirements~~procedures ~~would~~may not be ~~imposed~~adequate ~~by law on broker-dealers who sell our securities~~ to ~~persons~~prevent ~~other~~or ~~than established customers and accredited investors. Consequently, such regulations may~~identify ~~deter~~irregularities ~~broker-dealers~~or ~~from~~errors ~~recommending~~ or ~~selling~~to facilitate the ~~common~~fair ~~stock,~~presentation ~~which~~of ~~may~~our ~~further~~consolidated ~~affect~~financial ~~its liquidity~~statements. ~~This would also make it more difficult for us to raise additional capital.~~

~~Our common~~We ~~stock~~may isface ~~considered~~litigation and aother ~~“penny~~risks ~~stock”~~as soa ~~long~~result asof itthe ~~trades~~Restatement ~~below~~and ~~$5.00~~material ~~per~~weakness ~~share.~~in ~~This~~our ~~can~~internal ~~adversely~~control ~~affect~~over ~~its liquidity~~financial reporting.

~~Our~~As ~~common~~a ~~stock~~result isof ~~considered~~the aRestatement ~~“penny~~and ~~stock”~~the identified material weaknesses, and ~~will~~other ~~continue~~matters tothat may in the future be ~~considered~~raised aby ~~penny~~the ~~stock~~SEC, sowe face ~~long~~the aspotential itfor ~~trades~~litigation ~~below $5.00~~or ~~per~~other ~~share~~disputes which may include, among others, claims invoking the federal and asstate ~~such~~securities laws, ~~trading~~contractual claims or other claims arising from the Restatement and/or the material weaknesses in our ~~common~~internal ~~stock~~control ~~will~~over befinancial reporting ~~subject~~and to the ~~requirements~~preparation of ~~Rule~~our ~~15g-9~~financial ~~under~~statements. As of the ~~Exchange Act.~~date ~~Under~~of this ~~rule~~Registration Statement, ~~broker/dealers~~we ~~who~~have ~~recommend~~no ~~low-priced~~knowledge ~~securities~~of toany such ~~persons~~litigation ~~other~~or ~~than~~dispute. ~~established~~However, ~~customers~~we ~~and~~can ~~accredited investors~~provide ~~must~~no ~~satisfy~~assurance ~~special~~that ~~sales~~such ~~practice~~litigation ~~requirements.~~or ~~The~~dispute ~~broker/dealer~~will ~~must~~not ~~make~~arise anin ~~individualized~~the ~~written~~future. ~~suitability~~Any such ~~determination~~litigation ~~for~~or ~~the~~dispute, ~~purchaser~~whether ~~and~~successful ~~receive~~or ~~the~~not, ~~purchaser’s~~could ~~written~~adversely ~~consent~~affect ~~prior~~our tobusiness, ~~the~~financial ~~transaction~~condition and results of operations.

SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities. In addition, few broker or dealers are likely to undertake these compliance activities. Other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

Risks Associated with this Offering

You will experience immediate dilution in the book value per share of common stock as a result of this offering.

Investors in this offering will experience immediate dilution in their net tangible book value per share to the extent of the difference between the purchase price per share of common stock and the “adjusted” net tangible book value per share after giving effect to the offering. Our net tangible book value as of September 30, 2018 was approximately $(15.7 million), or $(0.54) per share of our common stock based on 29,208,310 shares outstanding. Assuming that we issue an aggregate of Class A Units at a price of $ per Class A Unit, the last reported sale price of our common stock on the OTCQB Market on , 2019, and Class B Units at a price of $1,000 per Unit, and assuming the conversion of all the shares of Series 1 Preferred sold in the offering, after deducting placement agent fees and estimated offering expenses payable by us, our net tangible book value as of September 30, 2018 would have been approximately ($ ) million, or ($ ) per share of our common stock. This calculation excludes the proceeds, if any, from the exercise of the Series 1 Warrants issued in this offering. This amount represents an increase in net tangible book value of $ per share to our existing stockholders and an immediate dilution in net tangible book value of $ per share to investors in this offering. If outstanding options and warrants to purchase our common stock are exercised, you will experience additional dilution. See the section entitled “Dilution” below.

~~Table~~Risk ofFactors ~~Contents~~ Relating to Our Common Stock

~~Our~~Trading on the ~~management~~OTC ~~might~~Markets ~~not~~is ~~use~~volatile and sporadic, which could depress the ~~proceeds~~market price of ~~this~~our ~~offering~~common ~~effectively~~stock and make it difficult for you to resell your common stock.

Our ~~management~~common ~~has~~stock ~~broad~~is ~~discretion~~quoted ~~over~~on the ~~use~~OTCQB oftier ~~proceeds~~ of ~~this~~the ~~offering.~~OTC InMarkets ~~addition~~Group, ~~our~~Inc. ~~management~~(“OTC ~~has~~Markets”). ~~not~~Trading ~~designated~~in asecurities ~~specific~~quoted on the ~~use~~OTC ~~for~~Markets ais ~~substantial~~often ~~portion~~thin ofand ~~the~~characterized ~~proceeds~~by ofwide ~~this~~fluctuations ~~offering.~~in ~~Accordingly~~trading prices, itdue isto ~~possible~~many ~~that~~factors, ~~our~~some ~~management~~of which may ~~allocate~~have ~~the~~little ~~proceeds~~to indo ~~ways~~with ~~that~~our dooperations ~~not~~or ~~improve~~business prospects. This volatility could depress the market price of our common stock for reasons unrelated to operating ~~results~~performance. InMoreover, ~~addition~~the OTC Markets is not a stock exchange, ~~cash~~and ~~proceeds~~trading ~~received~~of insecurities on the ~~offering~~OTC ~~may~~Markets beis ~~temporarily~~often more ~~used~~sporadic tothan ~~purchase~~the ~~short-term,~~trading ~~low-risk~~of ~~investments,~~securities ~~and~~listed ~~such~~on ~~investments~~a ~~might~~quotation ~~not~~system belike ~~invested~~Nasdaq toCapital ~~yield~~Market or a ~~favorable~~stock ~~rate~~exchange like the NYSE American. These factors may result in your having difficulty reselling any shares of ~~return~~our common stock.

~~There is~~The ~~no established public~~ market ~~for~~price ~~the~~of ~~Series~~our 1common ~~Preferred~~stock oris likely ~~the~~to ~~Series~~be 1highly ~~Warrants~~volatile tobecause ~~purchase shares~~ of ~~our~~several ~~common~~factors, ~~stock~~including ~~being offered~~a bylimited uspublic ~~in this offering~~float.

~~There is~~The ~~no established public trading~~ market ~~for~~price ~~the~~of ~~Series~~our 1common stock ~~Preferred~~has orbeen ~~the~~volatile ~~Series 1 Warrants being offered~~ in ~~this~~the ~~offering,~~past and we dothe ~~not expect a~~ market toprice ~~develop.~~of Inour ~~addition,~~common westock dois ~~not~~likely ~~intend~~ to ~~apply~~be tohighly ~~list~~volatile ~~either~~in the ~~Series~~future. 1You ~~Preferred~~may ~~or the Series~~not 1be ~~Warrants~~able onto ~~any~~resell ~~national~~shares ~~securities~~of ~~exchange~~our orcommon ~~other~~stock ~~nationally~~following ~~recognized~~periods ~~trading~~of ~~system,~~volatility ~~including~~because ~~the OTCQB marketplace~~ of the ~~OTC Markets. Without an active~~ market,’s ~~the~~adverse ~~liquidity~~reaction ofto ~~the Series 1 Preferred and the Series 1 Warrants will be limited~~volatility.

~~The Series~~Other 1factors ~~Warrants~~that could cause such volatility may ~~not~~include, ~~have~~among ~~any~~other ~~value.~~things:

~~The Series~~● 1actual ~~Warrants~~or ~~issued~~anticipated fluctuations in ~~this~~our ~~offering~~operating ~~will~~results; be● ~~immediately~~the ~~exercisable~~absence ~~and~~of ~~expire~~securities onanalysts ~~the~~covering ~~fifth~~us ~~anniversary~~and ofdistributing ~~the~~research ~~date~~and ofrecommendations ~~issuance. The~~about ~~Series~~us; 1● ~~Warrants~~we ~~will~~may have ana ~~initial~~low ~~exercise~~trading ~~price~~volume ~~per~~for ~~share~~a ~~equal~~number toof $ reasons, ~~which~~including ~~is %~~that a large portion of ~~the~~our ~~public~~stock ~~offering~~is ~~price~~closely held; ● overall stock market fluctuations; ● announcements concerning our business or those of ~~the Class~~our Acompetitors; ~~Units.~~● Inactual ~~the~~or ~~event~~perceived ~~that~~limitations on our ~~common~~ability ~~stock~~to ~~price~~raise ~~does~~capital ~~not~~when ~~exceed~~we require it, and to raise such capital on favorable terms; ● conditions or trends in the ~~exercise~~industry; ~~price~~● litigation; ● changes in market valuations of ~~the~~other ~~Series~~similar 1companies; ~~Warrants~~● ~~during~~future ~~the period~~sales ~~when~~of ~~the~~common ~~Series~~stock; 1● ~~Warrants~~departure ~~are~~of ~~exercisable,~~key ~~the~~personnel ~~Series~~or 1failure ~~Warrants~~to ~~may~~hire ~~not~~key ~~have~~personnel; ~~any~~and ~~value~~● general market conditions.

~~Holders~~Any of these factors could have a significant and adverse impact on the market price of our ~~Series~~common 1stock. ~~Warrants~~In ~~will~~addition, ~~have~~the nostock ~~rights~~market asin ageneral ~~common~~has ~~stockholder~~at ~~until~~times ~~they~~experienced extreme ~~acquire~~volatility and rapid decline that has often been unrelated or disproportionate to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock, regardless of our actual operating performance.

Until you acquire shares of our common stock upon exercise of your Series 1 Warrants, you will have no rights with respect to our common stock. Upon exercise of your Series 1 Warrants, you will be entitled to exercise the rights of a common stockholder only as to matters for which the record date occurs after the exercise date.

~~Table~~Our ofcommon ~~Contents~~ stock is currently a “penny stock” under SEC rules. It may be more difficult to resell securities classified as “penny stock.”

~~USE~~Our common stock is currently OFa ~~PROCEEDS~~“penny stock” under applicable SEC rules (generally defined as non-exchange traded stock with a per-share price below $5.00). If our common stock becomes listed on the Nasdaq Capital Market, it will not be considered “penny stock,” however, if we are unable to maintain that listing and our common stock is no longer listed on the Nasdaq Capital Market, unless we maintain a per-share price above $5.00, our common stock will become “penny stock.” These rules impose additional sales practice requirements on broker-dealers that recommend the purchase or sale of penny stocks to persons other than those who qualify as “established customers” or “accredited investors.” For example, broker-dealers must determine the appropriateness for non-qualifying persons of investments in penny stocks. Broker-dealers must also provide, prior to a transaction in a penny stock not otherwise exempt from the rules, a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, disclose the compensation of the broker-dealer and its salesperson in the transaction, furnish monthly account statements showing the market value of each penny stock held in the customer’s account, provide a special written determination that the penny stock is a suitable investment for the purchaser, and receive the purchaser’s written agreement to the transaction.

~~We expect~~Legal toremedies ~~receive~~available ~~net proceeds from the sale of Class A Units and Class B Units that we are offering~~ to ~~be approximately $ million,~~ ~~assuming~~an ainvestor public offering price of $ per Class A Unit, the last reported sale price of our common stock on the OTCQB Market on , 2019, and $ per Class B Unit, after deduction of placement agent fees and estimated expenses payable by us, as described in ~~the section below titled~~ “~~Plan~~penny ~~of Distribution.~~stocks” ~~Assuming~~may ~~all~~include of the Series 1 Warrants issued in this offering were exercised in full at the exercise price of $ per share, which is % of the public offering price of the Class A Units, we estimate that we would receive additional net proceeds of approximately $ million. We cannot predict when or if the Series 1 Warrants will be exercised, however, and it is possible that the Series 1 Warrants may expire and never be exercised.following:

~~Assuming Class~~● AIf ~~Units are~~ a “penny stock” is sold into the ~~offering~~investor ~~and~~in ~~no Class~~violation Bof ~~Units are~~the ~~sold~~requirements inlisted ~~this offering~~above, ~~each~~or ~~$1.00~~other ~~increase~~federal ~~(decrease)~~or instates ~~the~~securities ~~assumed~~laws, ~~public offering~~the ~~price~~investor ofmay ~~$ per Class~~be ~~A Unit~~able ~~would~~to ~~increase~~cancel ~~(decrease)~~ the ~~net~~purchase ~~proceeds~~and toreceive usa ~~from~~refund ~~this~~of ~~offering,~~the ~~after~~investment. ~~deducting the~~● ~~placement~~If ~~agent~~a ~~fees~~“penny ~~and~~stock” ~~estimated~~is ~~offering~~sold ~~expenses~~to ~~payable~~the byinvestor ~~us,~~in bya ~~approximately~~fraudulent ~~$ million~~manner, ~~assuming that~~ the ~~number~~investor ~~of shares~~may ~~offered~~be byable ~~us,~~to assue ~~set forth on~~ the ~~cover~~persons ~~page~~and offirms ~~this~~that ~~prospectus,~~committed ~~remains~~ the ~~same~~fraud for damages.

WeThese requirements may ~~also increase~~have ~~or decrease~~ the ~~number~~effect of ~~Class~~ Areducing ~~Units we are offering. Assuming Class A Units are sold in~~ the ~~offering~~level ~~and~~of ~~no Class B~~trading ~~Units are sold in this offering~~activity, anif ~~increase (decrease) of 100~~any,~~000~~ in the ~~number~~secondary ~~of Class~~market Afor ~~Units we~~a ~~are~~security ~~offering would~~that ~~increase~~becomes ~~(decrease)~~subject ~~the net proceeds~~ to ~~us from this offering, after deducting~~ the ~~placement agent fees and estimated offering~~penny ~~expenses~~stock ~~payable by us, by approximately $ million, assuming the public offering price stays the same~~rules. AnThe ~~increase~~additional ofburdens ~~100,000~~imposed ~~in the~~upon ~~number~~broker-dealers ofby ~~Class~~such Arequirements ~~Units~~may wediscourage ~~are~~broker-dealers ~~offering, together with a $1.00 increase in the assumed public offering price of $ per Class A Unit, would increase the net proceeds to us~~ from ~~this~~effecting ~~offering, after deducting the placement agent fees and estimated offering~~transactions ~~expenses payable by us, by approximately $ million. A decrease of 100,000~~ in ~~the~~our ~~number of Class A Units we are offering~~securities, ~~together with~~which acould ~~$1.00~~severely ~~decrease~~limit in the ~~assumed~~market ~~public offering~~ price ~~of $ per share, would decrease the net proceeds to us from this offering, after deducting the placement agent fees~~ and ~~estimated~~liquidity ~~offering~~of ~~expenses~~our ~~payable by us, by approximately $ million~~securities. WeThese dorequirements ~~not~~may ~~expect that~~restrict ~~a change in~~ the ~~offering price or the number~~ ability of ~~shares~~broker-dealers byto ~~these~~sell ~~amounts would have a material effect on~~ our ~~intended~~common ~~uses of~~stock ~~the~~and ~~net proceeds from this offering, although it~~ may ~~impact~~affect ~~the~~your ~~amount~~ability ~~of time prior~~ to ~~which~~resell weour ~~may~~common ~~need to seek additional capital~~stock.

~~We intend~~Many tobrokerage ~~use~~firms ~~the~~will ~~net~~discourage or ~~proceeds~~refrain from ~~this~~recommending ~~public~~investments ~~offering~~in ~~for~~penny ~~working~~stocks. ~~capital~~Most ~~and~~institutional ~~general~~investors ~~corporate~~will ~~purposes~~not ~~(including~~invest ~~research and~~in ~~development~~penny ~~and sales and marketing)~~stocks. ~~General~~In ~~corporate~~addition, ~~purposes~~many individual ~~may~~investors ~~include capital expenditures and trade payables. We~~ will ~~continue~~ tonot invest in ~~research~~penny ~~and~~stocks ~~development~~due, toamong ~~drive~~other ~~our~~reasons, ~~business~~to ~~growth~~the inincreased ~~securing,~~financial ~~digitizing~~risk ~~and~~generally ~~optimizing~~associated ~~premises~~ with ~~indoor~~these ~~positioning analytics for businesses and governments~~investments.

~~The amounts~~For ~~and~~these ~~timing~~reasons, ofpenny ~~our actual expenditures will depend on numerous factors. We~~ stocks may ~~find it necessary or advisable to use portions of the net proceeds for other purposes, and we will~~ have ~~broad~~a ~~discretion~~limited inmarket ~~the application~~ and, ~~allocation~~consequently, oflimited ~~the net proceeds from this offering~~liquidity. ~~Additionally,~~We wecan ~~may~~give ~~use~~no aassurance ~~portion~~at ofwhat ~~the net proceeds of this offering to finance acquisitions of~~time, orif ~~investments in~~ever, ~~competitive~~our ~~and~~common ~~complementary~~stock ~~businesses,~~will not ~~products~~be orclassified ~~services~~ as a ~~part~~“penny ofstock” ~~our~~in ~~growth~~the ~~strategy~~future. ~~However, we currently have no commitments with respect to any such acquisitions or investments.~~

~~Pending use~~If of the ~~net~~benefits of ~~proceeds~~any ~~from~~proposed ~~this~~acquisition ~~offering,~~do wenot ~~may~~meet ~~invest~~ the ~~net~~expectations ~~proceeds~~of ~~in short-term~~investors, ~~interest-bearing,~~stockholders ~~investment-grade~~or ~~securities. We~~financial ~~cannot~~analysts, ~~predict whether~~ the ~~proceeds~~market ~~invested~~price ~~will~~of ~~yield~~our acommon stock ~~favorable~~may ~~return~~decline.

If the benefits of any proposed acquisition do not meet the expectations of investors or securities analysts, the market price of our common stock prior to the closing of the proposed acquisition may decline. The market values of our common stock at the time of the proposed acquisition may vary significantly from their prices on the date the acquisition target was identified.

In addition, broad market and industry factors may materially harm the market price of our common stock irrespective of our operating performance. The stock market in general has experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected. The trading prices and valuations of these stocks, and of our securities, may not be predictable. A loss of investor confidence in the market for retail stocks or the stocks of other companies which investors perceive to be similar to us could depress our stock price regardless of our business, prospects, financial conditions or results of operations. A decline in the market price of our securities also could adversely affect our ability to issue additional securities and our ability to obtain additional financing in the future.

~~Table~~Changes ofin ~~Contents~~ accounting principles and guidance, or their interpretation, could result in unfavorable accounting charges or effects, including changes to our previously filed financial statements, which could cause our stock price to decline.

~~DIVIDEND~~We ~~POLICY~~prepare our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These principles are subject to interpretation by the SEC and various bodies formed to interpret and create appropriate accounting principles and guidance. A change in these principles or guidance, or in their interpretations, may have a significant effect on our reported results and retroactively affect previously reported results.

~~Sysorex does~~Being ~~not~~a ~~currently~~public company ~~expect~~results ~~to pay dividends on its capital stock. The payment of any dividends~~ in ~~the~~additional ~~future~~expenses, ~~and~~diverts ~~the timing and amount thereof, is within the discretion of Sysorex~~management’s ~~board~~attention of directors. The board’s decisions regarding the payment of dividends will depend on many factors, such as our financial condition, earnings, capital requirements, debt service obligations, restrictive covenants in any debt instrument, industry practice, legal requirements, regulatory constraints and ~~other~~could ~~factors that~~also ~~the~~adversely ~~board~~affect ~~deems relevant. Our ability to pay dividends will depend on~~ our ~~ongoing~~ ability to ~~generate~~attract ~~cash from operations.~~and Weretain ~~cannot~~qualified ~~guarantee that Sysorex will pay a dividend in the future or continue to pay any dividends if we began paying dividends~~directors.

As a public reporting company, we are subject to the reporting requirements of the Exchange Act. These requirements generate significant accounting, legal and financial compliance costs and make some activities more difficult, time consuming or costly and may place significant strain on our personnel and resources. The Exchange Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to establish the requisite disclosure controls and procedures and internal control over financial reporting, significant resources and management oversight are required.

As a result, management’s attention may be diverted from other business concerns, which could have an adverse and even material effect on our business, financial condition and results of operations. These rules and regulations may also make it more difficult and expensive for us to obtain director and officer liability insurance. If we are unable to obtain appropriate director and officer insurance, our ability to recruit and retain qualified officers and directors, especially those directors who may be deemed independent, could be adversely impacted.

We are an “emerging growth company” and our election to delay adoption of new or revised accounting standards applicable to public companies may result in our financial statements not being comparable to those of some other public companies. As a result of this and other reduced disclosure requirements applicable to emerging growth companies, our securities may be less attractive to investors.

As a public reporting company with less than $1,235,000,000 in revenue during our last fiscal year, we qualify as an “emerging growth company” under the JOBS Act. An emerging growth company may take advantage of certain reduced reporting requirements and is relieved of certain other significant requirements that are otherwise generally applicable to public companies. In particular, as an emerging growth company we:

	●	are not required to obtain an attestation and report from our auditors on our management’s assessment of our internal control over financial reporting pursuant to the Sarbanes-Oxley Act;

	●	are not required to provide a detailed narrative disclosure discussing our compensation principles, objectives and elements and analyzing how those elements fit with our principles and objectives (commonly referred to as “compensation discussion and analysis”);

	●	are not required to obtain a non-binding advisory vote from our stockholders on executive compensation or golden parachute arrangements (commonly referred to as the “say-on-pay,” “say-on-frequency” and “say-on-golden-parachute” votes);

	●	are exempt from certain executive compensation disclosure provisions requiring a pay-for-performance graph and CEO pay ratio disclosure;

	●	may present only two years of audited financial statements and only two years of related Management’s Discussion & Analysis of Financial Condition and Results of Operations (“MD&A”); and

	●	are eligible to claim longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act.

~~Table~~We intend to take advantage of ~~Contents~~ all of these reduced reporting requirements and exemptions, including the longer phase-in periods for the adoption of new or revised financial accounting standards under §107 of the JOBS Act. Our election to use the phase-in periods may make it difficult to compare our financial statements to those of non-emerging growth companies and other emerging growth companies that have opted out of the phase-in periods under §107 of the JOBS Act.

~~CAPITALIZATION~~Certain of these reduced reporting requirements and exemptions were already available to us due to the fact that we also qualify as a “smaller reporting company” under SEC rules. For instance, smaller reporting companies are not required to obtain an auditor attestation and report regarding management’s assessment of internal control over financial reporting; are not required to provide a compensation discussion and analysis; are not required to provide a pay-for-performance graph or Chief Executive Officer pay ratio disclosure; and may present only two years of audited financial statements and related MD&A disclosure.

~~The~~Under the ~~following~~JOBS ~~table~~Act, we may take advantage of the above-described reduced reporting requirements and exemptions for up to five years after our ~~sets~~initial ~~forth~~sale of common equity pursuant to a registration statement declared effective under the Securities Act or such earlier time that we no longer meet the definition of an emerging growth company. In this regard, the JOBS Act provides that we would cease to be an “emerging growth company” if we have more than $1,235,000,000 in annual revenues, have more than $700 million in market value of our ~~capitalization~~Common Stock asheld by non-affiliates, or issue more than $1.0 billion in principal amount of ~~September~~non-convertible 30debt over a three-year period. Further, under ~~2018:~~ current SEC rules we will continue to qualify as a “smaller reporting company” for so long as we have a public float (i.e., the market value of common equity held by non-affiliates) of less than $250 million as of the last business day of our most recently completed second fiscal quarter.

●We cannot onpredict anif ~~actual~~investors ~~basis;~~will ~~and~~find our securities less attractive due to our reliance on these exemptions.

●If onwe anfail ~~as-adjusted basis~~ to ~~reflect~~maintain ~~the~~effective ~~issuance~~internal control ~~and~~over ~~sale~~financial byreporting, ~~us of (i) Class A Units in this offering at~~ the ~~assumed public offering~~ price of $our ~~per~~securities ~~Class~~may Abe ~~Unit,~~adversely ~~(ii) no Class B Units, after deducting placement agent fees and estimated offering expenses payable by us and the receipt by us of the proceeds of such sale~~affected.

~~You~~Our internal ~~should~~control ~~read~~over ~~this information~~financial ~~together~~reporting ~~with~~has weaknesses and conditions that require correction or remediation. For the ~~sections~~year ~~titled~~ended ~~“Management’s~~December 31, ~~Discussion~~2021 and ~~Analysis~~the ofquarter ~~Financial~~ended ~~Condition~~September ~~and~~30, ~~Results~~ 2022, we identified a material weakness in our assessment of ~~Operations”~~the ~~included~~effectiveness ~~herein,~~of disclosure controls and ~~our~~procedures. ~~consolidated~~Our internal control over financial ~~statements~~reporting ~~and~~was ~~related~~not ~~notes~~effective ~~included~~due ~~herein.~~ to the following material weaknesses:

	As of September 30, 2018 (in thousands, except number of shares and par value data)
	Actual			As Adjusted(1)
Cash	$	89		$
Stockholders’ Equity:
Preferred stock, $0.00001 par value; 10,000,000 shares authorized; 0 issued and outstanding		-
Series 1 convertible preferred stock – $1,000.00 stated value; 0 issued and outstanding, actual and as adjusted		-
Common stock – $0.00001 par value; 500,000,000 shares authorized; 41,000,000 shares issued and 29,208,310 shares outstanding (actual), shares issued and outstanding (as adjusted)		4
Additional paid-in capital		(11,567	)
Treasury stock, at cost, 11,791,690 shares at September 30, 2018		(1	)
Accumulated deficit		(802	)
Total stockholders’ equity		(12,366	)

The Company does not have a formal top-down risk assessment process to identify significant process areas, underlying key controls, nor does the Company have a monitoring process in place to monitor internal control over financial reporting.

~~(1)~~2. ~~Does~~The Company did not ~~include~~properly design or maintain effective entity level monitoring controls over the ~~shares~~financial ofclose ~~common~~and ~~stock~~reporting ~~that~~process. ~~may~~The beCompany’s ~~issued~~controls ~~under~~surrounding the ~~Series~~review 1of ~~Warrants~~financial tostatements, bevendor ~~issued~~agreements, inkey ~~this~~reconciliations ~~offering~~and accounting for complex transactions were not designed and did not operate at a level of precision that would prevent or detect a material misstatement.

3. The ~~number~~Company ofdid ~~shares of~~not ~~our~~design ~~common~~and ~~stock~~implement toappropriate beuser ~~outstanding~~access ~~upon~~controls ~~completion~~to ofensure ~~this~~segregation ~~offering~~of isduties ~~based~~that onwould ~~29,208,310~~adequately ~~shares~~restrict ofuser ~~common~~access ~~stock~~to ~~outstanding as~~financially ofsignificant ~~September~~information 30systems, ~~2018~~and schedules, ~~assuming~~specifically ~~that~~surrounding ~~only~~mining ~~Class~~revenue ~~A Units are purchased in this offering~~ and ~~excludes~~mining ~~as of that date:~~equipment.

●4. ~~shares~~The ofCompany ~~common~~did ~~stock~~not ~~issuable~~properly ~~upon~~design ~~the~~or ~~exercise~~maintain ofeffective ~~outstanding~~controls ~~stock~~over ~~options~~its ~~under~~service ~~our~~organizations ~~Amended~~ and ~~Restated~~IT ~~2018~~vendors. ~~Equity~~More ~~Incentive Plan~~specifically, ~~having~~the aCompany ~~weighted~~did ~~average~~not ~~exercise~~properly ~~price~~design ofor $implement ~~per~~controls ~~share~~to ensure that data received from third parties is complete and ~~shares~~accurate ofor ~~common~~have ~~stock~~controls ~~available~~in place to review the applicable complementary user entity controls described in service organizations’ reports for ~~issuance~~their ~~under~~potential ~~our~~impact ~~2018~~on ~~Equity~~the ~~Incentive~~Company’s ~~Plan;~~financial reporting.

● shares of common stock are reserved for issuance from treasury to (i) the holders of certain warrants issued by Inpixon who will be entitled to receive shares of common stock if the warrants are exercised and (ii) holders of Inpixon securities that are subject to beneficial ownership restrictions;

● shares of common stock or other securities of the Company convertible or exercisable for shares of common stock issued after September 30, 2018; and

● shares of common stock that may be issued under the Series 1 Warrants to be issued in this offering.

To the extent we sell any Class B Units in this offering, the same aggregate number of common stock equivalents resulting from this offering would be convertible under the Series 1 Preferred issued as part of the Class B Units.

Assuming Class A Units are sold in the offering and no Class B Units are sold in this offering, each increase (decrease) of 100,000 Class A Units to be purchased at $ per unit (which was the last reported bid price of our common stock on the OTCQB on , 2019) would increase (or decrease) additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $ million, assuming the offering price remains at $ and after deducting placement agent fees and estimated offering expenses payable by us.

Assuming Class A Units are sold in the offering and no Class B Units are sold in this offering, a $1.00 increase (decrease) in the assumed public offering price of $ per Class A Unit (which was the last reported bid price of our common stock on the OTCQB on , 2019) would result in an incremental increase (decrease) in each of our additional paid-in capital, total stockholders’ equity (deficit) and total capitalization by approximately $ million, assuming that the number of Class A Units sold by us as set forth on the cover page of this prospect remains the same and after deducting the placement agent and estimated offering expenses payable by us.

~~Table~~Although management has implemented, and continues to implement, actions to remediate the underlying causes of ~~Contents~~ the control deficiencies that gave rise the material weaknesses, we cannot provide any assurance that the remediation efforts will be successful or that our internal control over financial reporting will be effective as a result of these efforts. See “Risk Factors—Risks Related to Restatement of Our Consolidated Financial Statements.”

~~DILUTION~~If we fail to comply with the rules under the Sarbanes-Oxley Act related to disclosure controls and procedures in the future, or, if we continue to have material weaknesses or other deficiencies in our internal control and accounting procedures and disclosure controls and procedures, our stock price could decline significantly and raising capital could be more difficult. If additional material weaknesses or significant deficiencies are discovered or if we otherwise fail to address the adequacy of our internal control over financial reporting and disclosure controls and procedures, our business may be harmed. Moreover, effective internal controls are necessary for us to produce reliable financial reports and are important to helping prevent financial fraud. If we cannot provide reliable financial reports or prevent fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading price of our securities could drop significantly.

~~Our net tangible book value represents the amount of our total tangible assets less total liabilities.~~ We ~~calculate~~are ~~the~~required ~~net~~to ~~tangible book~~comply ~~value~~with ~~per~~certain ~~share by dividing the net tangible book value by the number~~ provisions of ~~outstanding~~Section ~~shares~~404 of ~~our common stock. As of September 30, 2018, our historical net tangible book value was $(15.7) million, or approximately $(0.54) per share of our total outstanding common stock, based on~~ the ~~shares~~Sarbanes-Oxley ofAct ~~our~~and ~~outstanding~~if ~~common~~we ~~stock~~fail ~~immediately prior~~ to ~~the~~continue ~~completion of this offering. As of September 30, 2018, after giving effect~~ to ~~the sale of shares of common stock offered by us at an assumed public offering price of $ per share~~comply, ~~the last reported sale price of~~ our ~~common~~business ~~stock~~could onbe ~~the OTCQB Market on~~ harmed, ~~2019,~~ and ~~after~~the ~~deducting~~price ~~estimated placement agent fees and offering expenses payable by us, our pro forma net tangible book value as~~ of ~~September 30, 2018 would have been approximately $ , or $ per share of~~ our ~~total~~ ~~outstanding common stock. This represents an immediate dilution of $ per~~securities ~~share~~could ~~to new investors purchasing shares of our common stock in this offering~~decline.

Rules adopted by the SEC pursuant to Section 404 of the Sarbanes-Oxley Act require an annual assessment of internal control over financial reporting, and for certain issuers an attestation of this assessment by the issuer’s independent registered public accounting firm. The standards that must be met ~~following~~for ~~table~~management ~~illustrates~~to assess the ~~per~~internal ~~share~~control ~~dilution~~over financial reporting as effective are evolving and complex, and require significant documentation, testing, and possible remediation to ~~investors~~meet ~~purchasing~~the ~~securities~~detailed standards. We expect to incur significant expenses and to devote resources to Section 404 compliance on an ongoing basis. It is difficult for us to predict how long it will take or costly it will be to complete the assessment of the effectiveness of our internal control over financial reporting for each year and to remediate any deficiencies in our internal control over financial reporting. As a result, we may not be able to complete the ~~offering:~~assessment and remediation process on a timely basis. In the event that our Chief Executive Officer or Chief Financial Officer determines that our internal control over financial reporting is not effective as defined under Section 404, we cannot predict how regulators will react or how the market prices of our securities will be affected; however, we believe that there is a risk that investor confidence and the market value of our securities may be negatively affected.

Assumed public offering price per share of common stock				$
Net tangible book value per share as of September 30, 2018	$	(0.54	)
Increase in net tangible book value per share attributable to new investors	$
Adjusted net tangible book value per share as of September 30, 2018 after giving effect to this offering				$
Dilution in net tangible book value per share to new investors				$

Shares eligible for future sale may adversely affect the market.

~~The~~From time to time, certain ~~amounts~~of ~~above~~our ~~are~~stockholders ~~based~~may onbe 29eligible to sell all or some of their shares of common stock by means of ordinary brokerage transactions in the open market pursuant to Rule 144 promulgated under the Securities Act,~~208~~ subject to certain limitations. In general,~~310~~ pursuant to Rule 144, non-affiliate stockholders may sell freely after six months, subject only to the current public information requirement. Affiliates may sell after six months, subject to the Rule 144 volume, manner of sale (for equity securities), current public information, and notice requirements. Of the approximately 2,484,426,501 shares of our common stock outstanding as of ~~September~~November 3016, ~~2018~~2022, ~~which~~approximately ~~excludes~~1,933,270,220 shares asare tradable without restriction. Given the limited trading of ~~that~~our ~~date:~~common stock, resale of even a small number of shares of our common stock pursuant to Rule 144 or an effective registration statement may adversely affect the market price of our common stock.

●We ~~shares~~have ofnever ~~common~~paid ~~stock~~dividends ~~issuable~~on ~~upon the exercise of outstanding stock options under~~ our ~~Amended and Restated 2018 Equity Incentive Plan, having a weighted average exercise price of $ per share and shares of~~ common stock ~~available~~and ~~for~~have ~~issuance~~no ~~under~~plans ~~our~~to ~~2018~~do ~~Equity~~so ~~Incentive~~in ~~Plan;~~the future.

	●	shares of common stock are reserved for issuance from treasury to (i) the holders of certain warrants issued by Inpixon who will be entitled to receive shares of common stock if the warrants are exercised and (ii) holders of Inpixon securities that are subject to beneficial ownership restrictions;
	●	shares of common stock or other securities of the Company convertible or exercisable for shares of common stock issued after September 30, 2018; and

Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. See “Dividend Policy.”

●We ~~shares~~will ofindemnify ~~common~~and ~~stock~~hold ~~that~~harmless ~~may~~our officers beand ~~issued~~directors ~~under~~to the ~~Series~~maximum 1extent ~~Warrants~~permitted toby beNevada ~~issued in this offering~~law.

~~To the~~Our ~~extent~~bylaws provide that ~~any~~we will ofindemnify ~~our~~and ~~outstanding~~hold ~~options~~harmless orour ~~warrants,~~officers ~~including~~and ~~the~~directors ~~Series~~against 1claims ~~Warrants~~arising ~~issued~~from inour ~~this offering~~activities, ~~are~~to ~~exercised, we~~the ~~grant~~maximum ~~additional~~extent ~~options~~permitted by ~~under~~Nevada ~~our~~law. ~~equity~~If ~~incentive~~we ~~plan~~were orcalled ~~issue~~upon ~~additional~~to ~~warrants~~perform orunder ~~preferred~~our ~~stock~~indemnification agreement, orthen wethe ~~issue~~portion ~~additional shares~~ of ~~common~~our ~~stock~~assets inexpended ~~the~~for ~~future,~~such purpose ~~there~~would ~~may~~reduce bethe ~~further~~amount ~~dilution~~otherwise toavailable ~~new~~for ~~investors~~our business.

An investor that acquires additional shares of common stock through the exercise of the Series 1 Warrants offered hereby may experience additional dilution depending on our net tangible book value at the time of exercise. Assuming that we issue an aggregate of Class A Units and no Class B Units, that the Series 1 Warrants have an exercise price of $ per share, which is % of the public offering price of the Class A Units, and that all such Series 1 Warrants are exercised, our net tangible book value as of September 30, 2018 would have been approximately ($ ) million, or ($ ) per share of our common stock. This amount represents an increase in net tangible book value of $ per share to our existing stockholders and a dilution in net tangible book value of $ per share to new investors exercising such Series 1 Warrants.

~~Table~~The planned Reverse Stock Split may decrease the liquidity of ~~Contents~~ the shares of our common stock.

~~MARKET~~On ~~PRICE~~June OF15, ~~OUR~~2022, ~~COMMON~~the ~~STOCK~~Company’s ~~AND~~Board ~~RELATED~~of ~~STOCKHOLDER~~Directors ~~MATTERS~~ approved to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors. On September 22, 2022, the Company held its 2022 virtual annual meeting of stockholders, at which the Company’s stockholders voted in favor of, among other matters, to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors. On November 1, 2022, the Company’ Board of Directors approved an Articles of Amendment to the Company’s Articles of Incorporation to effect a 1 for 1,000 reverse stock split (“Reverse Stock Split”) of the Company’s common stock. The current status of the Reverse Stock Split is that the Company has notified the Financial Industry Regulatory Authority (FINRA) of the Reverse Stock Split, which will not be effective until FINRA processes it, and at such time we’ll file the Articles of Amendment with the State of Nevada to effectuate the Reverse Stock Split. The liquidity of the shares of our common stock may be affected adversely by the planned Reverse Stock Split given the reduced number of shares outstanding following the Reverse Stock Split. In addition, the planned Reverse Stock Split may have increased the number of shareholders who own odd lots (less than 100 shares) of our common stock, creating the potential for such shareholders to experience an increase in the cost of selling their shares and greater difficulty affecting such sales.

OnWe ~~December~~have ~~19,~~been ~~2018, the closing bid price for our common stock as reported on the OTCQB was $0.0268 per~~notified ~~share. There was no trading~~ of ~~our~~Non-Compliance ~~common~~with ~~stock on the~~ OTCQB orBid ~~any~~Price ~~other market~~Standards, ~~exchange~~and ~~or quotation system before September 4, 2018. Although~~ our common stock ~~is quoted on the OTCQB, there is a limited trading market for our common stock. Because our common stock is thinly traded, any reported sale prices~~ may not be aable ~~true~~to ~~market-based~~continue ~~valuation~~to oftrade ~~our~~on ~~common stock. The following table sets forth~~ the ~~range of high and low closing bid prices per share of our common stock since commencement of quotation~~OTCQB. ~~The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions.~~

	Fiscal Year 2018
	High		Low
First Quarter	$	-	$	-
Second Quarter	$	-	$	-
Third Quarter	$	0.050	$	0.02
Fourth Quarter (through December 19, 2018)	$	0.045	$	0.010

In order to be in compliance with OTCQB Standards, among other things, the Company must maintain a minimum closing bid price of $0.01 per share on at least one of the prior 30 consecutive calendar days. On October 13, 2022, the Company was contacted by OTC Markets Group, Inc. (“OTC Markets”), as the bid price of the Company’s common stock, quoted on the OTCQB under the symbol “SYSX,” closed below $0.001 on October 12, 2022. OTC Markets notified the Company that in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be removed from OTCQB as per Section 4.1(b) of the OTCQB Standards. On October 28, 2022, the Company was notified by OTC Markets that that the Company’s bid price had closed below $0.01 for more than 30 consecutive calendar days and no longer meets the Standards for Continued Eligibility for OTCQB (the “OTCQB Standards”). Pursuant to Section 4.1 of the OTCQB Standards, the Company was granted a cure period of 90 calendar days, during which the minimum closing bid price for the Company’s common stock must be $0.01 or greater for 10 consecutive trading days in order to continue trading on the OTCQB marketplace. If this requirement is not met by January 26, 2023, the Company will be removed from the OTCQB marketplace. In addition, pursuant to the OTCQB Standards, in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be immediately removed from OTCQB. On October 31, 2022, OTC Markets notified the Company that the bid price for the Company’s common stock closed below $0.001 on October 28, 2022. The bid price for the Company’s common stock closed below $0.001 on October 31, 2022, as well as November 10, 2022, November 11, 2022, November 15, 2022and November 16, 2022. Again, in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be immediately removed from OTCQB.

~~Holders~~ We do not currently have enough authorized shares of common stock under our Articles of Incorporation, as amended, to meet all of our potential obligations to third parties.

AsOur Articles of ~~December 19~~Incorporation, as ~~2018~~amended, weprovide ~~had~~for ~~197~~3,000,000,000 ~~registered holders of~~authorized ~~record~~shares of our common stock. AAs ~~substantially~~of ~~greater~~November ~~number~~16, 2022, we have 2,484,426,501 shares of common stock issued and outstanding. As of November 11, 2022, holders of our convertible debentures have delivered notices of conversion covering an aggregate of 617,635,347 shares of common stock. If we issued the shares that are ~~“street~~subject ~~name”~~to orthe notices of conversion that ~~beneficial~~have ~~holders~~been delivered, ~~whose~~it would result in us issuing more shares than what we have authorized. Accordingly, in order to meet all of ~~record~~such obligations, ~~are~~we ~~held~~will ~~through~~need ~~banks~~to amend our Articles of Incorporation, ~~brokers~~as amended, ~~other~~to increase the authorized shares of our common stock. We can give no assurance that we will obtain the requisite affirmative vote of our shareholders to so amend our Articles of Incorporation, as amended, which could materially adversely affect our financial ~~institutions~~condition and ~~registered~~the ~~clearing agencies~~market for our shares.

~~Table~~USE ofOF ~~Contents~~ PROCEEDS

~~PLAN~~All OFof ~~DISTRIBUTION~~the shares of Common Stock offered by the Selling Securityholders pursuant to this prospectus will be sold by the Selling Security holders for their respective accounts. We will not receive any of the proceeds from these sales. We will receive up to an aggregate of approximately $500,000.00 from the exercise of Warrants, assuming the exercise in full of all of the Warrants for cash. We expect to use the net proceeds from the exercise of the Warrants for general corporate purposes.

(referred to herein as the placement agent) has agreed to act as our exclusive placement agent in connection with this offering of our securities pursuant to this prospectus. The placement agent has agreed to be our placement agents on a reasonable best efforts basis, in connection with the issuance and sale by us of the securities being offered in this prospectus. The terms of this offering were subject to market conditions and negotiations between us, the placement agent and prospective investors. The placement agent does not have any commitment to purchase any of our securities, and the placement agent will have no authority to bind us by virtue of its agreement to act as placement agent. Further, the placement agent does not guarantee that it will be able to raise new capital in any prospective offering. The placement agent may engage sub-agents or selected dealers to assist with the offering. CAPITALIZATION

~~Only certain~~The ~~institutional~~following ~~investors~~table ~~purchasing~~sets ~~the securities offered hereby will execute a securities purchase agreement with us,~~forth ~~providing~~our ~~such investors~~cash ~~with~~and ~~certain~~cash ~~representations,~~equivalents ~~warranties~~ and ~~covenants~~capitalization ~~from~~as ~~us,~~of ~~which~~September ~~representations~~30, ~~warranties and~~2022 ~~covenants~~on ~~will~~an ~~not~~actual bebasis. ~~available~~The numbers topresented ~~other~~in ~~investors who~~this ~~will~~table ~~not~~are ~~execute a securities purchase agreement~~ in ~~connection with~~thousands ~~the purchase~~ of ~~the securities offered pursuant to this prospectus. Therefore~~dollars, ~~those investors~~except ~~shall~~number ~~rely solely on this prospectus in connection with the purchase~~ of ~~securities~~shares inand ~~the~~par ~~offering~~value data.

~~We will~~This ~~deliver~~table ~~the~~should ~~securities~~be ~~being~~read ~~issued~~in conjunction towith the ~~investors~~information ~~upon~~contained ~~receipt~~in ofthis ~~investor~~prospectus, ~~funds~~including ~~for~~“Management’s ~~the~~Discussion ~~purchase~~and Analysis of ~~the~~Financial Condition ~~securities~~and ~~offered pursuant~~Results toof ~~this~~Operations” ~~prospectus.~~and Weour ~~expect~~financial tostatements ~~deliver~~and the ~~securities~~related ~~being~~notes ~~offered~~thereto ~~pursuant~~appearing toelsewhere in this prospectus ~~on or about , 2019~~.

We have agreed to pay the placement agent a total cash fee equal to 7.0% of the gross proceeds of this offering. We have also agreed to reimburse the placement agent up to $ for its expenses.

	As of September 30, 2022
	Actual
Cash and cash equivalents	$	141

Current portion of convertible note payable, net of discount		15,985

Stockholders’ equity:
Common stock - $0.00001 par value; 3,000,000,000,000 shares authorized; 736,609,855 shares issued and outstanding on an actual basis		6
Treasury Stock		-
Preferred stock - $0.00001 par value, 10,000,000 shares authorized; no shares issued and outstanding on an actual basis		-
Additional paid-in capital		44,275

Accumulated deficit		(60,366	)
Total stockholders’ equity		(16,085	)
Total capitalization	$	(100	)

WeDETERMINATION ~~estimate~~OF ~~the~~OFFERING ~~total offering expenses of this offering that will be payable by us, excluding the placement agent’s fees and expenses, will be approximately $ .~~PRICE

~~Following the~~Resale ~~closing~~ of aCommon ~~financing~~Stock ~~in which the Company raises gross proceeds of at least $10 million from investors introduced~~ by ~~the placement~~Selling agent, for a period of 12 months following such closing, we will grant the placement agent the right to act as sole managing underwriter and book runner, or sole placement agent for future equity, equity-linked or debt (excluding commercial bank debt) during such 12 month period.Securityholders

~~If any~~Our ~~investors~~Common ~~introduced~~Stock tois usquoted on by the ~~placement~~OTCQB ~~agent~~under ~~participate~~the insymbol a“SYSX.” ~~financing~~The ~~within~~shares 12registered ~~months~~for ~~after~~resale in this ~~offering~~prospectus ~~pursuant to~~being ~~which~~offered weby ~~sell~~the ~~securities~~Selling toSecurityholders will ~~such~~be ~~investors~~sold at fixed prices, weat ~~have~~prevailing ~~agreed~~market toprices ~~pay~~at athe ~~fee~~time of ~~7.0%~~sale, ofat prices related to the ~~gross~~prevailing ~~proceeds~~market ofprice, ~~such~~at ~~sales~~varying prices todetermined at the ~~placement~~ ~~agent~~time of sale or at negotiated prices.

~~We have~~Issuance ~~agreed~~of toShares ~~indemnify the placement agent and specified other persons against certain liabilities relating to or arising out~~ of ~~the~~Common ~~placement~~Stock ~~agent’s activities under the engagement agreement and to contribute to payments that the placement agent~~Underlying ~~may be required to make in respect of such liabilities.~~ Warrants

The ~~placement~~ ~~agent~~price ~~may be deemed to be underwriters within the meaning~~ of ~~Section 2(a)(11) of~~ the ~~Securities~~shares ~~Act, and any commissions~~of ~~received~~Common byStock ~~then~~underlying ~~and any profit realized on~~ the ~~resale~~Warrants ofis ~~the~~determined ~~securities sold~~ by itreference ~~while acting as principal might be deemed~~ to ~~be underwriting discounts or commissions under~~ the ~~Securities~~exercise ~~Act.~~price ~~As an underwriter, the placement agent would be required to comply with the requirements~~ of the ~~Securities Act and the Exchange Act~~Warrants, ~~including,~~such ~~without~~that ~~limitation,~~each ~~Rule~~Warrant ~~415(a)(4) under~~entitles the ~~Securities~~holder ~~Act~~to ~~and~~purchase ~~Rule~~one ~~10b-5~~share ~~and~~of ~~Regulation~~our MCommon ~~under~~Stock ~~the~~at ~~Exchange~~an ~~Act.~~exercise ~~These~~price ~~rules and regulations may limit the timing~~ of ~~purchases~~ ~~and sales of the Units by the placement agent acting as principal~~$0.001 ~~Under~~per ~~these rules and regulations, the placement agent:~~ share.

● may not engage in any stabilization activity in connection with our securities; and

● may not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities, other than as permitted under the Exchange Act, until it has completed its participation in the distribution.

The public offering price of the securities we are offering was negotiated between us and the investors, in consultation with the placement agent based on the trading of our common stock prior to the offering, among other things. Other factors considered in determining the public offering price of the securities we are offering include the history and prospects of the Company, the stage of development of our business, our business plans for the future and the extent to which they have been implemented, an assessment of our management, general conditions of the securities markets at the time of the offering and such other factors as were deemed relevant.

~~Table~~DIVIDEND ~~of Contents~~ POLICY

~~Other~~We have not paid any cash dividends ~~Relationships~~on our common stock and do not currently anticipate paying cash dividends in the foreseeable future. The agreements into which we may enter in the future, including indebtedness, may impose limitations on our ability to pay dividends or make other distributions on our capital stock. Payment of future dividends on our common stock, if any, will be at the discretion of our board of directors and will depend on, among other things, our results of operations, cash requirements and surplus, financial condition, contractual restrictions and other factors that our board of directors may deem relevant. We intend to retain future earnings, if any, for reinvestment in the development and expansion of our business.

~~The placement~~MARKET ~~agent~~PRICE ~~may,~~FOR ~~from~~COMMON ~~time~~EQUITY toAND ~~time,~~RELATED ~~engage in transactions with or perform services for us in the ordinary course of its business~~STOCKHOLDER ~~and may continue to receive compensation from us for such services.~~MATTERS

~~On December~~Market ~~13, 2018, we issued 648,222 shares of its common stock to a designee of the placement agent in accordance with the terms and conditions of an advisory agreement between us and the placement agent.~~Information

~~Transfer~~Our common stock is currently ~~Agent~~quoted on the OTCQB tier of the OTC Market Group, ~~Registrar~~Inc. under the symbol “SYSX.” The Company began trading on the OTC Markets under the symbol “SYSX” on September 4, 2018. The OTC Market is a network of security dealers who buy and ~~Warrant~~sell ~~Agent~~stock. The dealers are connected by a computer network that provides information on current “bids” and “asks,” as well as volume information.

~~Computershare~~The ~~Trust~~following ~~Company,~~table ~~N.A.~~sets isforth the ~~transfer~~high ~~agent~~ and ~~registrar~~low closing prices for our common stock, ~~will~~for beeach quarterly period during the ~~transfer~~years ~~agent~~ended December 31, 2020, and ~~registrar~~2021 ~~for~~and to date, as reported by the ~~Series~~ 1OTC ~~Preferred~~Markets. ~~issued~~These inquotations ~~this~~reflect ~~offering~~inter-dealer prices, ~~and~~without ~~will~~retail bemark-up, mark-down ~~the~~or ~~warrant~~commission ~~agent~~and ~~for~~may ~~the~~not ~~Series~~represent 1actual ~~Warrants~~transactions.

OTCQB Listing

	Common Stock
	High		Low
Year Ended December 31, 2020:
January 1, 2020, through March 31, 2020	$	0.15	$	0.15
April 1, 2020, through June 30, 2020	$	0.42	$	0.25
July 1, 2020, through September 30, 2020	$	0.38	$	0.38
October 1, 2020, through December 31, 2020	$	0.43	$	0.43
Year Ended December 31, 2021:
January 1, 2021, through March 31, 2021	$	3.40	$	0.30
April 1, 2021, through June 30, 2021	$	15.00	$	0.79
July 1, 2021, through September 30, 2021	$	4.05	$	0.68
October 1, 2021, through December 31, 2021	$	0.97	$	0.19
Year Ended December 31, 2022:
January 1, 2022, through March 31, 2022	$	0.23	$	0.019
April 1, 2022, through June 30, 2022	$	0.11	$	0.005
July 1, 2022, through September 30, 2022	$	0.042	$	0.003
October 1, 2022, through December 31, 2022*	$	0.004	$	0.0006

~~Our shares~~The closing price of our common stock ~~are quoted~~ on the OTCQB ~~market~~on ofNovember ~~the OTC Markets Group~~16, 2022, ~~Inc.~~was ~~under the symbol “SYSX~~$0.”0009.

~~We do~~* ~~not~~Through ~~intend~~November ~~to apply to list the Series 1 Preferred or the Series 1 Warrants we are offering on the OTCQB market~~16, ~~any national securities exchange or other trading market~~2022.

~~Table~~Non-Compliance ofwith ~~Contents~~ OTCQB Bid Price Standards

~~OUR~~In order to be in compliance with OTCQB Standards, among other things, ~~BUSINESS~~the Company must maintain a minimum closing bid price of $0.01 per share on at least one of the prior 30 consecutive calendar days. On October 13, 2022, the Company was contacted by OTC Markets Group, Inc. (“OTC Markets”), as the bid price of the Company’s common stock, quoted on the OTCQB under the symbol “SYSX,” closed below $0.001 on October 12, 2022. OTC Markets notified the Company that in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be removed from OTCQB as per Section 4.1(b) of the OTCQB Standards. On October 28, 2022, the Company was notified by OTC Markets that that the Company’s bid price had closed below $0.01 for more than 30 consecutive calendar days and no longer meets the Standards for Continued Eligibility for OTCQB (the “OTCQB Standards”). Pursuant to Section 4.1 of the OTCQB Standards, the Company was granted a cure period of 90 calendar days, during which the minimum closing bid price for the Company’s common stock must be $0.01 or greater for 10 consecutive trading days in order to continue trading on the OTCQB marketplace. If this requirement is not met by January 26, 2023, the Company will be removed from the OTCQB marketplace. In addition, pursuant to the OTCQB Standards, in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be immediately removed from OTCQB. On October 31, 2022, OTC Markets notified the Company that the bid price for the Company’s common stock closed below $0.001 on October 28, 2022. The bid price for the Company’s common stock closed below $0.001 on October 31, 2022, as well as November 10, 2022, November 11, 2022, November 15, 2022 and November 16, 2022. Again, in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be immediately removed from OTCQB.

~~Overview~~Holders of Common Stock

~~Sysorex was~~As ~~incorporated~~of inNovember ~~California on January 3~~16, ~~1994 as Lilien Systems and was acquired by Inpixon on March 20~~2022, ~~2013. Effective January~~there ~~1, 2016, Inpixon consummated a reorganization transaction pursuant to which certain Inpixon subsidiaries, including, AirPatrol Corporation and Shoom~~ were ~~merged~~approximately ~~with~~218 ~~and~~record ~~into~~holders ~~Lilien~~of ~~and~~our ~~Lilien~~common ~~changed~~stock. ~~its~~The ~~name~~number ~~to “Sysorex USA”; and all outstanding shares~~ of ~~capital~~record ~~stock~~holders ofdoes ~~Sysorex~~not ~~Government~~include ~~were~~beneficial ~~assigned~~owners ~~to Lilien, pursuant to which Sysorex Government became a direct subsidiary~~ of ~~Lilien.~~common ~~Sysorex USA changed its name to Inpixon USA on March 1, 2017. On July 26, 2018, Inpixon USA merged into Sysorex, Inc.,~~stock aheld ~~wholly-owned~~in ~~subsidiary of Inpixon, for~~ the ~~purpose~~names of ~~changing~~banks, ~~its~~brokers, ~~name~~nominees ~~and~~or ~~moving~~other ~~its state of formation from California to Nevada~~fiduciaries. ~~Lilien significantly expanded Inpixon’s operations providing it with a Big Data analytics platform and enterprise infrastructure capabilities.~~

~~Spin-off from Inpixon~~Dividends

~~On August~~We 7,have ~~2018,~~not wepaid ~~entered~~any ~~into~~cash ~~a Separation and Distribution Agreement (the “Spin-off Agreement”) with Inpixon, pursuant~~dividends toon ~~which~~our the IT solutions and professional services business would be transferred to the Company (the “VAR Business”) and the indoor positioning analytics business (the “IPA Business”) would be transferred to Inpixon (the “Separation”) and Inpixon would distribute all of the outstanding common stock ~~of the Company to Inpixon stockholders of record (including holders of Inpixon’s Series 4 Convertible Preferred Stock)~~ and ~~certain~~do ~~holders~~not ofcurrently ~~Inpixon’s~~anticipate ~~outstanding~~paying ~~warrants~~cash asdividends ofin the ~~close~~ offoreseeable ~~business on August 21, 2018 (the “Distribution”)~~future. ~~Pursuant~~We tointend ~~Amendment No. 1~~ to ~~the~~retain ~~Spin-off~~future ~~Agreement~~earnings, ~~the~~if ~~Distribution was effective at 4:01 p.m.~~any, ~~Eastern~~for ~~Time,~~reinvestment onin ~~August 31, 2018 (~~the ~~“Effective~~development ~~Date”).~~and Asexpansion ~~a result~~ of ~~the~~our ~~Distribution, the Company became an independent public company~~business. ~~The Company began “regular-way” trading on the OTC Markets under the symbol “SYSX” on September 4, 2018.~~

~~In connection~~Historical ~~with~~Common ~~the~~Equity Separation and Distribution, on the Effective Date the Company entered into several agreements with Inpixon that govern the relationship of the parties following the Distribution, including the following:Transactions

●The following is a ~~Transition~~summary of ~~Services~~transactions ~~Agreement;~~by us since November 17, 2019 involving registered and unregistered issuances and redemption of our common equity securities.

●On January 22, 2021, the Company issued 40,616 shares of its common stock to Chicago Venture Partners, L.P. pursuant to a ~~Tax~~waiver ~~Matters~~agreement as ~~Agreement;~~a redemption amount under a convertible promissory note which was issued on December 31, 2018.

●On March an9, ~~Employee~~2021, ~~Matters~~the ~~Agreement;~~Company ~~and~~issued 43,651shares of its common stock to Chicago Venture Partners, L.P. pursuant to a waiver agreement as a redemption amount under a convertible promissory note which was issued on December 31, 2018.

●On March an19, ~~Assignment~~2021, ~~and~~the ~~Assumption~~Company ~~Agreement~~issued 5,272,408 shares of its common stock to First Choice International Company, Inc. pursuant to a letter agreement dated March 19, 2021.

~~Transition~~On ~~Services~~April 14, 2021, pursuant to the terms of the Merger Agreement, the Company agreed to issue an aggregate of 150,043,116, less certain pre-funded warrants and rights to receive shares of common stock as follows:

~~The Transition~~(i) ~~Services Agreement sets out the respective rights~~124, ~~responsibilities~~218,268 ~~and~~shares ~~obligations~~ of ~~with~~common ~~respect~~stock to ~~certain support services to be provided by each other to one another after~~ the ~~Spin-off,~~shareholders asof ~~may~~TTM beDigital ~~necessary~~in toconnection ~~ensure~~with the orderly transition under the Spin-off Agreement. Inpixon agreed to provide various hosting and support services to Sysorex for up to 30 users at a price of $3,680 per month. These services include user authentication and permissions control through Active Directory, access to email and office productivity tools through an Office365 Enterprise 3 plan, hosting and access to Quotewerks, Great Plains and Unanet servers through a Remote Desktop Protocol gateway. Inpixon also agreed to provide helpdesk support including remote support tools, system imaging and management, antivirus tools and basic network support. The pricing includes monthly subscription based licenses.Merger;

~~Any services~~(ii) ~~provided~~20,870,088 ~~beyond~~shares ~~the~~of ~~services~~common ~~covered~~stock ~~are~~(excluding ~~billed~~shares atreserved afor ~~negotiated rate~~issuance), ~~which~~in ~~will~~exchange ~~not~~for becancellation ~~less~~of ~~favorable~~$13,582,081 ~~than~~of ~~the~~Company ~~rate Inpixon~~indebtedness orand ~~Sysorex~~accounts ~~would~~payable ~~have~~as ~~received~~part ~~for~~of ~~such~~the ~~service~~transactions ~~from~~contemplated aby ~~third~~the ~~party.~~Merger Agreement; and

~~Under the~~(iii) ~~Transition Services Agreement~~4,954,760 ~~Inpixon~~shares ~~and~~of ~~Sysorex~~common ~~agreed~~stock toissued ~~promptly~~in ~~take~~certain ~~all~~other ~~steps~~transactions tocontemplated ~~internalize~~by the ~~services~~Merger ~~being provided by acquiring their own staff or outsourcing such services to third parties~~Agreement.

~~The~~On ~~Transition~~May ~~Services~~4, ~~Agreement~~2021, ~~became~~the ~~effective~~Company ~~upon~~issued the ~~Spin-off~~aggregate ~~and will continue for a minimum term~~ of ~~one year~~60,000 ~~provided~~shares ~~that Inpixon~~of orCommon ~~Sysorex~~Stock ~~may terminate the Transition Services Agreement with respect~~ to ~~any~~consultants orin ~~all~~consideration ~~services~~of ~~provided~~corporate ~~thereunder at~~communications/media ~~any~~relations ~~time~~and ~~upon~~investor 30relations ~~days prior written notice to the other party. Additionally, either party may renew or extend the term of the transition~~ services ~~agreement~~pursuant ~~with respect~~ to ~~the~~a ~~provision~~consulting ~~of any service which have not been previously terminated~~agreement.

~~Table~~On May 19, 2021, the Company issued 5,000 shares of ~~Contents~~ Common Stock to an attorney in consideration of legal services provided.

~~Tax~~The above shares have been ~~Matters~~sold ~~Agreement~~and issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder.

~~The~~On May 25, 2021, the Company ~~Tax~~entered ~~Matters~~into exchange agreements (each, an “Exchange Agreement”), ~~allocates~~with ~~responsibility~~three ~~for~~of the ~~preparation~~Company’s shareholders – First Choice International Company, Inc., a Delaware corporation, Bespoke Growth Partners, Inc., a Delaware corporation, and ~~filing~~One ofPercent ~~certain~~Investments, Inc., ~~tax~~a ~~returns~~Delaware corporation (~~and~~collectively, the ~~payment~~“Shareholders”). Under the terms of ~~taxes~~the Exchange Agreements, the Shareholders ~~reflected~~agreed ~~thereon)~~to convey, ~~including~~transfer, ~~Inpixon’s~~and ~~consolidated~~assign ~~federal~~their ~~income~~shares ~~tax~~of ~~return~~common stock of the Company, ~~tax~~$0.00001 ~~returns~~par ~~associated~~value ~~with~~per ~~both~~share (the ~~IPA~~“Common Stock”), ~~Business~~in ~~and~~exchange for prefunded warrants (the ~~VAR~~“Prefunded ~~Business,~~Warrants”) ~~and~~based ~~provides~~on a one-for-one ~~certain~~exchange ~~reimbursements~~ratio. byThe number of shares of Common Stock exchanged and the ~~parties.~~corresponding number of Prefunded Warrants received, are as follows:

Under the tax matters agreement, Inpixon is generally be liable for its own taxes and taxes of all of its subsidiaries (other than Sysorex and Sysorex Government, the taxes for which Sysorex shall be liable) for all tax periods (or portion thereof) ending on the date of the distribution. Sysorex, however, is responsible for its taxes and for taxes of Sysorex Government, for taxes attributable to the VAR Business (taking into account the availability of net operating losses to offset taxable income from the Spin-off and such related transactions). Sysorex will bear liability for any transfer taxes incurred in the Spin-off and certain related transactions.

Shareholder	Number of Shares of Common Stock Exchanged		Number of Prefunded Warrants
First Choice International Company, Inc.		6,225,214		6,225,214
Bespoke Growth Partners, Inc.		5,589,820		5,589,820
One Percent Investments, Inc.		2,075,998		2,075,998

~~Each~~ The issuances of ~~Inpixon~~Prefunded Warrants ~~and~~under ~~Sysorex~~the ~~agreed~~Exchange toAgreements ~~indemnify~~were ~~each~~made ~~other~~in ~~against~~reliance ~~any~~on ~~taxes~~the ~~allocated~~exemption tofrom ~~such~~registration ~~party~~provided ~~under~~by ~~the~~Section ~~tax~~3(a)(9) ~~matters~~of ~~agreement~~the Securities Act of 1933, as amended (the “Securities Act”), as no commission or ~~arising~~other ~~from~~remuneration ~~any~~was ~~breach~~or ofwill ~~its~~be ~~covenants~~paid ~~thereunder,~~or ~~and~~given ~~related~~directly or ~~out-of-pocket~~indirectly ~~costs~~for ~~and~~such ~~expenses~~transactions.

~~Employee~~On ~~Matters~~July 7, 2021, the Company consummated the initial closing (the “Initial Closing”) of a private placement offering (the “Offering”) pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of July 7, 2021 (the “Purchase Agreement”), between the Company and forty (40) accredited investors (the “Purchasers”). At the Initial Closing, the Company sold the Purchasers (i) 12.5% Original Issue Discount Senior Secured Convertible Debentures (the “Debentures”) in an aggregate principal amount of $9,990,000.00 and (ii) warrants (the “Warrants” and together with the Debentures, the “Underlying Securities”) to purchase up to 3,534,751 shares of common stock of the Company (the “Common Stock”), subject to adjustments provided by the Warrants, or units of Common Stock and Common Stock purchase warrants, which represents 100% warrant coverage. The maximum number of shares of Common Stock that may be issued through the conversion of the Debentures and the exercise of the Warrants as of July 7, 2021 (the “Original Issue Date”) is 7,069,502.

~~The~~On ~~employee~~July ~~matters~~20, ~~agreement~~2021, ~~allocates~~the ~~liabilities~~Company ~~and~~issued ~~responsibilities relating to employment matters~~75,000 ~~employee~~shares ~~compensation~~of ~~and benefits~~Common ~~arrangements~~Stock ~~and~~to ~~other~~a ~~related~~law ~~matters~~firm in ~~connection~~consideration ~~with~~of ~~the~~legal ~~Separation~~services provided.

~~The~~On ~~employee~~August ~~matters agreement provides that~~5, ~~unless otherwise specified~~2021, ~~Inpixon~~the isCompany ~~responsible~~issued ~~for liabilities associated with employees who will be employed by Inpixon following the distribution~~50,000 ~~and~~shares ~~former~~of ~~Inpixon~~Common ~~employees~~Stock ~~whose liabilities are not allocated~~ to ~~Sysorex~~ ~~(collectively,~~an ~~the~~attorney ~~“Inpixon~~in ~~allocated~~consideration ~~employees”),~~of ~~and~~legal ~~Sysorex~~services is responsible for liabilities associated with employees who are employed by Sysorex following the distribution, former Inpixon employees whose last employment was with the VAR Business and certain specified former employees (collectively, the “Sysorex allocated employees”)provided.

~~Sysorex~~On ~~allocated~~August ~~employees~~13, ~~are~~2021, ~~eligible~~the toCompany ~~participate~~consummated inthe ~~Sysorex~~second ~~benefit~~closing ~~plans~~(the in“Second ~~accordance~~Closing”) ~~with~~of a private placement offering (the “Offering”) pursuant to the terms and conditions of that certain Securities Purchase Agreement, dated as of July 7, 2021 (the ~~Sysorex~~“Purchase Agreement”), ~~plans~~between asthe Company and thirty-nine (39) accredited investors (the “Purchasers”). At the Second Closing, the Company sold the Purchasers (i) twelve-and-one-half-percent (12.5%) Original Issue Discount Senior Secured Convertible Debentures (the “Debentures”) in ~~effect~~an ~~from~~aggregate ~~time~~principal amount of $3,976,875 and (ii) warrants (the “Warrants” and together with the Debentures, the “Underlying Securities”) to ~~time~~purchase up to 1,862,279 shares of common stock of the Company (the “Common Stock”), subject to adjustments provided by the Warrants, or units of Common Stock and Common Stock purchase warrants, which represents one hundred percent (100%) warrant coverage. The maximum number of shares of Common Stock that may be issued through the conversion of the Debentures and the exercise of the Warrants sold at the Second Closing is 3,724,558 as of August 13, 2021 (the “Original Issue Date”).

The employee matters agreement also includes provisions relating to cooperation between the two companies on matters relating to employees and employee benefits and other administrative provisions.

Assignment and Assumption Agreement

Through the Assignment and Assumption Agreement, the Company and Inpixon assigned to each other, as applicable, the Sysorex Assets (as defined in the Spin-off Agreement) and the Inpixon Assets (as defined in the Spin-off Agreement) and assumed, as applicable, the Sysorex Liabilities (as defined in the Spin-off Agreement) and the Inpixon Liabilities (as defined in the Spin-off Agreement).

Our Services and Products

Sysorex provides information technology and telecommunications solutions and services to commercial and government customers primarily in the United States. Sysorex offers cost effective, right-fit information technology solutions that help organizations reach their next level of business advantage. To that end, Sysorex provides a variety of IT services and/or technologies that enable customers to manage, protect, and monetize their enterprise assets whether on-premises, in the cloud, or via mobile.

Our products and services include the following:

~~Table~~On September 2, 2021, the Company issued the aggregate of ~~Contents~~ 150,000 shares of Common Stock to an individual in consideration of corporate advisory services pursuant to an advisory agreement.

ByOn ~~partnering~~September ~~with~~3, ~~our technology vendors~~2021, wethe ~~offer~~Company ~~our~~issued ~~customers~~the ~~best-~~aggregate of~~-breed~~ ~~products~~50,000 ~~and~~shares ~~a team~~ of ~~technology~~Common ~~certified~~Stock ~~subject matter~~to ~~experts~~an ~~and~~individual ~~account~~elected ~~representatives~~to ~~who~~ serve ~~commercial~~as ~~and~~a ~~federal~~Board ~~clients~~of ~~and are ready to deploy and manage industry-leading solutions~~Director.

~~Working~~On ~~with~~September ~~our~~7, ~~network of distribution partners~~2021, wethe ~~have~~Company ~~built~~issued athe ~~solid~~aggregate ~~reputation~~ of ~~trust~~200,000 ~~and~~shares ~~knowledge~~of ~~with~~Common ~~our~~Stock ~~customers, who look~~ to ~~end-to-end~~an ~~hardware~~individual ~~and~~in ~~software~~consideration ~~solutions~~of tocorporate ~~optimize~~advisory services ~~their~~pursuant ~~performance.~~to ~~Solutions~~an ~~sets~~advisory ~~include:~~agreement.

On November 2, 2021, the Company issued the aggregate of 1,000,000 shares of Common Stock in consideration for the purchase of the remaining 50% membership interest in Up North.

In January and February 2022, the Company issued an aggregate of 13,415,427 shares of restricted common stock. Of these shares:

●

500,000 shares were granted, on January 20, 2022, by the Company’s Board of Directors (the “Board”) to Wayne Wasserberg, the Company’s Chief Executive Officer and a member of the Board;

●

6,000,000 shares were issued, on February 9, 2022, to consultants for advisory services provided; and

●

6,915,427 shares were issued, on February 15, 2022, to GS Capital Partners, LLC (“GS Capital”) pursuant to a notice of conversion, delivered by GS Capital to the Company, related to a convertible debenture issued to GS Capital on July 7, 2021.

From September 27, 2022 to September 28, 2022, the Company issued an aggregate of 56,044,018 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.0037 to $0.00453.

On September 29, 2022, the Company issued an aggregate of 79,647,000 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.0037 to $0.004.

On September 30, 2022, the Company issued an aggregate of 106,299,847 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.003 to $0.004.

From October 3, 2022 to October 4, 2022, the Company issued an aggregate of 62,131,250 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.004 to $0.0093.

On October 5, 2022, the Company issued an aggregate of 56,750,000 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.015 to $0.0034.

On October 6, 2022, the Company issued an aggregate of 59,000,000 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, of $0.015.

From October 7, 2022 to October 10, 2022, the Company issued an aggregate of 65,000,000 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.0009 to $0.001.

On October 11, 2022, the Company issued an aggregate of 82,267,826 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, of $0.00115.

On October 12, 2022, the Company issued an aggregate of 674,732,307 shares of the Company’s common stock in connection with conversions of outstanding debentures at 50% of the five-day VWAPs, pursuant to the terms of the debentures, ranging from $0.00085 to $0.0015.

As of October 14, 2022, there are 1,786,001,741 shares of common stock outstanding. In addition, there are several pending debenture conversions as of October 14, 2022.

On October 18, 2022, the Company entered into a Securities Purchase Agreement (the “SPA”), dated as of October 18, 2022, by and among the Company and each of the each of the investors signatories thereto (each an “Investor” and collectively, the “Investors”) the SPA closed on October 18, 2022 and accordingly, 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.

The above shares have been sold and issued in reliance on the exemption from registration afforded by Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder.

DESCRIPTION OF BUSINESS

Overview

Sysorex, Inc. through its wholly owned subsidiary, Sysorex Government Services, Inc. (“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. In addition to SGS, the Company has another wholly owned subsidiary, TTM Digital Assets &Technologies, Inc. (“TTM Digital”). TTM Digital is a digital asset technology and mining company that owns and operates specialized cryptocurrency mining processors and was previously focused on the Ethereum blockchain ecosystem. As of September 15, 2022, Ethereum switched from a Proof of Work model to a Proof of Stake model and as a result, the Company is no longer mining Ethereum. TTM is currently exploring alternative uses and sales opportunities for its Graphics Processing Units (“GPU”) assets and datacenter located in Lockport, NY. The Company had previously been in discussions with a third party to sell its mining assets and certain associated real property.

Overview of the Company’s Subsidiaries

Sysorex Government Services

SGS is a provider of information technology solutions from multiple vendors, including hardware products, software, services, including warranty and maintenance support, offered through our dedicated sales force, ecommerce channels, existing federal contracts and service team. Since our founding, we have served our customers by offering products and services from key industry vendors such as Aruba, Cisco, Dell, GETAC, Lenovo, Microsoft, Panasonic, Samsung, Symantec, VMware and others. We provide our customers with comprehensive solutions incorporating leading products and services across a variety of technology practices and platforms such as cyber, cloud, networking, security, and mobility. We utilize our professional services, consulting services and partners to develop and implement these solutions. Our sales and marketing efforts in collaboration with our vendor partners, allow us to reach multiple customer public sector segments including federal, state and local governments, as well as educational institutions.

For the year ended December 31, 2021, our sales to federal, state and local governments accounted for approximately 100% of our SGS net sales. Our past customers have included, among others, federal and international government agencies and state and local governments. Although SGS has had many customers, two customers generated approximately 71% of SGS’s gross revenue during the year ended December 31, 2021. One customer accounted for 44% of SGS’s gross revenue in 2021; however, this customer may or may not continue to be a significant contributor to revenue in the future. We plan to continue to focus our efforts on existing and potential government customers. SGS revenues for the three months ended September 30, 2022, and 2021, was approximately $3.5 million and $1.9 million, respectively. This includes approximately 71% of sales coming from the Company’s top two customers.

SGS experiences variability in our net sales and operating results on a quarterly basis as a result of many factors. SGS experiences some seasonal trends in our sales of technology solutions to government and educational institutions. For example, the fiscal year-ends of U.S. Public Sector customers vary for those in the federal government space and those in the state and local government and educational institution (“SLED”) space. SGS generally sees an increase in our second quarter sales related to customers in the U.S. SLED sector and in our third quarter sales related to customers in the federal government space as these customers close out their budgets for their fiscal year (June 30th and September 30^th, respectively). SGS may also experience variability in our gross profit and gross profit margin as a result of changes in the various vendor programs we participate in and its effect on the amount of vendor consideration we receive from a particular vendor or their authorized distributor/wholesaler, may be impacted by a number of events outside of our control.

TTM Digital

TTM Digital is a digital asset technology and mining company that owns and operates specialized cryptocurrency mining processors and was previously focused on the Ethereum blockchain ecosystem. Following the reverse merger on April 14, 2021, the business of TTM Digital became a business segment of the Company. TTM Digital was originally formed as a Delaware limited liability company on June 28, 2017, under the name of TTM Ventures LLC. Thereafter, on March 30, 2021, it filed a certificate of conversion to a non-Delaware entity with the Secretary of State of the State of Delaware together with Articles of Conversion and Articles of Incorporation with the Nevada Secretary of State filed on the same date. As a result of such conversion, TTM Digital has become a Nevada corporation under the name of “TTM Digital Assets & Technologies, Inc.”

TTM Digital has an evolving business model which is subject to various uncertainties. As digital assets and blockchain technology become more widely utilized on a mass scale, we anticipate that the services and products associated with the technologies will continue to evolve. To successfully continue in the industry, our business model may need to evolve to reflect the trends of the industry. Over time, we may modify aspects of our business model relating to our strategy. We cannot offer any assurance that we will be successful or that the future industry or business operation changes will not result in harm to our business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. Management cannot provide any assurances that we will identify all emerging trends and growth opportunities in this business sector, and we may lose out on those opportunities to current or future competitors. As anticipated, any such circumstances could have a material adverse effect on our business, prospects, or operations.

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”) 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 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 requested that Ostendo issue, pursuant to the Heads of Terms, 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. 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.

As of September 15, 2022, Ethereum switched from a Proof of Work model to Proof of Stake model and as a result, the Company no longer mines Ethereum. TTM Digital is currently exploring alternative uses and sales opportunities for its Graphics Processing Unit (GPU) assets and datacenter located in Lockport, NY.

TTM is exploring the future possibility of hosting client computing and evaluating the sale of its assets.

Recent Developments

Amendments to Heads of Terms and Current Status

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 “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 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.

On June 22, 2022, the Company executed an Amendment No. 1 to Heads of Terms (“Amendment 1”) with Ostendo and its wholly owned subsidiary TTM Digital Assets & Technologies, Inc. Pursuant to the Amendment 1, the parties agreed to amend certain terms contained in the Heads of Terms, including:

The closing of the transaction is to occur no later than June 30, 2022, unless mutually extended in writing by the parties.

The definition of “TTM Assets” was amended and restated to read “(i) all of the Seller Parties’ GPUs and related assets, supporting equipment and software (including software licenses, if any), in each case wherever located, (ii) the Company’s equity interests in Style Hunter, Inc. (excluding options to purchase equity interests), (iii) the real estate comprising the Lockport, NY location, and (iv) any other assets directly or indirectly used in the operation of the Seller Parties’ crypto mining business.”

The first sentence of the section of the Heads of Terms entitled “Purchase Price Consideration” was amended and restated to read: “The Purchase Price shall be comprised of the issuance to the Seller of 4,697,917 fully paid, non-assessable shares of the Purchaser valued at $45,100,000.00.”

On June 30, 2022, the Company executed an Amendment No. 2 to Heads of Terms (“Amendment 2”) with Ostendo and the Company’s wholly owned subsidiary TTM Digital Assets & Technologies, Inc. (“Seller”, and together with the Company, the “Seller Parties”). Pursuant to Amendment 2, the parties agreed to amend certain terms contained in the Heads of Terms and Amendment 1, including:

The closing of the transaction is to occur no later than July 31, 2022, unless mutually extended in writing by the parties.

The term “Expiration Date” in the section of the Heads of Term entitled “Exclusivity” is hereby amended to be the earlier of July 31, 2022 or the date on which Ostendo notifies the Company in writing that it is terminating negotiations regarding the transactions (and Ostendo agrees to give such notification promptly upon making a determination to terminate negotiations).

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 requested that Ostendo issue, pursuant to the Heads of Terms, 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. 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.

Amendments to Employment Agreements

On August 10, 2022, the Company entered into Amendment No. 2 (“Amendment No. 2”) to Employment Agreement, by and between the Company and Vincent Loiacono, the Company’s Chief Financial Officer. Pursuant to the terms of Amendment No. 2, the parties amended the termination provisions of the original employment agreement, as amended. Amendment No. 2 provides that the Company, in its sole discretion, may terminate Mr. Loiacono’s employment for any reason without Just Cause (as defined in the employment agreement, as amended) at any time. If (a) the Company terminates Mr. Loiacono’s employment without Just Cause, or (b) within 24 months following a change of control, Mr. Loiacono resigns as a result of and upon a material diminution of his duties, responsibilities, authority, and position, or a material reduction of his compensation and benefits, or if he ceases to hold the position of Chief Financial Officer after a change of control, the Company will, among other things: (l) continue to pay Mr. Loiacono’s base salary for one month for every two months of employment after the effective date up to a maximum of 12 months (as opposed to six months under the original agreement, as amended); and (2) within 45 days of termination or resignation, pay to Mr. Loiacono 100% of the value of any accrued but unpaid bonus. Except as set forth in Amendment No. 2, the original employment agreement, as amended, remains in full force and effect.

On September 9, 2022, the Company entered into Second Amendment to the Employment Agreement for Wayne Wasserberg, the Company’s Chief Executive Officer. The Second Amendment provides a minimum bonus of $100,000 for achievement of the bonus milestone. The bonus milestone is based upon the following:

The sale of all or substantially all of the stock or assets of: (i) TTM, or (ii) Sysorex Government Services.

The raising of five million dollars in financing by or before December 31, 2022, in one transaction or a series of related transactions.

Voting Rights Plan

On September 6, 2022, the Board of Directors (the “Board”) of the Company adopted a Voting Rights Plan (the “Plan”) pursuant to which the Board authorized and granted super voting rights (the “Voting Rights”) to certain shares of the Company’s common stock, $0.00001 par value (“Common Stock”), held by stockholders holding a minimum of 12,900,000 shares of Common Stock (each, a “Rights Stockholder”) as of the close of business on May 27, 2022, the record date for the Annual Meeting (the “Eligibility Record Date”). The Voting Rights allowed Rights Stockholders the ability to exercise additional voting rights with respect to their shares of Common Stock to which the Voting Rights are applied (the “Eligible Shares”).

The Plan was adopted by the Board pursuant to the authority in Nevada Revised Statutes (“NRS”) 78.195(5) and NRS 78.350(8), based upon the determination by the Board that the Plan was necessary to protect the interests of the Company and its stockholders. The Plan was of limited scope and purpose and was designed to facilitate the approval of the Corporate Actions at the Annual Meeting.

Under the Plan, each Rights Stockholder had the right to vote on the Corporate Actions at the Annual Meeting, with all other stockholders as a single class, the number of votes per share of Common Stock owned multiplied by 15. The Voting Rights and the Plan automatically terminated upon the occurrence of the completion of the vote of the Company’s stockholders at the Annual Meeting as to the approval of the Corporate Actions.

Actions Approved at Annual Shareholder Meeting

On September 22, 2022, the Company held its 2022 virtual annual meeting of stockholders, originally scheduled for July 25, 2022 and adjourned to September 22, 2022 (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders voted in favor for the following:

●

Wayne Wasserberg, Zaman Kahn and William Stilley were elected to the Company’s Board of Directors, to serve for a term of one year, until the next annual meeting of stockholders and until their successors have been duly elected;

●

To change the Company’s name from its current name, Sysorex, Inc., to SystemX, Inc.;

●

To increase the 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 are designated as common stock and 10,000,000 are designated as preferred stock;

●

To effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors, with any fractional shares being rounded up to the next higher whole share;

●

Contingent upon stockholder approval of the Reverse Stock Split Proposal and the occurrence of such reverse stock split, to decrease the total number of authorized shares of the Company’s capital stock from 3,010,000,000, par value $0.00001 per share (to 510,000,000 shares, of which 500,000,000 shares will be designated as common stock and 10,000,000 shares will be designated as preferred stock;

●

To approve an amendment to the Articles to remove Article 15 which provides for certain specific requirements for stockholder nomination of directors;

●

To approve, on an advisory basis, the compensation paid to the Named Executive Officers, as disclosed in the proxy statement for the 2022 Annual Meeting of Stockholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the ‘Executive Compensation’ section, compensation tables and narrative discussion, and other related disclosure;

●

To approve on a non-binding, advisory basis, for every one year as the frequency for the Company’s executive compensation advisory vote; and

●

To approve the ratification of the appointment of Friedman LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2022.

Increase in Authorized Shares

On September 22, 2022, the Company filed a Certificate of Amendment with the Nevada Secretary of State to increase the 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 are designated as common stock and 10,000,000 are designated as preferred stock (the “Increase in Authorized”). The Increase in Authorized was approved by the Company’s Board of Directors on June 15, 2022, and by the Company’s shareholders on September 22, 2022.

Change in the Company’s Auditors

The Company was notified that the audit practice of Friedman LLP, the Company’s independent registered public accounting firm (“Friedman”), was combined with Marcum LLP (“Marcum”) effective September 1, 2022. On October 3, 2022, the Board of Directors of the Company approved the dismissal of Friedman LLP and the engagement of Marcum LLP to serve as the independent registered public accounting firm of the Company. The services previously provided by Friedman LLP will now be provided by Marcum LLP.

Friedman LLP’s reports on the Company’s financial statements for the fiscal years ended December 31, 2021 and 2020 did not contain an adverse opinion or a disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except that such reports expressed substantial doubt regarding the Company’s ability to continue as a going concern and the emphasis of matter paragraph with respect to the Company’s involvement in digital asset activities. Furthermore, during the Company’s two most recent fiscal years and through October 3, 2022, there have been no disagreements with Friedman LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to Friedman LLP’s satisfaction, would have caused Friedman LLP to make reference to the subject matter of the disagreement in connection with its reports on the Company’s financial statements for such periods. For the fiscal years ended December 31, 2021 and 2020 and through October 3, 2022, there were no “reportable events” as that term is described in Item 304(a)(1)(v) of Regulation S-K.

Marcum previously acted as the Company’s independent registered public accounting firm. As previously disclosed, Marcum ceased to be the Company’s independent registered public accounting firm on June 3, 2021, when the Company appointed Friedman as the Company’s independent registered public accounting firm. Except in connection with Marcum’s prior service as the Company’s independent registered public accounting firm, during the Company’s two most recent fiscal years and through October 3, 2022, neither the Company nor anyone acting on the Company’s behalf consulted Marcum LLP with respect to any of the matters or reportable events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.

Non-Compliance with OTCQB Bid Price Standards

On October 28, 2022, the Company was notified by OTC Markets that that the Company’s bid price had closed below $0.01 for more than 30 consecutive calendar days and no longer meets the Standards for Continued Eligibility for OTCQB (the “OTCQB Standards”). Pursuant to Section 4.1 of the OTCQB Standards, the Company was granted a cure period of 90 calendar days, during which the minimum closing bid price for the Company’s common stock must be $0.01 or greater for 10 consecutive trading days in order to continue trading on the OTCQB marketplace. If this requirement is not met by January 26, 2023, the Company will be removed from the OTCQB marketplace.

In addition, pursuant to the OTCQB Standards, in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be immediately removed from OTCQB. On October 31, 2022, OTC Markets notified the Company that the bid price for the Company’s common stock closed below $0.001 on October 28, 2022. The bid price for the Company’s common stock closed below $0.001 on October 31, 2022, as well as November 10, 2022, November 11, 2022, November 15, 2022 and November 16, 2022. Again, in the event that the Company’s closing bid price falls below $0.001 at any time for five consecutive trading days, the Company will be immediately removed from OTCQB.

Placement Agent Agreement and Recent Private Placement

On October 17, 2022, the “Company entered into a Placement Agency Agreement (the “Placement Agency Agreement”), dated October 17, 2022, by and between the Company and Joseph Gunnar & Co., LLC (the “Placement Agent”). Pursuant to the terms of the Placement Agency Agreement, the Company engaged the Placement Agent to act as the Company’s exclusive placement agent with respect to effectuating a private placement (the “Offering”) to accredited investors, pursuant to which the Company offered up to $500,000 of its common stock and a warrant to purchase common stock (collectively, the “Securities”). Placement of the Securities was made on a “commercially reasonable efforts” basis.

Pursuant to the terms of the Placement Agency Agreement, the Company agreed to pay to the Placement Agent a cash fee (the “Cash Fee”) equal to 12.5% of the aggregate gross proceeds of the Offering. In addition, the Company agreed to reimburse the Placement Agent for all reasonable, documented marketing, travel and other out-of-pocket expenses incurred in connection with the Offering and to pay the Placement Agent’s counsel fees in the amount of $40,000 (“Legal Fees”); provided, however, that any fees or expenses incurred in connection with the Offering for which the Company will be responsible for reimbursement, including Legal Fees, will not exceed $50,000 collectively. The Company also agreed to pay to the Placement Agent the Cash Fee to the extent any party first introduced to the Company by the Placement Agent at any time prior to the date that is 12 months after the applicable termination date of the Offering or the final closing, whichever is applicable, makes any investment into the Company through the acquisition of Company securities from the Company.

For a period of 12 months following October 18, 2022 and subject to a closing of the Offering having been effected, in the event that the Company desires to raise additional capital in the form of debt, equity or otherwise (a “Prospective Financing”), the Placement Agent will have the right of first refusal to act as Placement Agent with respect to any such Prospective Financing

On October 18, 2022, pursuant to the terms of the SPA, the Company and the Investors entered into the Initial Registration Rights Agreement (the “Initial Registration Rights Agreement”), which provides for the registration of all of the Purchased Shares and all of the shares of common stock that may be acquired by the Investors pursuant to the Warrant 1s (the “Registrable Securities”). Pursuant to the terms of the Initial Registration Rights Agreement, the Company agreed to, within 30 calendar days of October 18, 2022, use its commercially reasonable efforts to file with the Securities and Exchange Commission (the “SEC”) a registration statement or registration statements (as is necessary) on Form S-1 (or, if such form is unavailable for such a registration, on such other form as is available for such registration) covering the resale of all of the Registrable Securities, or amend its current registration statement to cover the Registrable Securities. 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.

Planned Reverse Stock Split

On June 15, 2022, the Company’s Board of Directors approved to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors. On September 22, 2022, the Company held its 2022 virtual annual meeting of stockholders, at which the Company’s stockholders voted in favor of, among other matters, to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors. On November 1, 2022, the Company’ Board of Directors approved an Articles of Amendment to the Company’s Articles of Incorporation to effect a 1 for 1,000 reverse stock split (the “Reverse Stock Split”) of the Company’s common stock. The current status of the Reverse Stock Split is that the Company has notified the Financial Industry Regulatory Authority (FINRA) of the Reverse Stock Split, which will not be effective until FINRA processes it, and at such time we’ll file the Articles of Amendment with the State of Nevada to effectuate the Reverse Stock Split.

Resignation of William Stilley

On October 31, 2022, William Stilley, a member of the Board of Directors of the Company and Chairman of the Audit Committee, submitted his resignation as a director. Mr. Stilley’s resignation was not because of a disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

Principal Products and Services

Operations by Sysorex Government Services, Inc. (“SGS”)

Through SGS, we provide enterprise infrastructure solutions for business operations, continuity, data protection, software development, collaboration, IT security, and physical security needs, that seek to help organizations tackle challenges and aim to accelerate business goals. Our products include third party hardware, software and related maintenance and warranty products and services that we resell from some of the world most trusted brands such as Dell, Canon, Panasonic, Cisco, Hewlett Packard, and Microsoft. By partnering with our technology vendors, we aim to offer our customers best-of-breed products and a team of technology certified subject matter experts and account representatives who serve commercial and federal clients and are ready to deploy and manage industry-leading solutions.

Working with our network of distribution partners, we believe that we have built a solid reputation of trust and knowledge with our customers, who look to end-to-end hardware and software solutions to optimize their performance. Solutions sets include:

	●	Blockchain

	●	Artificial Intelligence

	●	Virtual and Augmented Reality

	●	Data center

	●	Cloud computing

	●	Enterprise servers, storage, networking

	●	Virtualization/consolidation

	●	Client/Mobile computing

	●	Secure networking

	●	Cyber security

	●	Collaboration tools

	●	Security and data protection

	●	IT service management tools

●

Big data analytics

AWe aim to provide a full range of information technology development and implementation professional services, from enterprise architecture ~~design~~ design to custom application development. Our experienced IT professionals help meet evolving business needs by optimizing IT resources, application performance, and business processes. Our services span many emerging and hybrid enterprise technologies, and we offer a comprehensive suite of network performance, secure wireless access and cybersecurity products and services from leading manufacturers that ~~improve~~aim to improve overall network performance and business operations. Our professional services are focused in the following areas:

	●	Network Performance Management

	●	Cyber Security

	●	Secure Wireless

●

IP Video

These products and services allow Sysorex to offer turnkey solutions, including delivery of insights from the data, when requested by customers. In 2016, approximately 76% or $36.6 million of our total revenues were derived from product solutions sales and 24% or $11.6 million of our total revenues were derived from professional services sales. In 2017, approximately 72% or $29.5 million of our total revenues were derived from product solutions sales and 28% or $11.6 million of our total revenues were derived from professional services sales. Now with all industry trends showing an increase in spending and our supplier credit issues improving we are poised to regain previous clients and new clients as spending increases and companies want to work closely with trusted providers.

~~Our Market~~42

~~Our~~Operations ~~markets~~by ~~are~~TTM ~~dynamic~~Digital ~~and~~Assets ~~highly~~& ~~competitive~~Technologies, Inc. ~~Following~~(“TTM isDigital” ~~information~~or ~~about the various markets in which we operate.~~“TTM”)

~~General~~TTM ~~Information~~Digital is a digital asset technology and mining company that owns and operates specialized cryptocurrency mining processors and was previously focused on the Ethereum blockchain ecosystem. Following the reverse merger on April 14, 2021, the business of TTM Digital became a business segment of the Company.

InTTM ~~2017,~~Digital ~~Forrester~~has ~~projected~~an ~~that~~evolving ~~global~~business ~~purchases~~model ofwhich is subject to various uncertainties. As digital assets and blockchain technology ~~software,~~become ~~hardware~~more widely utilized on a mass scale, ~~and~~we ~~services~~anticipate bythat ~~businesses~~the services and ~~governments would~~products ~~grow~~associated bywith 3the technologies will continue to evolve.4% To successfully continue in ~~2017~~the ~~and~~industry, byour 4%business inmodel ~~2018~~may need to evolve to reflect the trends of the industry. Over time, ~~reaching~~we $3may modify ~~trillion~~aspects of our business model relating to our strategy. ~~(Source: https://www~~We cannot offer any assurance that we will be successful or that the future industry or business operation changes will not result in harm to our business.~~forbes~~ We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results.~~com/sites/forrester/2017/10/18/global-tech-market-~~ Management cannot provide any assurances that we will~~-grow-by-4-~~ identify all emerging trends and growth opportunities in~~-2018-reaching-3-trillion/#397f8e1a12c9)~~ this business sector, and we may lose out on those opportunities to current or future competitors. As anticipated, any such circumstances could have a material adverse effect on our business, prospects, or operations.

~~According~~The Company made the decision to ~~industry~~divest ~~sources~~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 ~~information~~Company ~~technology~~executed Heads of Terms (IT“Heads of Terms”) ~~sector~~with isOstendo onTechnologies, ~~track~~Inc. ~~for~~(“Ostendo”) ~~another~~which ~~strong~~included ~~year~~certain ~~with~~binding anand ~~anticipated~~non-binding 5provisions. ~~percent~~Pursuant ~~growth~~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 (~~Source:~~“Assets”) ~~https://www~~to Ostendo for Ostendo preferred stock.~~comptia~~ The parties agreed that the Assets to be sold would not include the Company’s Ether funds generated prior to and held at closing.~~org/resources/it~~ 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 agreed to make a non-~~industry-trends-analysis~~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 ~~global~~Company IThas ~~spending~~in isgood ~~projected~~faith worked with Ostendo to ensure all closing ~~top~~terms ~~$3.7~~and ~~trillion~~closing conditions were mutually agreed upon, however, the parties have not entered into definitive transaction agreements and accordingly, it was determined in ~~2018~~November 2022 that the transaction will not proceed. In November 2022, anthe ~~increase~~Company requested that Ostendo issue, pursuant to the Heads of ~~4.5%~~Terms, ~~with~~shares equal to the ~~U.S.~~initial ~~accounting~~deposit made by the Company of $1,600,000.1 ~~trillion~~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 ~~market~~preferred ~~(Source: https://www~~stock has been filed and accepted by the California Secretary of State.~~gartner~~ 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.~~com/newsroom/id/3845563)~~ 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.

32As of September 15, 2022, Ethereum switched from a Proof of Work model to Proof of Stake model and as a result, the Company no longer mines Ethereum. TTM Digital is currently exploring alternative uses and sales opportunities for its Graphics Processing Unit (GPU) assets and datacenter located in Lockport, NY.

~~Table~~TTM is exploring the future possibility of ~~Contents~~ hosting client computing and evaluating the sale of its assets.

~~In the~~The USMarkets ~~market~~for ~~there~~Our ~~are~~Products ~~five key areas on IT component that will be focused on. These are divided as: IT Services 30%; Telecom Services 23%; Software 18%; Device + Infrastructure 17%;~~ and ~~Other Emerging Tech (e.g. IoT offerings). (Source IDC and https://www.comptia.org/resources/it-industry-trends-analysis).~~Services

Our markets are dynamic and highly competitive. The following is information about the various markets in which we operate.

General Market Information

In October 19, 2022, Gartner Forecasts Worldwide IT Spending to Grow 5.1% in 2023. Worldwide IT spending is projected to total $4.6 trillion in 2023, an increase of 5.1% from 2022, according to the latest forecast by Gartner, Inc.

According to Forrester, the global tech market will see robust 6% growth in 2022 and 2023, significantly faster than pre-pandemic levels.

According to the Computing Technology Industry Association, in the US market there are five key areas on IT component that will be focused on. These are divided as: IT Services 30%; Telecom Services 23%; Software 18%; Device + Infrastructure 17%; and Other Emerging Tech (e.g. IoT offerings).

Information about the Government IT Services and Solutions Market

~~In 2018~~For 2023 fiscal year, the U.S. government is ~~projected~~estimating toa ~~spend~~11% ~~approximately~~increase ~~$95.7~~for ~~billion~~the oncivilian information technology. ~~This~~budget ~~spending~~over ~~is expected to continue at a 3% growth rate as compared to 6% historically because of~~ the ~~government’s~~2022 ~~budget~~fiscal ~~challenges~~year. ~~(Source:~~The ~~Market Research~~total ~~Media — U.S. Federal IT Market Forecast 2013-2018.) Security of all forms, especially cyber-security, are significant~~spending ~~growth~~collectively ~~areas~~by (Source: Market Research Media — U.S. Federal Cyber Security Market Forecast 2013-2018) and Sysorex intends to increase its role in this sector. Sysorex, through its wholly owned subsidiary Sysorex Government, services U.S. government customers in both civilian ~~and defense~~ agencies. ~~Sysorex~~is ~~Government provides a variety of IT solutions and services (custom application development, project management, systems integration, etc~~$65.~~) through its various government contract vehicles including our GSA Schedule, SPAWAR, TEIS-III, SEWP, and others~~8B. ~~Sysorex Government may serve as the prime contractor or as the subcontractor, depending on the contract.~~

~~Spending~~For 2023 fiscal year, the ~~priorities~~U.S. ~~will~~government beis ITestimating ~~products~~a ~~and~~2.3% ~~services~~increase ~~that~~for ~~improve~~the ~~efficiency,~~defense ~~cut~~information ~~costs,~~technology ~~eliminate~~budget ~~duplicative~~over ~~programs,~~the ~~and~~2022 ~~reduce~~fiscal ~~risks~~year. The total spending ~~(Source: https://about~~collectively by defense is 57.~~bgov~~8B.~~com/wp-content/uploads/2018/01/Outlook-on-Government-Contracting.pdf).~~

~~Key~~Sysorex intends to increase ~~finds~~its ~~for~~role ~~2018~~in this sector. Sysorex, through its wholly owned subsidiary Sysorex Government Services (“SGS”) services U.S. government customers in ~~federal~~both civilian and defense agencies. SGS provides a variety of IT solutions and services (custom application development, project management, systems integration, etc.) through its various government ~~spending~~contract ~~include:~~vehicles including our GSA Schedule, TEIS-IV NASA SEWP V, NIH CIO-CS, and others. SGS may serve as the prime contractor or as the subcontractor, depending on the contract.

●Key ~~Federal~~highlights ~~spending~~in oninformation technology ~~mid-tier~~spending ~~contractors~~according ~~rose from $126 billion~~ to ~~$138 billion (Source:~~ Bloomberg Government ~~report, “The Mid-Tier Market Report~~are: ~~2018”).~~

●Cloud 23Computing: ~~percent~~Spending projected ofto ~~federal~~reach ~~spending~~$11.5 onbillion ~~mid-tier~~by ~~companies~~Q4 ~~was~~FY22, ~~made~~$12.5 ~~through~~billion ~~small-business~~by ~~set-asides~~FY ~~(Source:~~202. ~~Bloomberg~~DOD ~~Government~~market ~~report~~share rose from 26% to 33% FY 2017–FY 2021, ~~“The~~could hit ~~Mid-Tier~~41% ~~Market~~by ~~Report:~~FY ~~2018”~~2023. Top contract vehicles include Virtual Data Center Prime (CMS), SEWP V (NASA), IT Schedule 70 (GSA).

●Artificial ~~838~~Intelligence: Spending ~~mid-tier~~projected ~~companies~~to —total ~~(50%)~~$1.4 ~~had~~billion atby ~~least~~Q4 ~~one~~FY22, ~~large~~$1.5 ~~division~~billion ~~and~~by ~~one~~FY ~~small~~2023. ~~division~~DOD ~~(Source:~~market ~~Bloomberg~~share ~~Government~~rose ~~report~~from 48% to 64% FY 2017–FY 2021, could ~~“The~~fall ~~Mid-Tier~~to ~~Market~~53% ~~Report:~~by ~~2018”)~~FY 2023.

~~Cybersecurity, shared~~Operations ~~services,~~and ~~agile~~Logistics: ~~development,~~Spending ~~commercial~~projected ~~off-the-shelf~~to ~~software,~~total ~~cloud~~$17.6 ~~migration,~~billion by Q4 FY22 and ~~data-center~~rise ~~consolidation~~incrementally ~~are~~in ~~likely to~~FY be2023. ~~emphasized,~~DOD somarket ~~contractors~~share ~~with~~averaged ~~those~~95% ~~offerings~~from FY 2017–FY 2021, could ~~see~~fall ~~more~~to ~~obligations~~91% inby ~~2018~~FY ~~(Source: https://about~~2023.~~bgov.com/wp-content/uploads/2018/01/Outlook-on-Government-Contracting.pdf).~~

~~Investments~~Sysorex believes it has an advantage in the government marketplace by holding three government prime contracts. We believe that ~~upgrade~~the ~~legacy~~key ~~systems~~to ~~and~~our ~~supplement~~federal ~~innovative~~business ~~but~~is our ~~underfunded~~ability ~~programs~~to leverage existing contracts. We believe that three key contracts in our portfolio are ~~probably~~unique ~~the~~in ~~ideal~~that ~~candidates~~each ~~for~~contract ~~modernization~~is a ~~money~~Government Wide Acquisition Contract (~~Source: https://about~~GWAC).~~bgov.com/wp-content/uploads/2018/01/Outlook-on-Government-Contracting.pdf~~ These types of contracts can sell into all government agencies and directly to contractors (typically large integrators) who have existing services contracts that require IT products or additional professional services.

Sysorex believes it has an advantage in the government marketplace by holding three government prime contracts. Key to our federal business is our ability to leverage existing contracts. Three key contracts in our portfolio are unique in that each contract is a Government Wide Acquisition Contract (GWAC). These types of contracts can sell into all government agencies and directly to contractors (typically large integrators) who have existing services contracts that require IT products or additional professional services. GWACS have experienced significant growth over the years and continue to grow (Source:https://washingtontechnology.com/articles/2017/09/15/insights-amtower-power-of-gwacs.aspx).

Our GWAC contracts include:

●

NASA SEWP V

●

NIH CIO-CS

●

GSA IT 70 Schedule

~~Half~~Through SGS, Sysorex enters ofinto ~~the~~various ~~largest~~types ~~Best-in-Class~~of contracts ~~are~~with inour ITgovernment customers, ~~where~~such ~~the~~as ~~three~~Indefinite ~~contracts~~Delivery inIndefinite ~~our~~Quantity ~~portfolio~~(IDIQ), ~~combined~~Cost-Plus-Fixed-Fee (CPFF) ~~spent~~Level ~~just~~of ~~under~~Effort ~~$20~~(LOE), ~~billion for~~Cost-Plus-Fixed-Fee ~~fiscal~~(CPFF) ~~2017~~Completion, ~~amongst~~Cost-Reimbursement ~~all~~(CR), ~~contract~~Firm-Fixed-Price ~~holders~~(FFP), Fixed-Price Incentive (~~Source: https://about.bgov.com/wp~~FPI) and Time-~~content/uploads/2018/01/Outlook~~and-~~on-Government-Contracting.pdf~~materials (T&M).

As a result of the 2018 National Defense Authorization Act (Public Law 115-91) the way government will buy information technology products and services in 2018 will change (Source: https://about.bgov.com/wp-content/uploads/2018/01/Outlook-on-Government-Contracting.pdf). The law established working capital funds for IT modernization at individual agencies, and the General Services Administration will manage a separate technology modernization fund that is authorized to receive $500 million over two years and can be transferred to agencies for IT enhancements (Source: https://about.bgov.com/wp-content/uploads/2018/01/Outlook-on-Government-Contracting.pdf).44

Table of Contents

Through Sysorex Government, Sysorex enters into various types of contracts with our government customers, such as Indefinite Delivery Indefinite Quantity (IDIQ), Cost-Plus-Fixed-Fee (CPFF) Level of Effort (LOE), Cost-Plus-Fixed-Fee (CPFF) Completion, Cost-Reimbursement (CR), Firm-Fixed-Price (FFP), Fixed-Price Incentive (FPI) and Time-and-materials (T&M).

IDIQ contracts provide for an indefinite quantity of services or stated limits of supplies for a fixed period. They are used when the customer cannot determine, above a specified minimum, the precise quantities of supplies or services that the government will require during the contract period. IDIQs help streamline the contract process and speed service delivery. IDIQ contracts are most often used for service contracts and architect-engineering services. Awards are usually for base years and option years. The customer places delivery orders (for supplies) or task orders (for services) against a basic contract for individual requirements. Minimum and maximum quantity limits are specified in the basic contract as either a number of units (for supplies) or as dollar values (for services).

CPFF LOE contracts will be issued when the scope of work is defined in general terms requiring only that the contractor devote a specified level of effort, or LOE, for a stated time period. A CPFF completion contract will be issued when the scope of work defines a definite goal or target which leads to an end product deliverable (e.g., a final report of research accomplishing the goal or target).

CR contracts provide for payment of allowable incurred costs, to the extent prescribed in the contract. These contracts establish an estimate of total cost for the purpose of obligating funds and establishing a ceiling that the contractor may not exceed (except at its own risk) without the approval of the contracting officer and are suitable for use only when uncertainties involved in contract performance do not permit costs to be estimated with sufficient accuracy to use any type of fixed-price contract.

FFP contracts are issued when acquiring supplies or services on the basis of definite or detailed specifications and fair and reasonable prices can be established at the outset.

FPI target delivery contracts will be issued when acquiring supplies or services on the basis of reasonably definite or detailed specifications and cost can be reasonably predicted at the outset wherein the cost risk will be shared. A firm target cost, target profit, and profit adjustment formula will be negotiated to provide a fair and reasonable incentive and a ceiling that provides for the contractor to assume an appropriate share of the risk.

T&M contracts provide for acquiring supplies or services on the basis of (1) direct labor hours at specified fixed hourly rates that include wages, overhead, general and administrative expenses, and profit; and (2) actual cost for materials. A customer may use this contract when it is not possible at the time of placing the contract to estimate accurately the extent or duration of the work or to anticipate costs with any reasonable degree of confidence.

Distribution Methods for our Products and Services

OEM and Vendor Arrangements

We work with a number of manufacturers (“OEMs”) and vendors in our industry with a focus on commercial and federal enterprise markets, including, ~~but not limited to Avnet (now combined with TechData)~~Carahsoft, Synnex, ~~Arrow. Carasoft~~ScanSource, ~~Idera,~~ Dell, Panasonic, ~~and Fujitsu. Avnet has historically been our most significant supplier~~Cisco, ~~however~~Samsung, weand other. We anticipate that certain of the other ~~suppliers~~ suppliers are most likely to be more significant partners in the future.

Our vendor agreements vary, but typically they permit us to purchase products for combining with integration and professional services for transactions with our customers. Very few of our agreements require us to purchase any specified quantity of product. We usually require our partners to provide us with supply and price protection for the duration of specifically signed contracts. Other than supply agreements under certain government contracts, our vendor agreements are typically terminable by Sysorex or the vendor on short notice, at will or immediately upon default by either party, and may contain limitations on vendor liability. These vendor agreements also generally permit us to return previous product purchases at no charge within certain time limits for a restocking fee or in exchange for the vendor’s other products. Certain of our partners may provide us with various forms of marketing and sales financial assistance, including sales incentives, market development funds, cooperative advertising and sales events. Partners may also provide sell-through and other sales incentives in connection with certain product promotions.

34We depend on our vendors to provide us with financing on our purchases of inventory and services. Some of our suppliers have offered us net-30 or net-45 payment, however, other vendors require that we prepay for our products and services. We have financing arrangements with SouthStar Capital to accommodate prepays. Our vendors could seek to limit the availability of vendor credit to us or modify the other terms under which they sell to us, or both, at any time which could negatively impact our liquidity. We have ongoing discussions concerning our liquidity and financial position with the vendor community and third parties that offer various credit protection services to our vendors. The topics discussed have included such areas as pricing, payment terms and ongoing business arrangements. We also used a revolving credit facility to finance invoices in an amount equal to 80% of the face value of customer invoices, with the remaining 20%, net of fees paid upon collection of the customer receivable. We also used our revolving credit facility to finance 50% of the face value of purchase orders received to pre-pay vendors/suppliers to ensure shipment on our behalf to the end customer. Upon collection of the associated receivable from the customer we then pay the remaining balance to our vendor/supplier and retain our profit.

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We depend on our vendors to provide us with financing on our purchases of inventory and services. Many of our suppliers have offered us net-30 or net-45 payment terms with credit limits ranging from $200,000 to up to $7 million, however, other vendors require that we prepay for our products and services. In 2016 and 2017, we did experience credit limitations imposed by vendors, which resulted in a significant disruption to our operation and access to merchandise. As a result of contributions by Inpixon provided following the completion of certain equity financings during the first quarter of 2018, we have been able to begin to improve our credit limitations through negotiated settlements plans with our vendors. Our vendors, however, could seek to limit the availability of vendor credit to us or modify the other terms under which they sell to us, or both, at any time which could negatively impact our liquidity. We have ongoing discussions concerning our liquidity and financial position with the vendor community and third parties that offer various credit protection services to our vendors. The topics discussed have included such areas as pricing, payment terms and ongoing business arrangements. We also used a revolving credit facility to finance invoices in an amount equal to 80% of the face value of customer invoices, with the remaining 20%, net of fees paid upon collection of the customer receivable. We also used our revolving credit facility to finance 50% of the face value of purchase orders received to pre-pay vendors/suppliers to ensure shipment on our behalf to the end customer. Upon collection of the associated receivable from the customer we then pay the remaining balance to our vendor/supplier and retain our profit.

Dependence on Certain Customers

Our top three customers accounted for approximately 24.7% and 39.8% of our gross revenue during the years ended December 31, 2017 and 2016, respectively, and approximately 51% and 33% of our gross revenue during the six months ended June 30, 2018 and 2017 respectfully. One customer, Gilead Sciences, Inc., accounted for 24% of our gross revenue in 2016 and 4% in 2017, however this customer may or may not continue to be a significant contributor to revenue in 2018. The revenue from this customer was significantly higher in 2016 as compared to 2017 as a result of (1) a large one-time data migration project and (2) the Company’s inability to process orders in 2017 as a result of a lack of financing options resulting from existing vendor credit concerns.

The loss of a significant amount of business from one of our major customers would materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost business. Significant clients or projects in any one period may not continue to be significant clients or projects in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced by that customer to the extent that such risks impede the customer’s ability to stay in business and make timely payments to us.

Sales and Marketing

We utilize direct marketing through ~~approximately a dozen~~ outside and inside sales representatives, who are compensated with a base salary and, in certain instances, with incentive plans such as commissions or bonuses. We utilize tradeshows, government events and websites, vendor provided market development funds and other direct and indirect marketing activities to generate demand for our products and services. We also have extensive relationships with vendor/supplier partners to directly engage with customers.

We believe that we have built a core competency in bidding on government requests for proposals in the infrastructure segment. We utilize our internal bid and proposal team as well as consultants to prepare the proposal responses for government clients. We also use business development, sales and account management employees or consultants.

As part of our end-to-end IT solutions, we are authorized resellers of the products and services of leading IT manufacturers and distributors. In many cases, we have achieved the highest level of relationship the manufacturer or distributor offers. In addition, our employees hold certifications issued by these manufacturers and by industry associations relating to the configuration, installation and servicing of these products. We differentiate ourselves from our competitors by the range of manufacturers and distributors we represent, the relationship level we have achieved with these manufacturers and distributors and the scope of the manufacturer and industry certifications our employees hold.46

As part of our end-to-end IT solutions, we are authorized resellers of the products and services of leading IT manufacturers and distributors. In many cases, we have achieved the highest level of relationship the manufacturer or distributor offers. In addition, our employees hold certifications issued by these manufacturers and by industry associations relating to the configuration, installation and servicing of these products. We aim to differentiate ourselves from our competitors by the range of manufacturers and distributors we represent, the relationship level we have achieved with these manufacturers and distributors and the scope of the manufacturer and industry certifications our employees hold.

We have a variety of contracts that vary from cost plus to time and material in our storage and computing and professional services segments. These apply to both commercial and government customers.

Customers

We have worked with over 500 customers company-wide since inception. These customers include federal and international government ~~agencies~~ agencies as well as enterprise customers in retail, manufacturing, life sciences, ~~bio-technology~~biotechnology, high-tech, agriculture, financial services, state and local government, utilities, media and entertainment, telecom and many other verticals.

35Dependence on Certain Customers

~~Table~~For the year ended December 31, 2021, our sales to federal, state and local governments accounted for approximately 100% of ~~Contents~~ our SGS net sales. Our past customers have included, among others, federal and international government agencies and state and local governments. Although SGS has had many customers, two customers, generated approximately 71% of SGS’s gross revenue during the year ended December 31, 2021. One customer accounted for 44% of SGS’s gross revenue in 2021; however, this customer may or may not continue to be a significant contributor to revenue in the future. We plan to continue to focus our efforts on existing and potential government customers. SGS revenues for the three months ended September 30, 2022, and 2021, was approximately $3.5 million and $1.9 million, respectively. This includes approximately 71% of sales coming from the Company’s top two customers. The loss of a significant amount of business from one of our major customers would materially and adversely affect our results of operations until such time, if ever, as we are able to replace the lost business. Significant clients or projects in any one period may not continue to be significant clients or projects in other periods. To the extent that we are dependent on any single customer, we are subject to the risks faced by that customer to the extent that such risks impede the customer’s ability to stay in business and make timely payments to us.

Competition

We face substantial competition from other national, multi-regional, regional, and local value-added resellers and IT service providers, some of which may have greater financial and other resources than we do or that may have more fully developed business relationships with clients or prospective clients than we do. Many of our competitors compete principally on the basis of price and may have lower costs or accept lower selling prices than we do and, therefore, we may need to reduce our prices. In addition, manufacturers may choose to market their products directly to end-users, rather than through IT solutions providers such as us, and this could adversely affect our business, financial condition and results of operations.

The U.S. government systems integration business is intensely competitive and subject to rapid change. We compete with a large number of systems integrators, hardware and software manufacturers, and other large and diverse companies attempting to enter or expand their presence in the U.S. government market. Many of the existing and potential competitors have greater financial, operating and technological resources than we have. The competitive environment may require us to make changes in our pricing, services or marketing. The competitive bidding process involves substantial costs and a number of risks, including significant cost and managerial time to prepare bids and proposals for contracts that may not be awarded to us, or that may be awarded, but for which we do not receive meaningful revenues. Accordingly, our success depends on our ability to develop services and products that address changing needs and to provide people and technology needed to deliver these services and products. In the government services sector, our competition includes large systems integrators and defense contractors as well as small businesses such as 8a, women-owned, veteran disabled, Alaskan native, an others. Some of these competitors include global defense and IT service companies including IBM Global Services, LogicaCMG, CSC, ATOS Origins, Northrop Grumman, Raytheon IT Services and SAIC.

Government Regulation

Furthermore, U.S. government contracts generally are subject to the Federal Acquisition Regulation (“FAR”), which sets forth policies, procedures and requirements for the acquisition of goods and services by the U.S. government, department-specific regulations that implement or supplement DFAR, such as the Department of Defense’s Defense Federal Acquisition Regulation Supplement (“DFARS”) and other applicable laws and regulations. We are also subject to the Truth in Negotiations Act, which requires certification and disclosure of cost and pricing data in connection with certain contract negotiations; the Procurement Integrity Act, which regulates access to competitor bid and proposal information and government source selection information, and our ability to provide compensation to certain former government officials; the Civil False Claims Act, which provides for substantial civil penalties for violations, including for submission of a false or fraudulent claim to the U.S. government for payment or approval; and the U.S. Government Cost Accounting Standards, which impose accounting requirements that govern our right to reimbursement under certain cost-based U.S. government contracts.

Violations of one or more of these diverse legal requirements in the conduct of our business could result in significant fines and other damages, criminal sanctions against us or our officers, prohibitions on doing business and damage to our reputation. Violations of these regulations or contractual obligations related to regulatory compliance in connection with the performance of customer contracts could also result in liability for significant monetary damages, fines and/or criminal prosecution, unfavorable publicity and other reputational damage, restrictions on our ability to compete for certain work and allegations by our customers that we have not performed our contractual obligations. To date, compliance with these regulations has not been financially burdensome.

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Intellectual Property

The Company currently does not have any ~~registered~~intellectual ~~patents,~~property ~~copyrights~~ or ~~trademarks.~~intellectual Onproperty ~~the Effective Date, the Company entered into a Trademark License Agreement (the “License Agreement”) with Sysorex Consulting, Inc~~rights. for use of the mark “Sysorex.” A. Salam Qureishi, Mr. Nadir Ali’s father-in-law and a member of his household, is the majority owner and the chief executive officer of Sysorex Consulting, Inc. The term of the License Agreement is perpetual. As consideration for the license, the Company issued 1,000,000 shares of its common stock to Sysorex Consulting, Inc. and has agreed to issue to Sysorex Consulting, Inc. 250,000 shares of its common stock on each anniversary of the Effective Date until the License Agreement is terminated. The number of shares of common stock that will be issued in the future is subject to adjustment for changes in the outstanding shares of the Company’s common stock as a result of stock dividends, stock splits, reverse stock splits, recapitalizations, mergers, consolidations, combinations or exchanges of shares, separations, reorganizations or liquidations. The License Agreement may be terminated as a result of a breach of the License Agreement by the Company that remains uncured; the bankruptcy of the Company; the discontinuance of the Company’s business or a change in the Company’s name so that the word “Sysorex” is no longer used in the name or on the Company’s products or services; the license is attached, assigned or transferred; or there is a Change of Control of the Company, as defined in the License Agreement.

Government Regulation

In general, we are subject to numerous federal, state and foreign legal requirements on matters as diverse as data privacy and protection, employment and labor relations, immigration, taxation, anticorruption, import/export controls, trade restrictions, internal and disclosure control obligations, securities regulation and anti-competition. Our business is subject to extensive laws, rules, regulations, policies, orders, determinations, directives, treaties, and legal and regulatory interpretations and guidance in the markets in which we operate, including those typically applied to securities, commodities, the exchange, and transfer of digital assets, cross-border and domestic money and digital asset transmission businesses, as well as those governing data privacy, data governance, data protection, cybersecurity, fraud detection, payment services (including payment processing and settlement services), consumer protection, antitrust and competition, bankruptcy, tax, anti-bribery, economic and trade sanctions, anti-money laundering, and counter-terrorist financing. Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, digital assets, and related technologies. As a result, they often do not contemplate or address unique issues associated with digital assets, are subject to significant uncertainty, and vary widely across U.S. federal, state, and local jurisdictions. These legal and regulatory regimes, including the laws, rules, and regulations thereunder, evolve frequently and may be modified, interpreted, and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another. Moreover, the relative novelty and evolving nature of our business and the significant uncertainty surrounding the regulation of digital assets requires us to exercise our judgement as to whether certain laws, rules, and regulations apply to us, and it is possible that governmental bodies and regulators may disagree with our conclusions. To the extent we have not complied with such laws, rules, and regulations, we could be subject to significant fines, limitations on our business, reputational harm, and other regulatory consequences, as well as criminal penalties, each of which may be significant and could adversely affect our business, operating results and financial condition. Regulatory enforcement actions have been taken against businesses in the industries in which we intend to operate, across many jurisdictions, in response to hacks, consumer harm, and criminal activity.

The SEC has been active in asserting its jurisdiction over Initial Coin Offerings (“ICO”) and digital assets and in bringing enforcement cases. The SEC has directed enforcement activity toward digital assets, and more specifically, ICOs. The SEC has issued guidance and made numerous statements regarding the application of securities laws to digital assets. For example, on July 25, 2017, the SEC issued a Report of Investigation (the “Report”) which concluded that “DAO Tokens” offered and sold by the Decentralized Autonomous Organization (“DAO”), a digital decentralized autonomous organization and investor-directed venture capital fund for digital assets, were issued for the purpose of raising funds. The Report concluded that these tokens were “investment contracts” within the meaning of Section 2(a)(1) of the Securities Act and Section 3(a)(10) of the Exchange Act, and therefore securities subject to the federal securities laws. In December 2017, the SEC issued a cease-and-desist letter ordering a company to stop its initial coin offering of tokens on the grounds that it failed to file a registration statement or qualify for an exemption from registration. Similar to the tokens issued by the DAO, the SEC found that these tokens satisfied the definition of an “investment contract,” and were therefore subject to the federal securities laws.

In September 2017, the SEC created a new division known as the “Cyber Unit” to address, among other things, violations involving distributed ledger technology and ICOs, and filed a civil complaint in the Eastern District of New York charging a businessman and two companies with defrauding investors in a pair of so-called ICOs purportedly backed by investments in real estate and diamonds. Subsequently, the SEC has filed several orders instituting cease-and-desist proceedings against certain entities in connection with their unregistered offerings of tokens for failing to register a hedge fund formed for the purpose of investing in digital assets as an investment company for failing to register as a broker-dealer, even though it did not meet the definition of an exchange for failing either to register as a national securities exchange or to operate pursuant to an exemption from registration as an exchange after creating a platform that clearly fell within the definition of an exchange.

On March 9, 2022, President Biden signed an executive order on cryptocurrencies. While the executive order did not mandate any specific regulations, it instructs various federal agencies to consider potential regulatory measures, including the evaluation of the creation of a U.S. Central Bank digital currency. We cannot be certain as to how future regulatory developments will impact the treatment of digital assets under the law, including, but not limited to, whether digital assets will be classified as a security, commodity, currency and/or new or other existing classification. Such additional regulations may result in extraordinary, non-recurring expenses, thereby materially and adversely affecting an investment in us. If we determine not to comply with such additional regulatory and registration requirements, we may seek to cease certain or all of our operations. Any such action could have a material adverse effect on our business, financial condition and results of operations. Further, we may be subject to investigation, administrative or court proceedings, and civil or criminal monetary fines and penalties as a result of any regulatory enforcement actions, all of which could harm our reputation and affect the value of our common stock. On April 4, 2022, shortly after President Biden’s executive order, SEC Chairman Gary Gensler announced that he has instructed the SEC staff to work (i) to register and regulate digital asset platforms like securities exchanges; (ii) with the CFTC on how to jointly address digital asset platforms that trade both securities and non-securities; (iii) on segregating out digital asset platforms’ custody of customer assets, if appropriate; and (iv) on segregating out the market making functions of digital asset platforms, if appropriate. These efforts have a high likelihood or resulting in new interpretations or regulations that would have material effects on our business that are impossible to predict.

Additionally, the adoption of new money transmitter (“MT”) or money services business (“MSB”) statutes in jurisdictions or changes in regulators’ interpretation of existing state and federal money transmitter or money services business statutes or regulations, could subject us to registration or licensing, or limit business activities, cause us to enter relationships with one or more third parties for payment services until we are appropriately licensed. The activities of TTM Digital may cause it to be deemed a MSB under the regulations promulgated by FinCEN under the authority of the U.S. Bank Secrecy Act, TTM Digital may be required to comply with FinCEN regulations, including those that would mandate TTM Digital to implement anti-money laundering programs, make certain reports to FinCEN and maintain certain records.

Additionally, we are not licensed to conduct a virtual currency business in New York and do not intend to become licensed in any other state that may require licensing in the future. We have taken the position that the New York State Department of Financial Services (“NYSDFS”) BitLicense Regulatory Framework (23 NYCRR 200.2(q)) does not apply to our business. It is possible, however, that the NYSDFS could disagree with our position. If we were deemed to be conducting an unlicensed virtual currency business in New York, we could be subject to significant additional regulation and/or regulatory consequences. There are a number of states that review the adaptation that the Conference of State Bank Supervisors has proposed a model form of state-level “virtual currency” regulation. There are at least thirty-one states that have pending legislation in the 2021 legislative session regarding blockchain and cryptocurrency. The recent New York Senate Bill 6486C seeks to establish a moratorium on consolidated operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations will be subject to a full generic environmental impact statement review. Although the majority of our mining activity is operating using hydroelectric power, New York Senate Bill 6486C may require TTM Digital to halt mining until an environmental impact assessment is completed.

Employees

As of ~~September~~November 3017, ~~2018~~2022, ~~Sysorex~~we ~~has~~had 2417 ~~employees, including 2 part~~full-time employees. ~~This~~We ~~includes~~believe ~~2 officers, 6 sales people, 10 technical and engineering people and 6 finance and administration persons. None of~~ our ~~employees~~employee ~~are~~relations ~~subject~~ to ~~collective~~ ~~bargaining~~be ~~agreements~~good.

Properties

Our principal executive offices are located at 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 with the following gross monthly rent payments:

Month	Gross Monthly Rent Payment
Month 1 – Month 12	$	9,653.33
Month 13 – Month 24	$	10,039.46
Month 25 – Month 36*	$	10,441.04
Month 37 – Expiration Date*	$	10,858.68

* Provided there is no event of default under our lease, rent will be abated for the last eight (8) calendar months of the term prior to the expiration date.

Legal Proceedings

~~Versata~~The ~~Companies~~Company entered into a Promissory Judgment Note dated as of August 15, 2018 (the “Note”), with Tech Data Corporation (“Tech Data”), pursuant to which the Company promised to pay the principal sum of $6,849,423.42 to Tech Data. The Note provides that interest shall accrue on the balance of the Note at the rate of 18% per annum. Due to miscommunication with Tech Data, the Company inadvertently failed to pay, when due, some of the installment payments in the aggregate principal amount of $3,341,801.80, as set forth in the Note and has defaulted under the Note.

On ~~February~~December 1614, ~~2018~~2021, the ~~Versata~~Company ~~Companies~~became ~~submitted~~aware that a ~~notice~~Confession of ~~mediation~~Judgment to (the ~~WIPO~~“Confession ~~Arbitration~~of ~~and~~Judgment”) ~~Mediation~~had ~~Center~~been ~~claiming~~entered ~~that~~against ~~Sysorex~~the ~~Government~~Company ~~owes approximately $421,000~~ in ~~unpaid~~the ~~invoices~~Superior ~~and~~Court ~~late~~of ~~fees.~~the ~~Approximately~~State ~~$176~~of California,~~000~~ County of ~~that~~Santa ~~amount~~Clara ~~is under~~by ~~dispute~~Tech byData ~~Sysorex~~on ~~Government~~September 24, 2021. The ~~parties~~Confession of ~~are~~Judgement ~~currently~~is ~~negotiating~~entered for a ~~settlement~~total ~~agreement~~sum ~~and~~of ~~payment~~$5,942,559.05, ~~plan~~which tois ~~pay~~comprised of the principal sum of $3,341,801.80 and prejudgment interest ~~outstanding~~in ~~liability~~the sum of $2,600,757.25.

~~Consultant~~Following ~~for~~a ~~Advisory~~negotiation ~~Services~~with Tech Data, the Company was able to reduce the Award by in excess of $4.2 million, and on January 13, 2022, the Company and Tech Data entered into a Settlement and Release Agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company paid $1,375,000 on January 14, 2022. The Company recognized a gain on settlement of $1.5 million.

On March 19, 2018, the Company and Inpixon, the Company’s former parent, were notified by a consultant for advisory services (the “Consultant”) that it believes the Company and Inpixon are required to pay a minimum project fee in an amount equal to $1 million less certain amounts previously paid as a result of Inpixon’s completion of certain financing transactions. On April 18, 2018, the Consultant filed a demand for arbitration with the American Arbitration Association. The Company and Inpixon are contesting such demand and a hearing was held between December 4 and 6, 2018. Per the request of the arbitrator, additional information is to be provided by the parties and the arbitrator will have up to approximately 30 days from the receipt of such information to review all materials and render a decision.50

~~There~~The ~~are~~Award nowas deemed satisfied in full. Among other ~~material~~things, ~~pending~~Tech ~~legal~~Data ~~proceedings~~agreed asto ~~defined~~file byan ~~Item~~acknowledgment ~~103~~of full satisfaction of ~~Regulation~~judgment ~~S-K,~~attached as an exhibit to ~~which~~the weSettlement ~~are~~Agreement, anot ~~party~~take any further action against the Company in connection with or ofrelating ~~which~~to the Judgment, and release the Company and its representatives from any ofand ~~our~~all ~~property~~claims, isincluding the ~~subject~~Judgment, ~~other~~which ~~than~~Tech ~~ordinary~~Data ~~routine~~may ~~litigation~~have ~~incidental~~against tothe Company based upon any transaction that occurred at any time before the ~~Company’s~~date ~~business~~of the Settlement Agreement.

37On June 3, 2022, the Company became aware that a Complaint had been entered against the Company in the United States District Court Southern District of New York by ProActive Capital Partners, L.P, a convertible debenture holder. The Complaint is entered for injunctive relief to honor is stock conversion, recover damages, and receive payments due under the Debenture agreement. The convertible debenture principal and interest of $168,593 is recorded in the unaudited condensed consolidated balance sheets – accrued liabilities for the period ended September 30, 2022. The notice of conversion to convert its convertible debt to shares of the Company’s stock will be honored upon issuance of the Company’s increase in authorized shares.

~~Table~~There are no proceedings in which any of ~~Contents~~the directors, officers, or affiliates of the Company, or any registered or beneficial holder of more than 5% of the Company’s voting securities, is an adverse party or has a material interest adverse to that of the Company.

~~MANAGEMENT’S DISCUSSION~~Organizational ~~AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~Chart

The ~~following~~ ~~discussion should be read in conjunction with the financial statements and the related notes contained elsewhere in this prospectus. In addition to historical information, the~~ following ~~discussion~~is ~~contains~~a ~~forward looking statements based upon~~ current ~~expectations that are subject to risks and uncertainties. Actual results may differ substantially from those referred~~ toorganization ~~herein~~chart ~~due to a number~~ of ~~factors,~~our ~~including, but not limited to, risks described in the section entitled “Risk Factors” and elsewhere in this prospectus.~~Company:

Properties

Our principal executive offices are located at 13880 Dulles Corner Lane, Suite 120, Herndon, Virginia 20171. We lease this premise, which consists of approximately 5,758 square feet pursuant to a lease that expires on May 31, 2025, with the following gross monthly rent payments:

	Gross
	Monthly
	Rent
Month	Payment
Month 1 – Month 12	$	17,514
Month 13 – Month 24	$	17,996
Month 25 – Month 36	$	18,490
Month 37 – Expiration Date	$	18,999

In addition, the Company owns and operates its data center in New York. The data center facility is located in an industrial redevelopment area which has a property tax abatement and pays certain fees in lieu of property taxes under an agreement with the Industrial Development Agency. We believe that our facilities are adequate for our current needs.

Smaller Reporting Company Status

We qualify as a “smaller reporting company” under Rule 12b-2 of the Exchange Act, which is defined as an issuer that is not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent that is not a smaller reporting company and that (i) has a public float of less than $250 million, or (ii) has annual revenues of less than $100 million and either (a) no public float, or (b) a public float of less than $700 million. Whether an issuer is a smaller reporting company is determined on an annual basis. As a smaller reporting company, we are not required to, and may not, include a Compensation Discussion and Analysis section in our proxy statements; we will provide only two years of financial statements; we need not provide the table of selected financial data; and we are not required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002, as amended. We also will have other “scaled” disclosure requirements that are less comprehensive than issuers that are not smaller reporting companies which could make our common stock less attractive to potential investors, which could make it more difficult for our stockholders to sell their shares.

Corporate Information

Our office is located at 13880 Dulles Corner Lane, STE 120, Herndon, Va. 20171 which is where our records are kept. Our website addresses are www.sysorexinc.com and www.ttmdigitalassets.com. The inclusion of our website addresses in this prospectus does not include or incorporate by reference the information on our websites into this prospectus. Our telephone number is (703) 961-1125.

Corporate History

We were originally incorporated in California on January 3, 1994 under the name Lilien Systems. In connection with a reorganization of Inpixon (“Inpixon”) effective as of January 1, 2016, Lilien Systems acquired 100% of the issued and outstanding capital stock of Sysorex Government Services, Inc. (“SGS”) and changed its name to Sysorex USA. On February 27, 2017, our name was changed to Inpixon USA. On July 26, 2018, solely for the purpose of reincorporating the Company into the State of Nevada, Inpixon formed a wholly owned subsidiary in the State of Nevada named “Sysorex, Inc.” which was merged with the Company and resulted in the Company being reincorporated in the state of Nevada under the name “Sysorex, Inc.” On August 31, 2018, Sysorex and Inpixon engaged in a spin-off transaction (the “Spin-off”), whereby Sysorex Inc., and its wholly owned subsidiary SGS, was separated from Inpixon and became a separate entity. The Company began trading on the OTC Markets under the symbol “SYSX” on September 4, 2018.

The Company has two wholly owned subsidiaries: TTM Digital Assets & Technologies, Inc. (“TTM Digital”) and Sysorex Government Services, Inc. (“SGS”). Following the Company’s Merger with TTM Digital in April 2021, the Company shifted its business focus to the mining of Ethereum and opportunities related to the Ethereum blockchain. In addition to its focus on Ethereum, the Company continues to operate its wholly owned subsidiary, SGS, a business that provides information technology products, solutions, and services to federal, state, and local government, including system integrators. SGS provides these services to enable its customers to manage, protect, and monetize their enterprise assets whether on-premises, in the cloud, or via mobile technology. TTM Digital was originally formed as a Delaware limited liability company on June 28, 2017, under the name of TTM Ventures LLC. Thereafter, on March 30, 2021, it filed a certificate of conversion to a non-Delaware entity with the Secretary of State of the State of Delaware together with Articles of Conversion and Articles of Incorporation with the Nevada Secretary of State filed on the same date. As a result, of such conversion, TTM Digital has become a Nevada corporation under the name of “TTM Digital Assets & Technologies, Inc.”

On September 5, 2017, as a result of the Spin-Off, a computer hardware supplier threatened legal action against the Company and demanded approximately $1.8 million for payment of unpaid invoices. On or about January 29, 2018, the parties executed a settlement agreement resolving the matter. No court action was filed. Subsequently thereafter, the Company defaulted under the terms of the agreement. The liability of approximately $0.6 million has been accrued and includes interest $0.007 million calculated based on a default rate of 8%, which is included as a component of accounts payable and accrued liabilities as of December 31, 2021, in the consolidated balance sheets.

On January 22, 2018, a software vendor filed a motion for entry of default judgment (the “Motion”) against SGS in the Circuit Court of Fairfax County, Virginia. The Motion alleges that SGS failed to respond to a complaint served on November 22, 2017. The Motion requests a default judgment in the amount of $336,000 plus $20,000 in legal fees. On August 10, 2018, the Company and vendor entered into a settlement agreement and the Company is repaying the debt in monthly installments. Subsequently thereafter, the Company defaulted under the terms of the agreement. The liability of approximately $0.1 million has been accrued and includes interest $0.001 million calculated based on a default rate of 6% and is included as a component of accounts payable and accrued liabilities as of December 31, 2021, in the Consolidated Balance Sheets.

The Company entered into a Registration Rights Agreement (the “RRA”) dated April 13, 2021. The Company had ninety (90) calendar days following the closing date of its Merger with TTM Digital Assets & Technologies, Inc. on April 14, 2021, to file an initial registration statement covering the Shares. The ninety (90) calendar day filing date was July 13, 2021 (“Filing Deadline”). The Company did not fulfill its obligation to file a registration statement covering the Shares by July 13, 2021, nor any date thereafter up to and including the filing of this Registration Statement and therefore has accounted for an accrued liability in the amount of $0.2 million recorded in the Consolidated Balance Sheets – Accrued Liabilities for the year ended December 31, 2021. The RRA terminated as of October 14, 2021, by its own terms.

The Company entered into a Promissory Judgment Note dated as of August 15, 2018 (the “Note”), with Tech Data Corporation (“Tech Data”), pursuant to which the Company promised to pay the principal sum of $6,849,423.42 to Tech Data. The Note provides that interest shall accrue on the balance of the Note at the rate of 18% per annum. Due to miscommunication with Tech Data, the Company inadvertently failed to pay, when due, some of the installment payments in the aggregate principal amount of $3,341,801.80, as set forth in the Note and has defaulted under the Note. On December 14, 2021, the Company became aware that a Confession of Judgment (the “Confession of Judgment”) had been entered against the Company in the Superior Court of the State of California, County of Santa Clara by Tech Data on September 24, 2021. The Confession of Judgement is entered for a total sum of $5,942,559.05, which is comprised of the principal sum of $3,341,801.80 and prejudgment interest in the sum of $2,600,757.25.

Following a negotiation with Tech Data, the Company was able to reduce the Award by in excess of $4.2 million, and on January 13, 2022, the Company and Tech Data entered into a Settlement and Release Agreement (the “Settlement Agreement”). Pursuant to the Settlement Agreement, the Company was paid $1,375,000.00 (the “Settlement Amount”) on January 14, 2022. The Award was deemed satisfied in full. Among other things, Tech Data agreed to file an acknowledgment of full satisfaction of judgment attached as an exhibit to the Settlement Agreement, not take any further action against the Company in connection with or relating to the Judgment, and release the Company and its representatives from any and all claims, including the Judgment, which Tech Data may have against the Company based upon any transaction that occurred at any time before the date of the Settlement Agreement. The vendor liability of $2,908,133 is recorded in the Consolidated Balance Sheets – Accounts Payable as of December 31, 2021.

On April 8, 2021, the Company, TTM Digital, “MergerSub”, entered into a merger agreement (the “Merger Agreement”). Under the terms of the Merger Agreement, the parties agreed that the Company would acquire TTM Digital by way of a reverse triangular merger, subject to certain closing conditions (the “Merger”). On April 14, 2021 (the “Effective Time”), the closing conditions delineated in the Merger Agreement were satisfied and the Merger closed. At the Effective Time, the MergerSub was merged with and into TTM Digital with TTM Digital surviving the Merger. Under the terms of the Merger Agreement, the shareholders of TTM Digital received a right to receive an aggregate of 124,218,268 Merger Shares in exchange for their shares of TTM Digital. Simultaneously, upon the issuance of the Merger Shares to the TTM Digital shareholders, the Company was issued all of the authorized capital of TTM Digital and TTM Digital became a wholly owned subsidiary of the Company. The Merger resulted in a change of control, with the shareholders of TTM Digital receiving that number of Merger Shares equal to approximately eighty percent (80%) of the outstanding shares of capital stock of the Company including the effect of the Company Recapitalization as discussed in TTM Digital Reverse Merger and the Company Recapitalization.

Effective on April 1, 2021, TTM Digital entered into an Asset Contribution and Exchange Agreement to acquire 3,130 GPUs, and thereafter a Purchase Order on April 1, 2021, for a lease-to-buy financing arrangement to acquire 1,344 GPUs with CoreWeave, with both CoreWeave agreements closing on or after April 1, 2021. In connection with the Contribution and Exchange Agreement, TTM Digital issued equity to the sellers representing 28.65% of the pre-merger equity outstanding for TTM Digital and agreed to installment payments of $2.2 million over 180 days subject to acceleration based on the completion of certain corporate events. Additionally, the parties entered a service agreement on the same date providing for installation and configuration, operation, and management of the mining systems of TTM Digital by CoreWeave. It includes the use of the management software to monitor, maintain, troubleshoot, and communicate with the hosting service providers as well as certain physical repairs. As part of the arrangement, the Company made an initial down payment of $100,000 which was applied to future invoices. The ongoing fee is determined based on the number of specific mining systems under the Service Agreement. Based on the number and type of units at the arrangement’s inception, monthly costs are expected to be $32,400. All third-party software costs associated with the Services and operation of the equipment will be passed through to the Company. The agreement expired on June 30, 2022.

On July 7, 2021, the Company consummated the initial closing of a private placement offering (the “Offering”) pursuant to the terms and conditions of a Securities Purchase Agreement. At the initial closing the Company sold the purchasers (i) 12.5% Original Issue Discount Convertible Debentures in an aggregate principal amount of $9,990,000 and (ii) warrants to purchase up to 3,534,751 shares of common stock of the Company. The Company received total gross proceeds of $8,880,000 taking into account the 12.5% discount before deducting placement agent fees and expenses of approximately $913,000. The Debentures matured on July 7, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. We believe we are currently in default under the terms of our secured convertible notes.

On August 13, 2021, the Company consummated the second closing of the offering pursuant to the same terms and conditions of the Securities Purchase Agreement dated July 7, 2021. At the second closing, the Company sold the purchasers (i) 12.5% Original Issue Discount Senior Secured Convertible Debentures in an aggregate principal amount of $3,976,875 and (ii) warrants to purchase up to 1,862,279 shares of common stock of the Company. The Company received a total of $3,535,000 in gross proceeds following the second closing taking into account the 12 % discount before deducting placement agent fees and expenses of approximately $354,000. The Debentures matured on August 13, 2022, subject to a three-month extension upon mutual agreement of the Company and the holder. We believe we are currently in default under the terms of our secured convertible notes.

On September 26, 2021, the Company acquired a 5% minority interest in Style Hunter, Inc. (“Hunt”). The investment in Hunt is part the assets that TTM is exploring the possibility of selling. Hunt issued 613,723 shares of its common stock: par value $0.0001 per share for $0.81470 per share for a total price of $500,000. The Company shall have a one-time option to purchase an additional $500,000 of the Common Stock (“Option”) on or before the 360-day anniversary of Closing Date as follows: (i) if the Buyer exercises its Option prior to the 90-day anniversary of Closing Date the per-share purchase price of the additional shares of Common Stock (the “Option Price”) shall be $0.81470 (a $10,000,000 Company valuation), (ii) if the Buyer exercises its Option after the 90-day anniversary of Closing Date, but prior to the 180-day anniversary of Closing Date, the Option Price will be $1.22200 (a $15,000,000 Company valuation), or (iii) if the Buyer exercises its option after the 180-day anniversary of Closing the Option Price will be $2.03670.

On November 2, 2021, the Company through a wholly owned subsidiary of TTM Digital executed a Membership Interest Purchase Agreement (“Up North Agreement”) with BWP Holdings, LLC (“BWP”) whereby the Company acquired the remaining 50.0% membership interest (“Transferred Membership Interest”) in Up North Hosting LLC (“Up North”) that it did not already own to bring its ownership in Up North to 100.0% (“UNH Acquisition”). In addition to the Transferred membership Interest the Company acquired certain data mining equipment of BWP (“Bitworks Equipment” and collectively the “Acquisition”) that was resident in the Up North data center facility. Total transaction consideration paid for the acquired interests of Up North and the Bitworks Equipment were $1.0 million and the issuance of 1.0 million shares of restricted common stock, $0.00001 par value of the Company.

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”) 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 “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 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 requested that Ostendo issue, pursuant to the Heads of Terms, 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. 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.

On June 3, 2022, the Company became aware that a Complaint had been entered against the Company in the United States District Court Southern District of New York by ProActive Capital Partners, L.P, a convertible debenture holder. The Complaint is entered for injunctive relief to honor is stock conversion, recover damages, and receive payments due under the Debenture agreement. The convertible debenture principal and interest of $168,593 is recorded in the unaudited condensed consolidated balance sheets – accrued liabilities for the period ended September 30, 2022. The notice of conversion to convert its convertible debt to shares of the Company’s stock will be honored upon issuance of the Company’s increase in authorized shares.

On June 15, 2022, the Company’s Board of Directors approved to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors. On September 22, 2022, the Company held its 2022 virtual annual meeting of stockholders, at which the Company’s stockholders voted in favor of, among other matters, to effect a reverse stock split of the Company’s outstanding shares of common stock, par value $0.00001 per share, at a ratio of no less than 1-for-500 and no more than 1-for-1,000, with such ratio to be determined at the sole discretion of the Board of Directors. On November 1 2022, the Company’ Board of Directors approved an Articles of Amendment to the Company’s Articles of Incorporation to effect a 1 for 1,000 reverse stock split (the “Reverse Stock Split”) of the Company’s common stock. The current status of the Reverse Stock Split is that the Company has notified the Financial Industry Regulatory Authority (FINRA) of the Reverse Stock Split, which will not be effective until FINRA processes it, and at such time we’ll file the Articles of Amendment with the State of Nevada to effectuate the Reverse Stock Split.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction the audited financial statements and related notes included elsewhere in this registration statement. In addition to historical information, this discussion and analysis here and throughout this registration statement contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements due to a number of factors, including but not limited to, risks described in the section entitled “Risk Factors”.

Overview

Sysorex, ~~was~~Inc. ~~incorporated~~through inits ~~California~~wholly onowned ~~January~~subsidiary, 3Sysorex Government Services, ~~1994~~Inc. as(“SGS”), ~~Lilien~~provides ~~Systems~~information ~~and~~technology ~~was~~solutions primarily ~~acquired~~to bythe ~~Inpixon~~public onsector. ~~March 20~~These solutions include cybersecurity, ~~2013.~~professional ~~Effective~~services, engineering support, IT consulting, enterprise ~~January~~level 1technology, ~~2016~~networking, ~~Inpixon~~wireless, ~~consummated~~help adesk ~~reorganization~~and ~~transaction~~custom ~~pursuant~~IT tosolutions. ~~which~~In ~~certain~~addition ~~Inpixon~~to ~~subsidiaries~~SGS, ~~including,~~the ~~AirPatrol Corporation~~Company ~~and~~has ~~Shoom~~another ~~were~~wholly ~~merged~~owned ~~with~~subsidiary, TTM ~~and~~Digital ~~into~~Assets ~~Lilien~~&Technologies, ~~and~~Inc. ~~Lilien~~(“TTM ~~changed~~Digital”). ~~its~~TTM ~~name~~Digital tois ~~“Sysorex~~a ~~USA”;~~digital asset technology and ~~all~~mining ~~outstanding~~company that ~~shares~~owns ofand ~~capital~~operates ~~stock~~specialized ofcryptocurrency ~~Sysorex~~mining ~~Government~~processors ~~were~~and ~~assigned~~was topreviously ~~Lilien,~~focused ~~pursuant~~on tothe ~~which~~Ethereum ~~Sysorex~~blockchain ~~Government~~ecosystem. ~~became~~As aof September ~~direct~~15, ~~subsidiary of~~2022, ~~Lilien.~~Ethereum ~~Sysorex~~switched ~~USA~~from ~~changed~~a ~~its~~Proof ~~name~~of Work model to ~~Inpixon~~a ~~USA~~Proof onof ~~March~~Stake 1,model ~~2017.~~and Onas ~~July~~a 26result, ~~2018,~~the ~~Inpixon~~Company ~~USA~~is ~~merged~~no ~~into~~longer ~~Sysorex, Inc.,~~mining aEthereum. ~~wholly-owned~~TTM ~~subsidiary~~is ofcurrently ~~Inpixon,~~exploring ~~for~~alternative ~~the~~uses ~~purpose~~and ofsales ~~changing~~opportunities for its ~~name~~Graphics ~~and~~Processing ~~moving~~Units ~~its~~(“GPU”) ~~state~~assets and ofdatacenter ~~formation~~located ~~from~~in ~~California~~Lockport, ~~to Nevada~~NY. ~~Lilien~~The ~~significantly~~Company ~~expanded~~had ~~Inpixon’s~~previously ~~operations~~been ~~providing~~in itdiscussions with a ~~Big~~third ~~Data~~party ~~analytics~~to ~~platform~~sell ~~and~~its ~~enterprise~~mining assets and ~~infrastructure~~certain ~~capabilities~~associated real property.

~~On August~~Overview ~~31,~~of ~~2018, Inpixon completed~~ the ~~Spin-off of its value-added reseller business from its indoor positioning analytics business by way of a distribution of all of our shares of common stock to holders of Inpixon~~Company’s common stock, preferred stock and certain Inpixon warrants as of August 21, 2018 (the “Record Date”). The distribution occurred by way of a pro rata stock distribution to such holders of common stock, preferred stock and warrants, each of whom received one share of Sysorex common stock for every three shares of Inpixon common stock held (or into which such preferred stock was convertible or warrants were exercisable) on the Record Date.Subsidiaries

~~As a result of the Spin-off,~~ Sysorex isGovernment ~~an independent public company and Sysorex’s common stock began regular-way trading on the OTC Markets under the symbol “SYSX” on September 4, 2018.~~Services

~~Although~~SGS ~~the~~is ~~Spin-off~~a ~~was~~provider ~~completed~~of oninformation ~~August~~technology 31solutions from multiple vendors, ~~2018~~including hardware products, ~~the~~software, ~~Company~~services, ~~has~~including ~~reflected~~warranty and ~~the~~maintenance ~~Spin-off~~support, inoffered ~~these~~through ~~financial~~our ~~statements~~dedicated sales force, ecommerce channels, existing federal contracts and service team. Since our founding, we have served our customers by offering products and services from key industry vendors such as ifAruba, itCisco, ~~occurred~~Dell, GETAC, onLenovo, ~~September~~Microsoft, 30Panasonic, ~~2018~~Samsung, Symantec, VMware and others. We provide our customers with comprehensive solutions incorporating leading products and services across a variety of technology practices and platforms such as ~~the~~cyber, ~~Company~~cloud, ~~determined~~networking, ~~that~~security, ~~the~~and ~~impact~~mobility. We isutilize ~~not~~our ~~material~~professional services, consulting services and partners to ~~the~~develop ~~combined~~and ~~financial~~implement ~~statements~~these solutions. Our sales and marketing efforts in collaboration with our vendor partners, allow us to reach multiple customer public sector segments including federal, state and local governments, as well as educational institutions.

~~The~~For the year ended December 31, 2021, our sales to federal, state and ~~financial~~local ~~statements~~governments ~~present~~accounted ~~the~~for ~~combined~~approximately ~~results~~100% of ~~operations~~our SGS net sales. Our past customers have included, ~~financial~~among ~~condition~~others, federal and ~~cash~~international government ~~flows~~agencies ofand ~~Sysorex~~state and ~~its~~local ~~subsidiary~~governments. Although SGS has had many customers, two customers generated approximately 71% of ~~These~~SGS’s ~~financial~~gross ~~statements~~revenue ~~were~~during ~~prepared~~the onyear ended December 31, 2021. One customer accounted for 44% of SGS’s gross revenue in 2021; however, this customer may or may not continue to be a ~~combined~~significant ~~basis~~contributor ~~because~~to revenue in the ~~operations~~future. ~~were~~We ~~under~~plan ~~common~~to ~~control~~continue to focus our efforts on existing and potential government customers. ~~All~~SGS ~~intercompany~~revenues for the three months ended September 30, 2022, and 2021, was ~~accounts~~approximately $3.5 million and ~~transactions~~$1.9 ~~have~~million, ~~been~~respectively. ~~eliminated~~This ~~between~~includes approximately 71% of sales coming from the ~~combined~~Company’s ~~entities~~top two customers.

~~Sysorex~~SGS isexperiences avariability ~~leading~~in ~~provider~~our ofnet ~~information~~sales ~~technology~~and ~~solutions~~operating ~~from~~results ~~multiple~~on ~~vendors,~~a ~~including~~quarterly ~~hardware~~basis ~~products,~~as ~~software,~~a ~~services, including~~result ~~warranty~~of ~~and~~many ~~maintenance~~factors. ~~support,~~SGS ~~offered~~experiences ~~through~~some seasonal ~~our~~trends ~~dedicated~~in our sales ~~force,~~of ~~ecommerce~~technology ~~channels,~~solutions ~~existing~~to ~~federal~~government ~~contracts~~ and ~~service~~educational ~~team~~institutions. ~~Since~~For ~~our founding~~example, wethe ~~have~~fiscal ~~served~~year-ends ~~our~~of U.S. Public Sector customers byvary ~~offering~~for ~~products~~those in the federal government space and ~~services~~those ~~from~~in ~~key~~the ~~industry~~state ~~vendors~~and local government and educational ~~such~~institution as(“SLED”) ~~Aruba,~~space. ~~Cisco,~~SGS ~~Dell,~~generally ~~GETAC,~~sees ~~Lenovo,~~an ~~Microsoft,~~increase ~~Panasonic,~~in ~~Samsung,~~our ~~Symantec,~~second ~~VMware~~quarter ~~and~~sales ~~others~~related to customers in the U.S. WeSLED sector ~~provide~~and in our ~~customers with~~third ~~comprehensive~~quarter ~~solutions~~sales ~~incorporating~~related ~~leading~~to ~~products~~customers ~~and~~in ~~services~~the ~~across~~federal agovernment ~~variety~~space ofas ~~technology~~these ~~practices~~customers ~~and~~close ~~platforms~~out their budgets ~~such~~for astheir ~~cyber,~~fiscal ~~cloud,~~year ~~networking,~~(June ~~security,~~30th and ~~mobility.~~September We30th, ~~utilize~~respectively). ~~our~~SGS ~~professional~~may ~~services,~~also ~~consulting~~experience ~~services~~variability ~~and~~in ~~partners to~~our ~~develop~~gross profit and ~~implement~~gross ~~these~~profit ~~solutions.~~margin ~~Our~~as ~~sales~~a ~~and~~result ~~marketing~~of ~~efforts~~changes in ~~collaboration~~the ~~with~~various ~~our~~ vendor ~~partners,~~programs ~~allows~~we ~~us to~~participate ~~reach~~in ~~multiple~~and ~~customer~~its ~~public~~effect ~~sector~~on ~~segments~~the ~~including~~amount ~~federal,~~of ~~state~~vendor consideration ~~and~~we ~~local~~receive ~~governments,~~from asa ~~well~~particular asvendor ~~educational~~or ~~institutions. A~~their ~~very~~authorized ~~small~~distributor/wholesaler, ~~percentage~~may ofbe ~~our~~impacted ~~sales~~by ~~comes~~a ~~from~~number ~~commercial~~of ~~sales~~events outside of our control.

Revenues from our business are typically driven by public sector delivery orders that are received on a monthly basis. During the nine months ended September 30, 2018 approximately 99% of our revenues were from these delivery orders. These delivery orders include information technology hardware, software, professional services, warranty and maintenance support, and highly integrated solutions that include two or more of the aforementioned items.56

38TTM Digital

~~Table~~TTM Digital ofis ~~Contents~~a digital asset technology and mining company that owns and operates specialized cryptocurrency mining processors and was previously focused on the Ethereum blockchain ecosystem. Following the reverse merger on April 14, 2021, the business of TTM Digital became a business segment of the Company. TTM Digital was originally formed as a Delaware limited liability company on June 28, 2017, under the name of TTM Ventures LLC. Thereafter, on March 30, 2021, it filed a certificate of conversion to a non-Delaware entity with the Secretary of State of the State of Delaware together with Articles of Conversion and Articles of Incorporation with the Nevada Secretary of State filed on the same date. As a result of such conversion, TTM Digital has become a Nevada corporation under the name of “TTM Digital Assets & Technologies, Inc.”

WeTTM ~~experience~~Digital ~~variability~~has inan ~~our~~evolving ~~net~~business ~~sales~~model ~~and~~which ~~operating~~is ~~results~~subject onto avarious ~~quarterly~~uncertainties. ~~basis~~As asdigital aassets ~~result~~and ofblockchain ~~many~~technology ~~factors.~~become ~~We experience~~more ~~some~~widely ~~seasonal~~utilized ~~trends~~on ina ~~our~~mass ~~sales~~scale, ofwe ~~technology~~anticipate ~~solutions~~that tothe ~~government~~services and ~~educational~~products ~~institutions.~~associated ~~For~~with ~~example,~~ the ~~fiscal year-ends~~technologies ofwill ~~U.S.~~continue ~~Public~~to ~~Sector~~evolve. To ~~customers~~successfully ~~vary~~continue ~~for those~~ in the ~~federal~~industry, ~~government~~our ~~space~~business ~~and~~model ~~those~~may inneed ~~the~~to ~~state~~evolve ~~and~~to ~~local~~reflect ~~government and~~the ~~educational~~trends ~~institution~~of ~~(“SLED”)~~the ~~space~~industry. WeOver ~~generally~~time, ~~see~~we anmay modify ~~increase~~aspects inof our ~~second~~business ~~quarter~~model ~~sales~~relating ~~related~~ to ~~customers in~~our ~~the U~~strategy.S. ~~SLED~~We ~~sector~~cannot ~~and~~offer inany ~~our~~assurance ~~third~~that ~~quarter~~we ~~sales~~will ~~related~~be tosuccessful ~~customers~~or inthat the ~~federal government space as these customers~~future ~~close~~industry ~~out~~or ~~their~~business ~~budgets~~operation ~~for~~changes ~~their~~will ~~fiscal~~not ~~year~~result ~~(June~~in ~~30th~~harm ~~and~~to ~~September~~our ~~30th respectively)~~business. We may ~~also~~not ~~experience~~be ~~variability in~~able ~~our~~to ~~gross~~manage ~~profit~~growth ~~and~~effectively, ~~gross~~which could ~~profit~~damage ~~margin~~our asreputation, alimit ~~result~~our ofgrowth ~~changes~~and innegatively ~~the~~affect ~~various~~our ~~vendor~~operating ~~programs~~results. weManagement ~~participate~~cannot inprovide ~~and~~any ~~its~~assurances ~~effect~~that onwe ~~the~~will ~~amount~~identify ofall ~~vendor~~emerging ~~consideration~~trends weand ~~receive~~growth ~~from~~opportunities ain ~~particular~~this ~~vendor~~business ~~or their authorized distributor/wholesaler~~sector, ~~which~~and we may be ~~impacted~~lose byout aon ~~number~~those ofopportunities ~~events~~to ~~outside~~current or offuture ~~our control~~competitors. As ~~such~~anticipated, ~~the~~any ~~results~~such ofcircumstances ~~interim~~could ~~periods~~have ~~are~~a ~~not~~material ~~necessarily~~adverse ~~indicative of~~effect ~~the~~on ~~results~~our ~~that~~business, ~~may~~prospects, ~~be expected for any other interim period~~ or ~~for the full year~~operations.

AThe ~~substantial~~Company ~~portion~~made the decision to divest certain mining equipment and the data center of ~~our~~the ~~business~~TTM isDigital ~~dependent~~reporting onunit ~~sales~~and ~~through~~commenced ~~existing~~discussions with ~~federal~~a ~~contracts~~third party to execute an asset sale in the spring of 2022. On March 24, ~~known~~2022, asthe ~~Government~~Company ~~Wide~~executed ~~Acquisition~~Heads of Terms (“Heads ~~Contracts~~of Terms”) with Ostendo Technologies, Inc. (“~~GWAC~~Ostendo”) which included certain binding and non-binding provisions. WePursuant 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 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 ~~three~~not ~~key~~entered ~~GWAC~~into ~~contracts~~definitive transaction agreements and accordingly, ~~known~~it was determined in November 2022 that the ~~industry~~transaction aswill ~~GSA~~not ~~Federal~~proceed. ~~Supply~~In ~~Schedule~~November IT2022, 70the Company requested that Ostendo issue, pursuant to the Heads of Terms, shares equal to the initial deposit made by the Company of $1,600,000. In November 2022, the Company ~~NASA~~received ~~SEWP~~a Vcertificate, 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 ~~NIH~~accepted ~~CIO-CS~~by the California Secretary of State. ~~Maintaining~~If ~~current~~the ~~vendor~~Company ~~offerings~~receives this document and ~~pricing~~it is ~~critical~~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 ~~attaining~~issue ~~sales~~something that did not exist at the time. Accordingly, the Company is unable to determine definitively whether it currently holds these shares or not.

~~Our planned~~As ~~operating~~of ~~expenditures~~September ~~each~~15, ~~quarter~~2022, Ethereum ~~are~~switched ~~based~~from ina ~~large~~Proof ~~part~~of onWork ~~sales~~model ~~forecasts~~to ~~for~~Proof ~~the~~of ~~quarter.~~Stake Ifmodel ~~our~~and ~~sales~~as doa ~~not meet expectations in any given quarter~~result, ~~our operating results for~~ the ~~quarter~~Company ~~may~~no belonger ~~materially~~mines ~~adversely affected~~Ethereum. ~~Our~~TTM ~~narrow margins~~Digital ~~may~~is ~~magnify~~currently ~~the~~exploring ~~impact~~alternative ofuses ~~these factors on our operating results. Management regularly reviews our operating performance using a variety of financial~~ and ~~non-financial metrics including~~ sales, ~~shipments,~~opportunities ~~margin,~~for ~~vendor~~its ~~consideration,~~Graphics ~~advertising~~Processing ~~expense, personnel~~Unit ~~costs,~~(GPU) ~~account~~assets ~~executive productivity, accounts receivable aging, supplier inventory turnover, liquidity~~ and ~~cash~~datacenter ~~resources. Our~~located ~~management monitors the various metrics against goals and budgets~~in Lockport, ~~and makes necessary adjustments intended to enhance our performance~~NY.

~~Our current~~TTM ~~debt~~is ~~repayment~~exploring ~~to key vendors due to prior non-payment of invoices has impacted our ability to receive~~ the ~~most~~future ~~favorable cost,~~possibility ~~terms, and delivery priority. General economic conditions also have an effect on our business and results~~ of ~~operations. For~~hosting ~~example,~~client ~~if the federal government fails to pass a budget or a continuing resolution before adopting an annual budget, our~~computing ~~primary customers will not have the ability to make purchases off of our existing contracts until the budget issue is resolved. If current tariffs~~ and ~~stipulation~~evaluating by the ~~government~~sale ~~to require the purchase~~ of ~~goods~~its ~~that are substantially made or assembled in America are enacted, this could severely impact our ability to source from vendors whom manufacture overseas~~assets. These factors affect sales of our products, sales cycles, adoption rates of new technologies and level of price competition. We continue to focus our efforts paying down our debt, cost controls, competitive pricing strategies, capturing new contracts, and driving higher margin service and solution sales. We also continue to make selective investments in our sales force personnel, service and solutions capabilities and internal information technology infrastructure and tools in an effort to meet vendor program requirements and to position us for enhanced productivity and future growth.

Basis of Presentation

~~Sysorex,~~In ~~through~~connection ~~its~~with ~~wholly-owned~~the ~~subsidiary,~~preparation ~~Sysorex~~of ~~Government,~~our ~~provides~~consolidated ~~information~~financial ~~technology~~statements, ~~solutions~~we ~~primarily~~are required to make assumptions and estimates about future events and apply judgments that affect the ~~public~~reported ~~sector~~amounts of assets, liabilities, revenue, expenses and the related disclosures. We ~~These~~base ~~include~~our ~~cybersecurity~~assumptions, ~~professional~~estimates ~~services,~~and ~~engineering~~judgments ~~support~~on historical experience, ITcurrent ~~consulting~~trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, ~~enterprise~~we ~~level~~review ~~technology~~the accounting policies, ~~networking~~assumptions, ~~wireless,~~estimates ~~help~~and ~~desk,~~judgments to ensure that our consolidated financial statements are presented fairly and ~~custom~~in ITaccordance ~~solutions~~with accounting principles generally accepted in the United States (“GAAP”). ~~The~~However, ~~Company~~because isfuture ~~headquartered~~events inand ~~Virginia~~their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

~~The~~Our ~~accompanying~~significant ~~unaudited condensed consolidated financial statements of the Company, have been prepared in accordance with generally accepted~~ accounting ~~principles~~policies ~~(“GAAP”) for interim financial information, which~~ are ~~the~~discussed ~~accounting principles that are generally accepted~~ in ~~the~~Note ~~United~~4 ~~States~~ of ~~America. Accordingly, they do not include all of~~ the ~~information~~consolidated ~~and footnotes required by GAAP for complete~~ financial statements. InWe ~~the~~believe ~~opinion~~that ofthe ~~management,~~following ~~all adjustments (consisting of normal recurring~~accounting ~~accruals)~~estimates ~~considered~~are ~~necessary for a fair presentation have been included. The results of~~ the ~~Company’s~~most ~~operations~~critical ~~for~~to ~~the nine~~aid ~~month~~in ~~period~~fully ~~ended~~understanding ~~September~~and ~~30,~~evaluating ~~2018~~our isreported ~~not~~financial ~~necessarily indicative of the~~ results, toand bethey ~~expected~~require ~~for~~our ~~the year ending December~~most 31difficult, ~~2018.~~subjective ~~These~~or ~~interim~~complex ~~unaudited~~judgments, ~~condensed~~resulting ~~consolidated~~from ~~financial statements should be read in conjunction with~~ the ~~Company’s audited~~need ~~condensed~~to ~~consolidated~~make ~~financial~~estimates ~~statements~~about ~~and notes for~~ the ~~years~~effect ~~ended~~of ~~December~~matters ~~31,~~that ~~2017~~are ~~and 2016 included in the Form~~inherently ~~10 filed with SEC on June 15, 2018, as amended~~uncertain.

~~Critical Accounting~~Known ~~Policies~~Trends or Uncertainties

~~The~~SGS ~~preparation~~experiences ofvariability in our ~~financial~~net ~~statements~~sales and ~~related~~operating ~~disclosures~~results inon ~~conformity~~a ~~with~~quarterly ~~GAAP~~basis ~~requires~~as usa toresult ~~make~~of ~~estimates~~many ~~and~~factors. ~~assumptions~~SGS experiences some ~~that~~seasonal ~~affect~~trends ~~the~~in ~~reported~~our ~~amounts~~sales of ~~assets,~~technology ~~liabilities,~~solutions ~~revenues~~to government and ~~expenses~~educational institutions. ~~These~~For ~~estimates~~example, ~~and~~the ~~assumptions~~fiscal ~~are~~year-ends ~~based~~of U.S. onPublic ~~historical experience~~Sector ~~and~~customers onvary ~~various~~for ~~other~~those ~~factors~~in ~~that~~the wefederal ~~believe~~government ~~are~~space ~~reasonable~~and ~~under~~those in the ~~circumstances.~~state Weand ~~periodically~~local ~~review~~government ~~our~~and ~~accounting~~educational ~~policies,~~institution ~~estimates~~(“SLED”) ~~and~~space. ~~assumptions~~SGS ~~and~~generally ~~make~~sees ~~adjustments~~an ~~when~~increase ~~facts~~in ~~and~~our ~~circumstances~~second ~~dictate.~~quarter Insales ~~addition~~related to customers in the ~~accounting~~U.S. ~~policies~~SLED ~~that~~sector ~~are~~and ~~more~~in ~~fully~~our ~~described~~third inquarter ~~the~~sales ~~Notes~~related to customers in the ~~Combined~~federal ~~Financial~~government ~~Statements~~space ~~included~~as ~~elsewhere~~these incustomers ~~this~~close ~~information~~out ~~statement,~~their budgets wefor ~~consider~~their ~~the~~fiscal ~~critical~~year ~~accounting~~(June ~~policies~~30th ~~described~~and ~~below~~December to31st, berespectively). ~~affected~~SGS bymay ~~accounting~~experience ~~estimates.~~variability ~~Our~~in ~~critical~~our ~~accounting~~gross ~~policies~~profit and gross profit ~~that~~margin ~~are~~as ~~affected~~a byresult ~~accounting~~of ~~estimates~~changes ~~require~~in usthe tovarious ~~use~~vendor ~~judgments,~~programs ~~often~~we asparticipate ain ~~result~~and ofits ~~the~~effect ~~need~~on tothe ~~make~~amount ~~estimates~~of ~~and~~vendor ~~assumptions~~consideration we ~~regarding~~receive ~~matters~~from ~~that~~a ~~are~~particular ~~inherently~~vendor ~~uncertain~~or their authorized distributor/wholesaler, ~~and~~may ~~actual~~be ~~results~~impacted ~~could~~by ~~differ~~a ~~materially~~number ~~from~~of ~~these~~events ~~estimates~~outside of our control.

3957

~~Table~~TTM Digital, as noted above, has an evolving business model which is subject to various uncertainties and which may need to evolve to reflect the trends of ~~Contents~~ the industry. Over time, we may be required to modify aspects of our business model relating to our strategy. We cannot offer any assurance that we will be successful or that the future industry or business operation changes will not result in harm to our business. We may not be able to manage growth effectively, which could damage our reputation, limit our growth and negatively affect our operating results. Management cannot provide any assurances that we will identify all emerging trends and growth opportunities in this business sector, and we may lose out on those opportunities to current or future competitors. As anticipated, any such circumstances could have a material adverse effect on our business, prospects, or operations

Material Changes

On April 8, 2021, the Company, TTM Digital, “MergerSub”, entered into the Merger Agreement. Under the terms of the Merger Agreement, the parties agreed that Sysorex would acquire TTM Digital by way of a reverse triangular merger, subject to certain closing conditions. On the Effective Time, the closing conditions delineated in the Merger Agreement were satisfied and the Merger closed. At the Effective Time, the MergerSub was merged with and into TTM Digital with TTM Digital surviving the Merger.

Under the terms of the Merger Agreement, the shareholders of TTM Digital received a right to receive an aggregate of 124,218,268 Merger Shares in exchange for their shares of TTM Digital. Simultaneously, upon the issuance of the Merger Shares to the TTM Digital shareholders, Sysorex was issued all of the authorized capital of TTM Digital and TTM Digital became a wholly owned subsidiary of Sysorex. The Merger resulted in a change of control, with the shareholders of TTM Digital receiving that number of Merger Shares equal to approximately eighty percent (80%) of the outstanding shares of capital stock of Sysorex including the effect of the Sysorex Recapitalization as discussed in TTM Digital Reverse Merger and Sysorex Recapitalization.

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”) 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 “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 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 requested that Ostendo issue, pursuant to the Heads of Terms, 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. 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.

Summary of TTM Digital Mining Result for the year ended December 31, 2021 and 2020

The following is a discussion on continuing and discontinued operations is discussed further in the following sections, Liquidity and Capital Resources as of December 31, 2021, and 2020.

The following table presents the roll forward of digital asset activity from both continuing and discontinued operations during the respective periods:

	December 31,
	2021			2020
Opening Balance	$	24		$	25
Revenue from mining		12,534	*		1,868	*
Received for membership interest		-			46
Payment of Mining equipment under lease to buy arrangement		(1,091	)		-
Mining pool operating fees		(129	)		(4	)
Management fees		(321	)		(189	)
Transaction fees		(26	)		-
Owners’ distributions		(1,521	)		(1,211	)
Digital asset impairment		(704	)		-
Proceeds from sale of digital assets		(3,670	)		(555	)
Realized gain on sale of digital assets		106			44
Ending Balance	$	5,202		$	24

*	Of the $12.5 million revenue from mining, $4.4 million in continuing operations and $8.1 million in discontinued operations. The $1.8 million in 2020 is included in discontinued operations.

Discussion of Results of Operations of TTM Digital for the year ended December 31, 2021, and 2020

For the year ending 2021, TTM Digital reported $12.5 million in revenues, ($4.4 million in continuing operations and $8.1 million in discontinued operations). TTM Digital reported $1.3 million in mining costs ($0.5 in continuing operations and $0.8 million in discontinued operations), $0.2 million in sales and marketing costs (continuing operations), $6.3 million in general and administrative costs, ($6.0 million in continuing operations and $0.3 million in discontinued operations), $0.3 million in management fees (continuing operations), $4.1 million in amortization and depreciation costs ($2.5 million in continuing operations and $1.6 million in discontinued operations), $3.2 million of fixed asset impairment ( continuing operations), $0.7 million of digital asset impairment (continuing operations), $7.8 million in loss contingency on debt default (continuing operations), $6.3 million in change in fair value of debt conversion feature, $22.0 million in merger charges (continuing operations), $2.0 million in restructuring fees (continuing operations), $0.8 in other net income and expenses ($0.012 million in other income from continuing operations and $0.1 million in other expenses in discontinued operations), resulting in a net loss from operations of $21.6 million ($26.8 million net loss from continuing operations and $5.2 million net income from discontinued operations).

For the year ending 2020, TTM reported its results as discontinued operations. TTM Digital reported $1.8 million in revenues. TTM Digital reported $0.4 million in mining costs, $0.1 million in management fees, $0.8 million in depreciation costs, resulting in a net income from operations of $0.5 million.

TTM Digital margins are affected by new and existing competitors in the digital asset mining industry. As an increasing number of new miners enter the Ethereum network, and as existing miners acquire additional mining equipment, the total rewards per miner decrease and the difficulty to obtain mining equipment increases. Margins are also affected by increases in natural gas prices. At times of peak usage on the power grid, and in times of inclement weather, natural gas prices tend to rise. Additionally, for the year ended December 31, 2021, there were significant merger and acquisition related costs due to the triangular reverse merger with Sysorex Inc.

Discussion of Results of Operations of SGS for the year ended December 31, 2021

SGS operates on the resale of technology products and associated services related to those products. These products are resold through several contracts with the federal government in SGS’ portfolio of contracts. SGS suppliers include wholesale distributors of major technology products, small niche product suppliers, services from specialized partners, and services from SGS’ own resources.

The lifecycle of an order includes: solicitation of a requirement form the customer, quotation or proposal in response to the solicitation, evaluation of quote or proposal by the customer, awarding an order to SGS based on favorable evaluation, customer order is then entered in as a sales order, the SGS system then issues purchase orders to suppliers, suppliers delivers the goods to the customer and performs any services necessary to complete order obligations, customer provides acceptance, and SGS issues an invoice to the customer. Once a customer accepts the invoice the dollar amount is guaranteed and backed by the U.S. Treasury. Post invoice obligation may include warranty, maintenance, and telephonic support either directly by SGS or through the OEM directly. From acceptance until the period of performance is completed (warranty, maintenance, and/or telephonic support), SGS is responsible for the operability of the delivered goods. Once the period of performance is completed, the customer will contact SGS to complete a contract closeout.

For the year ending 2021, the SGS reported $8.3 million in revenues. This includes approximately 70% of revenues coming from the Company’s top two customers. SGS reported $6.9 million in product and services costs, $0.8 million in sales and marketing costs, $3.4 million in general and administrative costs, $0.4 million in amortization costs, resulting in a loss from operations of $3.2 million. See Note 4 — Summary of Significant Accounting Policies for discussion of the accounting treatment under ASC 606 included in the notes to the financial statements. Based on the two contracts, the Company acted as the agent and is required to record the costs against the related revenues, resulting in a reduced revenue line, offset by a reduced cost of goods sold line in the financial statements.

SGS margins are affected by the diversity of our supplier. Supplier diversity allows companies such as SGS to seek better cost through competition of multiple suppliers of the same product. Currently, SGS does not have the supplier diversity that is required to increase margin. SGS is on a prepay basis with many suppliers and this requires SGS to finance cash advances to suppliers from our finance source, South Star credit facility. Our financial source charges high fees and interest, which also affects our net margin.

Three Months Ended September 30, 2022, Compared to Three Months Ended September 30, 2021

Discussion of Results of Operations of SGS for the Three Months Ended September 30, 2022, and 2021

SGS revenues for the three months ended September 30, 2022, and 2021, was approximately $3.5 million and $1.9 million, respectively. This revenue increase is representative of increased product sales to the federal agencies. This includes approximately 71% of sales coming from the Company’s top two customers. SGS product and service costs for the three months ended September 30, 2022, and 2021, was approximately $3.0 million and $1.5 million, respectively. This includes approximately 72% of product costs from the Company’s top two vendors.

SGS margins are affected by the diversity of our supplier. Supplier diversity allows companies such as SGS to seek better cost through competition of multiple suppliers of the same product. Currently, SGS does not have the supplier diversity that is required to increase margin. SGS is on a prepay basis with many suppliers and this requires SGS to finance cash advances to suppliers from our finance source, South Star Capital. Our financial source charges high fees and interest, which also affects our net margin.

SGS also reported for the three months ended September 30, 2022, and 2021, $0.2 million and in sales and marketing costs, $1.0 million in general and administrative costs, $0.1 million in amortization costs, resulting in a loss from operations of approximately $0.9 million. The Company continues to search for paths to drive costs down and increase its cash position. The overall decrease in general and administrative costs are directly related to a decrease in professional and consulting fees.

Summary of TTM Mining Result

The numbers presented in this table are in thousands of dollars. The following table present the roll forward of digital asset activity from continuing and discontinued operations during the respective periods:

	Three months ended September 30,
	2022			2021
Opening Balance	$	218		$	105
Revenue from mining		809			2,993
Payment of mining equipment under lease to buy arrangement		-			(72	)
Mining pool operating fees		(8	)		(31	)
Impairment of digital assets		(71	)		(325	)
Transaction fees		(20	)		-
Proceeds from sale of digital assets		(1,068	)		(339	)
Realized gain on sale of digital assets		227			3
Ending Balance	$	87		$	2,334

Discussion of Results of Operations of TTM Digital for the Three Months Ended September 30, 2022, and 2021

The activities for TTM revenues and costs for the three months ended September 30, 2022, represent discontinued operations.

Revenues from mining are impacted significantly by volatility in cryptocurrency prices and network difficulty. The average price of Ethereum mined during the three months ended September 30, 2022, was approximately $1,521 compared to approximately $2,771 during the three months ended September 30, 2021. Network difficulty was also significantly higher in 2022, resulting in lower total rewards from mining. Total Ethereum mined during the three months ended September 30, 2022, was approximately 512 ETH vs approximately 1,069 ETH during the three months ended September 30, 2021.

Ethereum’s transition to proof of stake (“POS”) took place on September 15, 2022, and has had a direct negative impact on the company’s ability to generate revenue.

For the three months ended September 30, 2022, the Company recorded approximately $1.3 million of impairment of fixed assets in its discontinued operations.

Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021

Discussion of Results of Operations of SGS for the Nine Months Ended September 30, 2022, and 2021

SGS revenues for the nine months ended September 30, 2022, and 2021, was approximately $12.0 million and $3.9 million respectively. This revenue increase is representative of increased product sales to the federal agencies, however, the periods for the nine months ended September 30, 2022, and September 30, 2021 are not comparable, as the prior year period includes a short period of April 15, 2021 through September 30, 2021. SGS revenues resulted from product sales to U.S. governmental agencies and local county governments. This includes approximately 83% of sales coming from the Company’s top two customers in 2022. As disclosed in the notes to the financial statements, Note 3 - Basis of Presentation, the acquisition/merger was effective April, 2021 which resulted in SGS’s reporting period of April 15, 2021 through September 30, 2021. As a result, the nine months ended September 30, 2021, is not comparable in total months of operation to the nine months ended September 30, 2022.

Product, and service costs for the nine months ended September 30, 2022, of approximately $8.4 million included a gain on a vendor liability settlement of $1.5 million. Without this gain, product and service costs would approximate $9.9 million. The margin effect on the revenue and costs as presented is approximately 30%, however without the one-time settlement gain of $1.5 million, the margin is approximately 17%.

Selling, general, and administrative expenses (“SG&A”) for the nine months ended September 30, 2022, was $4.4 million, which were associated with compensation and payroll tax costs, and professional fees related to the Heads of Terms investment and sale of TTM assets and ongoing operational advisory and accounting services.

Other income and expense, including interest expense for the nine months ended September 30, 2022, was approximately $3.2 million of which interest incurred on the Company’s convertible debt of approximately of $2.4 million, a loss on extinguishment of debt of $1.0 million, a realized gain on sale of digital assets of $1.5 million and a conversion feature derivative liability valuation of $1.6 million. Other income and expenses for the nine months ended September 30,2021 was approximately $25.0 million. SGS recorded approximately $22.0 million in merger charges, $2.0 million in debt restructuring fees and $0.9 million in interest expense for the period nine months ended September 30, 2021, related to the acquisition.

Summary of TTM Mining Result

The numbers presented in this table are in thousands of dollars. The following tables present the roll forward of digital asset activity from continuing and discontinuing operations during the periods ended:

	Nine months ended September 30,
	2022			2021
Opening Balance	$	5,202		$	24
Revenue from mining		4,077			9,244
Payment of mining equipment under lease to buy arrangement		-			(1,091	)
Mining pool operating fees		(41	)		(96	)
Impairment of digital assets		(2,494	)		(325	)
Management fees		-			(322	)
Owners’ distributions		-			(1,521	)
Transaction fees		(132	)		-
Proceeds from sale of digital assets		(8,023	)		(3,670	)
Realized gain on sale of digital assets		1,498			91
Ending Balance	$	87		$	2,334

Discussion of Results of Operations of TTM Digital for the Nine Months Ended September 30, 2022, and 2021

The activities for TTM revenues and costs for the nine months ended September 30, 2022, represent discontinued operations.

As disclosed in the notes to the financial statements, revenues from mining are impacted significantly by volatility in cryptocurrency prices and network difficulty. The average price of Ethereum mined during the nine months ended September 30, 2022, was approximately $2,213 compared to approximately $2,276 during the nine months ended September 30, 2021. While the average price of Ethereum during the nine months ended September 30, 2022, was lower than the nine months ended September 30, 2021. Additionally, network difficulty was also significantly higher in 2022, resulting in lower total rewards from mining. Total Ethereum mined during the nine months ended September 30, 2022, was approximately 1,747 ETH compared to approximately 3,987 ETH during the nine months ended September 30, 2021.

Ethereum’s transition to proof of stake (“POS”) occurred on September 15, 2022, and has had a direct negative impact on the company’s ability to generate revenue.

For the nine months ended September 30, 2022, the Company recorded approximately $2.3 million of impairment of fixed assets in its discontinued operations.

Liquidity and Capital Resources

Going Concern

As of December 31, 2021, the Company had an approximate cash balance of $0.6 million, working capital deficit of approximately $21.5 million, and an accumulated deficit of approximately $49.3 million. As of September 30, 2022, the Company had an approximate cash balance of $0.1 million, working capital deficit of approximately $21.6 million, and an accumulated deficit of approximately $60.4 million. On October 18, 2022, the Company completed a $500,000 private placement. Despite the Company’s recent private placement, the aforementioned factors continue to raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months following the issuance of these financial statements. 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.

The Company does not believe that its capital resources as of December 31, 2021 and as of September 30, 2022, its ability to pursue its Ethereum related business, availability on the SGS SouthStar credit facility to finance purchase orders and invoices, reauthorization of key vendors and credit limitation improvements will be sufficient to fund planned operations. As a result, the Company will need additional funds to support its obligations for the next twelve months.

The Company continues to explore a number of other possible solutions to its financing needs, including efforts to raise additional capital as needed, through the issuance of equity, equity-linked or debt securities, as well as possible transactions with other companies, strategic partnerships, and other mechanisms for addressing our financial condition. The Company will utilize its current contracts that are not limited to a single branch of government or a specific agency. These contracts can provide the Company an opportunity to attain new solutions and service type orders. The Company will also utilize SGS’s small business status to partner with prime contractors on larger orders. The Company currently has utilized SouthStar to finance purchase orders and it also has the ability to factor its receivables if needed to fund operations. In addition, the Company will need to increase its authorized common stock to settle convertible debt conversions.

If the Company is unable to raise additional capital on terms acceptable to the Company and on a timely basis, or is unable to attain new vendors, the Company will be required to downsize or wind down its operations through liquidation, bankruptcy, or sale of its assets. In addition, as of September 30, 2022, the Company has been reliant on its ability to liquidate Ethereum to continue to fund operations when needed, and as such, the Company does not currently have enough Ethereum on hand to fund operations through the next twelve months.

Our capital resources and operating results, continuing and discontinued operations, as of and through December 31, 2021, consisted of the:

1) An overall working capital deficit of $21.5 million,

2) Cash and cash equivalents of $0.6 million,

3) Net cash used in operating activities of $(8.5) million,

4) Net cash provided by investing activities of $2.2 million, and

Net cash provided by financing activities of $6.9 million.

Our capital resources and operating results as of and through September 30, 2022, consisted of the:

1) An overall working capital deficit of $21.6 million,

2) Cash and cash equivalents of $0.1 million,

3) Net cash used in operating activities of $(6.9) million,

4) Net cash provided by investing activities of $6.4 million.

Liquidity and Capital Resources as of December 31, 2021, Compared to December 31, 2020

The Company’s net cash flow used in operating, investing and financing activities, continuing and discontinued operations for the year ended December 31, 2021, and certain balances as of the end of those periods are as follows (in thousands):

	December 31,
(Thousands, except per share data)	2021 (As Restated)			2020
Net cash used in operating activities	$	(8,473	)	$	(514	)
Net cash provided by (used in) investing activities		2,178			(27	)
Net cash provided by financing activities		6,887			574

Net increase in cash	$	592		$	33
Cash		659			67
Working capital (deficit)		(21,524	)		91

Operating Activities:

Net cash used in operating activities during the year ended December 31, 2021, was $(8,473). Net cash used in operating activities during the year ended December 31, 2021, consisted of the following (in thousands):

The non-cash income and expenses of $49,612 consisted of (in thousands):

$	2,917		Depreciation expense
	113		Stock compensation
	2,173		Amortization of debt discount
	2,000		Debt extinguishment fee
	22,004		Merger charges
	(145	)	Gain on settlement of vendor liabilities
	6,278		Change in fair value of debt conversion feature
	3,276		Impairment of data mining assets
	704		Impairment of digital assets
	(106	)	Realized gain on sale of digital assets
	7,821		Loss contingency on debt default
	2,577		Issuance of shares in exchange for services
$	49,612		Total non-cash income and expenses

The net use of cash due to changes in operating assets and liabilities totaled $(3,719) and consisted of the following (in thousands):

$	1,650		Increase in accounts receivable and other receivables
	(173	)	Prepaid assets and other current assets
	8,729		Increase in accounts payable
	2,859		Decrease in accrued liabilities and other payables
	1,369		Operating cash flows – discontinued operations
	(18,153	)	Decrease in digital assets

$	(3,719	)	Net use of cash in the changes in operating assets and liabilities

Operating cash flows – discontinued operations of approximately $1.4 million for the year ended December 31, 2021, is primarily driven by net income of $5.2 million, depreciation and amortization of $1.6 million and a gain on sale of mining equipment of $0.2 million, equity in earnings of equity method investments of $0.1 million, offset by decreases in digital assets of $6.1 million and a decrease in accounts payable and accrued liabilities of $11.8 million.

Net cash used in operating activities for the year ended December 31, 2020, of $(0.5) million were primary driven by a net loss from continuing operations of $0.1 million, decreases in digital assets of $1.0 million offset by operating cash flows – discontinued operations of $0.6 million.

Operating cash flows – discontinued operations for the year ended December 31, 2020, is primarily driven by net income of $0.6 million, depreciation and amortization of $0.8 million, offset by decreases in digital assets of $0.7 million and a decrease in accrued liabilities of $0.1 million.

Operating Activities:

Net cash used in operating activities was $(8.5) million during the year ended December 31, 2021. Cash was consumed from operations by the net loss of $(54.4) million, plus non-cash and one-time items of $49.6 million, consisting primarily of merger charges of $22.0 million, non-employee compensation costs of $2.6 million, in shares issued in exchange for services, restructuring fees of $2.0 million, loss contingency for debt default of $7.8 million, change in fair value of debt conversion feature of $6.3 million, impairment of mining assets of $3.2 million, impairment of digital assets of $0.7 million, and depreciation and amortization of $2.9 million and cash flows provided by discontinued operations of $1.3 million, offset by changes in assets and liabilities of $(5.1) million.

Investing Activities:

Net cash provided by investing activities for the year ended December 31, 2021, was approximately $2.2 million, primarily driven from proceeds from the sale of digital assets of $3.6 million, offset by investing cash flows – discontinued operations of $1.4 million.

Investing cash flows - discontinued operations for the year ended December 31, 2021, is primarily driven by purchase of mining equipment of $0.5 million, UpNorth business combination of $0.3 million, investments in UpNorth of $0.1 million and an investment in Style Hunter of $0.5 million.

Net cash provided by investing activities for the year ended December 31, 2020, was approximately $0.03 million, primarily driven from proceeds from the sale of digital assets of $0.55 million and investing cash flow – discontinued operations of $0.6 million.

Investing cash flows - discontinued operations for the year ended December 31, 2020, is primarily driven by purchase of mining equipment of $0.9 million offset by proceeds from the sale of mining equipment of $0.3 million.

Financing Activities:

Net cash provided by financing activities during the year ended December 31, 2021, of $6.9 million was from the proceeds received for convertible debt of $12.4 million and offset by the payments for convertible debt transaction costs of $1.2 million and the repayment of loans of $4.3 million.

Net cash provided by financing activities during the year ended December 31, 2020, was approximately $0.6 million, primarily driven by proceeds received from the issuance of members’ interest.

Liquidity and Capital Resources as of September 30, 2022, Compared to September 30, 2021

The Company’s net cash flow used in operating, investing and financing activities for the nine months ended September 30, 2022, and 2021 and certain balances as of the end of those periods are as follows (in thousands):

	For the Nine Months Ended September 30,
(Thousands, except per share data)	2022			2021
Net cash used in operating activities	$	(6,941	)	$	(5,799	)
Net cash provided by investing activities		6,423			3,095
Net cash used in financing activities		-			6,905

Net (decrease) increase in cash	$	(518	)	$	4,201

	September 30, 2022			December 31, 2021

Cash	$	141		$	659
Working capital (deficit)	$	(21,609	)	$	(21,524	)

Operating Activities:

Net cash used in operating activities during the nine months ended September 30, 2022, and 2021, was $(6.9) million and $(5.8) million, respectively. Net cash used in operating activities during the nine months ended September 30, 2022, consisted of the following (in thousands):

Net loss	$	(10,034	)
Non-cash income and expenses		2,667
Net change in operating assets and liabilities		426
Net cash used in operating activities	$	(6,941	)

The non-cash income and expenses of $2,667, consisted of (in thousands):

$	430		Depreciation and amortization
	119		Amortization of right of use asset
	1,008		Loss on extinguishment of debt
	(1,533	)	Gain on settlement of vendor liabilities
	(1,498	)	Realized gain on sale of digital assets
	2,494		Impairment of digital assets
	1,559		Change in fair value of debt conversion feature
	(263	)	Change in fair value of share derivative liability
	111		Stock-based compensation
	240		Issuance of shares in exchange for services
$	2,667		Total non-cash income and expenses

The net proceeds of cash due to changes in operating assets and liabilities totaled $426 and consisted of the following (in thousands):

$	2,099		Decrease in accounts receivable and other receivables
	805		Prepaid assets and other current assets
	(1,385	)	Decrease in accounts payable
	737		Increase in accrued liabilities and other payables
	(35	)	Operating lease liability
	(1,795	)	Operating cash flows – discontinued operations
$	426		Net proceeds of cash in the changes in operating assets and liabilities

Investing Activities:

Net cash provided by investing activities during the nine months ended September 30, 2022, was approximately $6.4 million, primarily driven from proceeds from the sale of digital assets of $8 million, offset by Pre–funded right in Ostendo of $1.6 million. Net cash provided by financing activities for the nine months ended September 30, 2021, was approximately $3.1 million, also driven from the proceeds from the sale of digital assets of approximately $3.7 million, offset by investing activities for discontinued operations of approximately $0.6 million.

Financing Activities:

The company did not incur financing activities for the nine months ended September 30, 2022. Net cash used in financing activities during the nine months ended September 30, 2021, was approximately $7.9 million, primarily from the proceeds received for convertible debt of approximately $12.4 million, offset by the repayment of loans of approximately $3.3 million and convertible debt transaction fees paid of approximately $1.2 million.

Critical Accounting Policies and Estimates

We believe the following accounting estimates to be the most critical estimates we used in preparing our consolidated financial statements for the year ended December 31, 2021 and our financial statements for the nine months ended September 30, 2022.

Digital Assets

Digital assets, (predominantly Ethereum) are included in current assets in the accompanying consolidated balance sheets. The classification of digital assets as a current asset has been made after the Company’s consideration of the consistent daily trading volume on cryptocurrency exchange markets, there are no limitations or restrictions on Company’s ability to sell Ethereum, and the pattern of actual sales of Ethereum by the Company. Cryptocurrencies purchased are recorded at cost and cryptocurrencies awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy.

Digital assets held are accounted for as intangible assets with indefinite useful lives. An intangible asset with an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount exceeds its fair value, which is measured using the quoted price of the digital asset at the time its fair value is being measured. In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses is not permitted. The Company recorded a $2.5 million and $0.7 million impairment charge for the nine months ended September 30, 2022, and the year ended December 31, 2021. No impairment was taken during the year ended December 31, 2020.

The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The Company recognized realized gains (losses) through the sale and disbursement of digital assets during the year ended December 31, 2021, and 2020 of $0.1 million and $0.04 million, respectively.

Impairment of Long-lived Assets

Management reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to undiscounted future cash flows expected to be generated by the asset. If such assets are impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. An impairment loss of $2.3 million and $3.3 million was recorded for long-lived assets during the nine months ended September 30, 2022, and the year ended December 31, 2021.

Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net identifiable assets acquired in a business combination. Goodwill is reviewed for impairment at least annually, in December, or more frequently if a triggering event occurs between impairment testing dates.

The Company’s impairment assessment begins with a qualitative assessment to determine whether it is more likely than not that the fair value of the reporting unit is less than its carrying value. Qualitative factors may include, macroeconomic conditions, industry and market considerations, cost factors, and other relevant entity and Company specific events. If, based on the qualitative test, the Company determines that it is “more likely than not” that the fair value of a reporting unit is less than its carrying value, then the Company evaluates goodwill for impairment by reviewing the fair value of the reporting unit versus its respective carrying value, including its goodwill. If it is determined that it is “not likely” that the fair value of the reporting unit is less than its carrying value, then no further testing is required.

The selection and assessment of qualitative factors used to determine whether it is more likely than not that the fair value of a reporting unit exceeds the carrying value involves significant judgment and estimates. Fair values may be determined using a combination of both income and market-based approaches.

The Company did not record any impairment of goodwill as of September 30, 2022 and December 31, 2021. As of September 30, 2022 and December 31, 2021, the total goodwill of approximately $1.6 million relates to the Sysorex Reporting unit.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, the core principle of which is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to receive in exchange for those goods or services. To achieve this core principle, five basic criteria must be met before revenue can be recognized:

●

Identification of the contract, or contracts, with a customer

●

Identification of the performance obligations in the contract

●

Determination of the transaction price

●

Allocation of the transaction price to the performance obligations in the contract; and

●

Recognition of revenue when, or as, the Company satisfies a performance obligation.

Mining Revenue

TTM Digital has entered into mining pools with the operators to provide computing power to the mining pool. The Company is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less transaction fees to the mining pool operator) for successfully adding a block to the blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. Providing computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision of such computing power is the only performance obligation in the Company’s arrangement with mining pool operators. The transaction consideration the Company receives, if any, is non-cash consideration. The transaction price of the Company’s share of the cryptocurrency award is measured at fair value on the date received, which is not materially different than the fair value at the time the Company has earned the award from the mining pool. The consideration is all variable under the definition within ASC 606. Because it is not probable that a significant reversal of cumulative revenue will not occur, the consideration is constrained until the Company successfully places a block and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant financing component in these transactions.

Hardware and Software Revenue Recognition

~~The~~SGS ~~Company~~ is a primary resale channel for a large group of vendors and suppliers, including original equipment manufacturers (“OEMs”), software publishers and wholesale distributors.

The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, ~~payment~~ 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 ~~goods~~ 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.

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.

The Company leverages drop-shipment arrangements with many of its vendors and suppliers to deliver products to its customers without ~~having~~ having to physically hold the inventory at its ~~warehouses~~warehouse. The Company is the principal in the transaction and recognizes revenue for drop-shipment arrangements on a gross basis.

The Company may provide integration of products from multiple vendors as a solution it sells to the customer. In this arrangement , the Company provides a 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.

License and Maintenance Services Revenue Recognition

~~The~~SGS ~~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.

For ~~resales~~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.

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.

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Professional Services Revenue Recognition

~~The Company~~SGS’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 ~~Accounting~~ ~~Standards Codification “~~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 ~~nine~~year ~~months~~ ended ~~September~~December 3031, ~~2018 and 2017~~2021, ~~the~~SGS ~~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~~ ~~and commercial customers~~agencies.

~~The Company~~Convertible adopted ASC 606 effective January 1, 2018 using the modified retrospective method which was applied to all contracts at the date of initial application. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. The cumulative effect of the changes made to our consolidated January 1, 2018 balance sheet for the adoption of Accounting Standards Update “ASU” No. 2014-09, Revenue — Revenue from Contracts with Customers were as follows (in millions):Debt

	Balance at December 31, 2017			Adjustments due to ASU 2014-09			Balance at January 1, 2018
Balance Sheet:
Assets
Prepaid licenses & maintenance contracts, current	$	4,638		$	(4,638	)	$	—
Prepaid licenses & maintenance contracts, non-current	$	2,264		$	(2,264	)	$	—
Liabilities
Deferred revenue, current	$	5,554		$	(5,554	)	$	—
Deferred revenue, non-current	$	2,636		$	(2,636	)	$	—
Equity
Accumulated deficit	$	(22,172	)	$	1,287		$	(20,885	)

The Company’s debt instruments contain a host liability, freestanding warrants, and an embedded conversion feature. The Company uses the guidance under FASB ASC Topic 815 Derivatives and Hedging (“ASC 815”) to determine if the embedded conversion feature must be bifurcated and separately accounted for as a derivative under ASC 815. It also determines whether any embedded conversion features requiring bifurcation and/or freestanding warrants qualify for any scope exceptions contained within ASC 815. Generally, contracts issued or held by a reporting entity that are both (i) indexed to its own stock, and (ii) classified in shareholders equity, would not be considered a derivative for the purposes of applying ASC 815. Any embedded conversion features and/or freestanding warrants that do not meet the scope exception noted above are classified as derivative liabilities, initially measured at fair value, and remeasured at fair value each reporting period with change in fair value recognized in the Condensed Consolidated statements of operations. Any embedded conversion features and/or freestanding warrants that meet the scope exception under ASC 815 are initially recorded at their relative fair value in paid-in-capital and are not remeasured at fair value in future periods.

InThe host debt instrument is initially recorded at its relative fair value in long-term debt. The host debt instrument is accounted for in accordance with ~~the~~guidance ~~new~~applicable ~~revenue~~to ~~standard~~non-convertible ~~requirements,~~debt under FASB ASC Topic 470 Debt (“ASC 470”) and is accreted to its face value over the ~~disclosure~~term of the ~~impact~~debt ofwith ~~adoption~~accretion onexpense ~~our~~and ~~condensed~~periodic ~~consolidated income~~interest ~~statement~~expense ~~and~~recorded ~~balance~~in ~~sheet~~the ~~was~~unaudited ascondensed ~~follows~~consolidated statements ~~(in~~of ~~millions):~~operations.

	For the Three Months Ended September 30, 2018
	As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Income Statement
Revenues
Products(A)		349			1,649			(1,300	)
Services		365			365			—
Cost and expenses
Cost of Revenues
Products(A)		230			1,330			(1,100	)
Services		271			271			—
Gross Profit		213			413			(200	)
Income/Loss from Operations		(2,307	)		(2,107	)		(200	)
Net Income (Loss)		(2,408	)		(2,208	)		(200	)

Issuance costs are allocated to each instrument in the same proportion as the proceeds that are allocated to each instrument. Issuance costs allocated to the debt hosted instrument are netted against the proceeds allocated to the debt host. Issuance costs allocated to freestanding warrants classified in equity are recorded in paid-in-capital.

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	For the Nine Months Ended September 30, 2018
	As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Income Statement
Revenues
Products(A)		1,249			6,218			(4,969	)
Services		1,700			1,700			—
Cost and expenses
Cost of Revenues
Products(A)		676			4,877			(4,201	)
Services		981			981			—
Gross Profit		1,292			2,059			(767	)
Income/Loss from Operations		(6,100	)		(5,333	)		(767	)
Net Income (Loss)		(5,399	)		(4,632	)		(767	)

	As of September 30, 2018
	As Reported			Balances Without Adoption of ASC 606			Effect of Change Higher/(Lower)
Balance Sheet
Assets
Prepaid Licenses & Maintenance Contracts, current		—			436			(436	)
Prepaid Licenses & Maintenance Contracts, non-Current		—			2,264			(2,264	)
Liabilities
Deferred Revenue, current		—			585			(585	)
Deferred Revenue, non-current		—			2,636			(2,636	)
Equity
Accumulated Deficit		(13,173	)		(13,693	)		520

(A) Product revenues and cost of revenues include maintenance/licenses contracts that are sold by the Company but performed by third parties.

Long-lived Assets

We account for our long-lived assets in accordance with ASC 360, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“ASC 360”), which requires that long-lived assets be evaluated whenever events or changes in circumstances indicate that the carrying amount may not be recoverable or the useful life has changed. Some of the events or changes in circumstances that would trigger an impairment test include, but are not limited to:

● significant under-performance relative to expected and/or historical results (negative comparable sales growth or operating cash flows for two consecutive years);

● significant negative industry or economic trends;

● knowledge of transactions involving the sale of similar property at amounts below our carrying value; or

● our expectation to dispose of long-lived assets before the end of their estimated useful lives, even though the assets do not meet the criteria to be classified as “held for sale.”

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Long-lived assets are grouped for recognition and measurement of impairment at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets. The impairment test for long-lived assets requires us to assess the recoverability of our long-lived assets by comparing their net carrying value to the sum of undiscounted estimated future cash flows directly associated with and arising from our use and eventual disposition of the assets. If the net carrying value of a group of long-lived assets exceeds the sum of related undiscounted estimated future cash flows, we would be required to record an impairment charge equal to the excess, if any, of net carrying value over fair value.

When assessing the recoverability of our long-lived assets, which include property and equipment and finite-lived intangible assets, we make assumptions regarding estimated future cash flows and other factors. Some of these assumptions involve a high degree of judgment and also bear a significant impact on the assessment conclusions. Included among these assumptions are estimating undiscounted future cash flows, including the projection of comparable sales, operating expenses, capital requirements for maintaining property and equipment and residual value of asset groups. We formulate estimates from historical experience and assumptions of future performance, based on business plans and forecasts, recent economic and business trends, and competitive conditions. In the event that our estimates or related assumptions change in the future, we may be required to record an impairment charge. Based on our evaluation, we did not record a charge for impairment for the nine months ended September 30, 2018.

The benefits to be derived from our acquired intangibles, will take additional financial resources to continue the development of our technology. Management believes our technology has significant long-term profit potential, and to date, management continues to allocate existing resources to the develop products and services to seek returns on its investment. We continue to seek additional resources, through both capital raising efforts and meeting with industry experts, as part of our continued efforts. Although there can be no assurance that these efforts will be successful, we intend to allocate financial and personnel resources when deemed possible and/or necessary. If we choose to abandon these efforts, or if we determine that such funding is not available, the related development of our technology (resulting in our lack of ability to expand our business), may be subject to significant impairment.

As described previously, we continue to experience weakness in market conditions, a depressed stock price, and challenges in executing our business plans. The Company will continue to monitor these uncertainties in future periods, to determine the impact.

We evaluate the remaining useful lives of long-lived assets and identifiable intangible assets whenever events or circumstances indicate that a revision to the remaining period of amortization is warranted. Such events or circumstances may include (but are not limited to): the effects of obsolescence, demand, competition, and/or other economic factors including the stability of the industry in which we operate, known technological advances, legislative actions, or changes in the regulatory environment. If the estimated remaining useful lives change, the remaining carrying amount of the long-lived assets and identifiable intangible assets would be amortized prospectively over that revised remaining useful life. We have determined that there were no events or circumstances during the nine months ended September 30, 2018 and 2017 which would indicate a revision to the remaining amortization period related to any of our long lived assets. Accordingly, we believe that the current estimated useful lives of long-lived assets reflect the period over which they are expected to contribute to future cash flows and are therefore deemed appropriate.

Deferred Income Taxes

In accordance with ASC 740 “Income Taxes” (“ASC 740”), we routinely evaluate the likelihood of the realization of income tax benefits and the recognition of deferred tax assets. In evaluating the need for any valuation allowance, we will assess whether it is more likely than not that some portion, or all, of the deferred tax asset may not be realized. Ultimately, the realization of deferred tax assets is dependent upon the generation of future taxable income during those periods in which temporary differences become deductible and/or tax credits and tax loss carry-forwards can be utilized. In performing our analyses, we consider both positive and negative evidence including historical financial performance, previous earnings patterns, future earnings forecasts, tax planning strategies, economic and business trends and the potential realization of net operating loss carry-forwards within a reasonable timeframe. To this end, we considered (i) that we have had historical losses in the prior years and cannot anticipate generating a sufficient level of future profits in order to realize the benefits of our deferred tax asset; (ii) tax planning strategies; and (iii) the adequacy of future income as of and for the nine months ended September 30, 2018, based upon certain economic conditions and historical losses through September 30, 2018. After consideration of these factors we deemed it appropriate to establish a full valuation allowance.

A liability for “unrecognized tax benefits” is recorded for any tax benefits claimed in our tax filings that do not meet these recognition and measurement standards. As of September 30, 2018 and the year ended December 31, 2017, no liability for unrecognized tax benefits was required to be reported. The guidance also discusses the classification of related interest and penalties on income taxes. Our policy is to record interest and penalties on uncertain tax positions as a component of income tax expense. No interest or penalties were recorded during the nine months ended September 30, 2018 and 2017.

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Allowance for Doubtful Accounts

We maintain our reserves for credit losses at a level we believe to be adequate to absorb potential losses inherent in the respective balances. We assign an internal credit quality rating to all new customers and update these ratings regularly, but no less than annually. Our determination of the adequacy of the reserve for credit losses for our accounts and notes receivable is based on the age of the receivable balance, the customer’s credit quality rating, an evaluation of historical credit losses, current economic conditions, and other relevant factors.

The Company’s allowance for doubtful accounts was nominal as of September 30, 2018 and December 31, 2017.

Three Months Ended September 30, 2018 Compared to Three Months Ended September 30, 2017

The following table sets forth selected unaudited condensed consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:

	For the Three Months Ended
	September 30, 2018						September 30, 2017
(in thousands, except percentages)	Amount			% of Revenues			Amount			% of Revenues			% Change
Product revenues	$	349			49	%	$	9,514			86	%		(96	%)
Services revenues	$	365			51	%	$	1,539			14	%		(76	%)
Cost of net revenues - products	$	230			32	%	$	8,426			76	%		(97	%)
Cost of net revenues - services	$	271			38	%	$	980			9	%		(72	%)
Gross profit	$	213			30	%	$	1,647			15	%		(87	%)
Operating expenses	$	2,520			353	%	$	11,547			104	%		(78	%)
Loss from operations	$	(2,307	)		(323	%)	$	(9,900	)		(90	%)		(77	%)
Net loss	$	(2,408	)		(337	%)	$	(9,745	)		(88	%)		(76	%)

Revenues

Revenues for the three months ended September 30, 2018 were $714,000 compared to $11.1 million for the comparable period in the prior year. This $10.3 million decrease is primarily associated with the decline in revenues as a result, of supplier credit issues and a $2.2 million decrease in revenue resulting from the adoption of the new ASC 606 revenue recognition policy beginning in January 2018.

Cost of Revenues

Cost of revenues for the three months ended September 30, 2018 was $501,000 compared to $9.4 million for the prior year period. This decrease of $8.9 million was primarily attributable to lower sales resulting from the capital constraints and supplier credit limitations and a $1.5 million decrease in prepaid maintenance amortization due to the adoption of the new ASC 606 revenue recognition policy beginning in January 2018.

The gross profit margin for the three months ended September 30, 2018 was 30% compared to 15% during the three months ended September 30, 2017. This increase in gross margin is primarily due to the decrease in lower margin storage and maintenance sales.

Operating Expenses

Operating expenses for the three months ended September 30, 2018 were $2.5 million compared to $11.5 million for the prior year period. This decrease of $9.0 million is primarily attributable to a decrease in compensation costs, occupancy costs and travel costs due to the downsizing of staff and office locations and an impairment charge for goodwill of $7.8 million in 2017.

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Loss from Operations

Loss from operations for the three months ended September 30, 2018 was ($2.3) million compared to ($9.9) million for the prior year period. This decrease in loss of $(7.6) million was attributable an impairment charge for goodwill of $7.8 million in 2017.

Provision for Income Taxes

There was no provision for income taxes for the three months ended September 30, 2018 and 2017. Deferred tax assets resulting from such losses would be fully reserved as of September 30, 2018 and 2017 since, at present, we have no history of taxable income and it is more likely than not that such assets will not be realized.

Net Loss

Net loss for the three months ended September 30, 2018 was ($2.4) million compared to ($9.7) million for the prior year period. This decrease in loss of $7.3 million was attributable to the changes described for the various reporting captions discussed above.

Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017

The following table sets forth selected unaudited condensed consolidated financial data as a percentage of our revenue and the percentage of period-over-period change:

	For the Nine Months Ended
	September 30, 2018						September 30, 2017
(in thousands, except percentages)	Amount			% of Revenues			Amount			% of Revenues			% Change
Product revenues	$	1,249			42	%	$	30,750			82	%		(96	%)
Services revenues	$	1,700			58	%	$	6,744			18	%		(75	%)
Cost of net revenues - products	$	676			23	%	$	26,394			70	%		(97	%)
Cost of net revenues - services	$	981			33	%	$	4,195			11	%		(77	%)
Gross profit	$	1.292			44	%	$	6,905			18	%		(81	%)
Operating expenses	$	7,392			251	%	$	20,020			53	%		(63	%)
Loss from operations	$	(6,100	)		(207	%)	$	(13,115	)		(35	%)		(53	%)
Net loss	$	(5,399	)		(183	%)	$	(13,919	)		(37	%)		(62	%)

Revenues

Revenues for the nine months ended September 30, 2018 were $2.9 million compared to $37.5 million for the comparable period in the prior year. This $34.6 million decrease is primarily associated with the decline in revenues as a result of supplier credit issues and a $5.0 million decrease in revenue resulting from the adoption of the new ASC 606 revenue recognition policy beginning in January 2018.

Cost of Revenues

Cost of revenues for the nine months ended September 30, 2018 was $1.7 million compared to $30.6 million for the prior year period. This decrease of $28.9 million was primarily attributable to lower sales resulting from the capital constraints and supplier credit limitations and a $4.2 million decrease in prepaid maintenance amortization due to the adoption of the new ASC 606 revenue recognition policy beginning in January 2018.

The gross profit margin for the nine months ended September 30, 2018 was 44% compared to 18% during the nine months ended September 30, 2017. This increase in gross margin is primarily due to the decrease in lower margin storage and maintenance sales.

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Operating Expenses

Operating expenses for the nine months ended September 30, 2018 were $7.4 million compared to $20.0 million for the prior year period. This decrease of $12.6 million is primarily attributable to a decrease in compensation costs, occupancy costs and travel costs due to the downsizing of staff and office locations and an impairment charge for goodwill of $7.8 million in 2017.

Loss from Operations

Loss from operations for the nine months ended September 30, 2018 was ($6.1) million compared to ($13.1) million for the prior year period. This decrease in loss of $7.0 million was due to an impairment charge for goodwill of $7.8 million in 2017, and a decrease in revenue offset by the decrease in operating expenses.

Other Income/Expense

Total other income/expense for the nine months ended September 30, 2018 and 2017 was $1.5 million and $600,000, respectively. This increase in gain of $900,000 is attributable to the gain on earn out of Integrio in 2018.

Provision for Income Taxes

There was no provision for income taxes for the nine months ended September 30, 2018 and 2017. Deferred tax assets resulting from such losses would be fully reserved as of September 30, 2018 and 2017 since, at present, we have no history of taxable income and it is more likely than not that such assets will not be realized.

Net Loss

Net loss for the nine months ended September 30, 2018 was ($5.4) million compared to ($13.9) million for the prior year period. This decrease in loss of $8.5 million was attributable to the changes described for the various reporting captions discussed above.

Discussion of Results of Operations for the Years ended December 31, 2017 and 2016

The following table sets forth selected combined carve-out financial data as a percentage of our revenue and the percentage of period-over-period change:

	Years ended
	December 31, 2017						December 31, 2016
(in thousands, except percentages)	Amount			% of Revenues			Amount			% of Revenues			% Change
Product Revenues	$	33,392			81	%	$	36,147			75	%		(8	)%
Services Revenues	$	7,806			19	%	$	12,221			25	%		(36	)%
Cost of revenues – Products	$	28,310			69	%	$	28,475			59	%		(1	)%
Cost of revenues – Services	$	4,770			12	%	$	8,277			17	%		(42	)%
Gross profit	$	8,118			20	%	$	11,616			24	%		(30	)%
Operating expenses	$	22,574			55	%	$	13,168			27	%		71	%
Loss from operations	$	(14,456	)		(35	)%	$	(1,552	)		(3	)%		831	%
Net loss	$	(16,914	)		(41	)%	$	(2,207	)		(5	)%		666	%

Net Revenues

Net revenues for the year ended December, 2017 were $41.2 million compared to $48.4 million for the prior year, a decrease of approximately 15%. The decrease in revenues of $7.2 million was primarily attributable to the on-going capital constraints and supplier credit challenges the Company faced throughout the year.

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Cost of Revenues

Cost of revenues for the year ended December 31, 2017 was $33.1 million compared to $36.8 million for the prior year, a decrease of approximately 10%. The decrease in cost of revenues of $3.7 million is primarily attributable to lower sales resulting from the capital constraints and supplier credit limitations.

The gross profit margin for the year ended December 31, 2017 was 19.7% compared to 24.0% during the prior year. The decrease in gross margin was primarily attributable to lower margin sales from the Integrio acquisition.

Operating Expenses

Operating expenses for the year ended December 31, 2017 were $22.6 million compared to $13.2 million for the prior year, an increase of approximately 71.2%. This increase of $9.4 million is primarily due to a $7.8 million goodwill impairment charge, an increase in amortization of intangibles due to the Integrio intangibles and increases in other operating expenses primarily due to the Integrio acquisition offset by lower compensation costs.

Loss from Operations

Loss from operations for the year ended December 31, 2017 was $14.5 million compared to $1.6 million for the prior year, an increase of approximately 806%. This increase in loss of $12.9 million was primarily attributable to a decrease in gross profit of $3.5 million, $7.8 million goodwill impairment charge and an increase in operating expenses as described above.

Other Income/Expense

Net other expense for the years ended December 31, 2017 and 2016 was $2.5 million and $655,000, respectively. This increase of $1.8 million was primarily attributable to additional interest expense on credit facilities and debt and an extinguishment loss on debt modification.

Provision for Income Taxes

There was no provision for income taxes for the years ended December 31, 2017 and 2016. Deferred tax assets resulting from such losses are fully reserved as of December 31, 2017 and 2016 since, at present, we have no history of taxable income and it is more likely than not that such assets will not be realized.

Net Loss

Net loss for the year ended December 31, 2017 was $16.9 million compared to $2.2 million for the prior year, an increase of approximately 668%. This increase in net loss of $14.7 million was attributable to the changes discussed above.

Non-GAAP Financial information

EBITDA

EBITDA is defined as net income (loss) before interest, provision for (benefit from) income taxes, and depreciation and amortization. ~~Adjusted~~ Adjusted EBITDA is used by our management as the matrix in which it manages the business. It is defined as EBITDA plus adjustments for other income or expense items, non-recurring items, and non-cash stock-based compensation.

Adjusted EBITDA for the ~~three~~year ~~months~~ ended ~~September~~December 3031, ~~2018 was a loss of $1.7 million compared to a loss of $780~~2021,~~000~~ ~~for the prior year period. Adjusted EBITDA for the nine months ended September 30, 2018~~ was a ~~loss~~gain of $4.12 million compared to a ~~loss~~gain of $21.53 million for the prior year period.

47The following table presents a reconciliation of continuing and discontinued operations net income/loss attributable to stockholders of Sysorex, which is our GAAP operating performance measure, to Adjusted EBITDA for the years ended December 31, 2021, and 2020 (in thousands):

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	December 31,
	2021 (As Restated)			2020
Net (loss) income	$	(49,130	)	$	452
Interest expense		3,841			-
Depreciation and amortization		5,090			827
EBITDA		(40,199	)		1,279
Adjustments:
Non-recurring one-time charges:
Merger charges		22,004			-
Debt Restructuring fee		2,000			-
Impairment of fixed assets		3,276			-
Loss Contingency on debt default		7,821			-
Change in fair value of debt conversion feature		6,278			-
Stock Compensation		113			-
Acquisition related costs – Accounting acquirer		2,884			-
Acquisition related costs – Accounting acquiree		209			-

Adjusted EBITDA	$	4,386		$	1,279

~~The~~We ~~following~~have ~~table~~presented ~~presents~~Adjusted aEBITDA ~~reconciliation~~above ofbecause ~~net~~we ~~income/loss~~believe ~~attributable~~it conveys useful information to ~~stockholders~~investors ofregarding ~~Sysorex~~our operating results. We believe it provides an additional way for investors to view our operations, ~~which~~when isconsidered with both our GAAP ~~operating~~results and the reconciliation ~~performance~~to ~~measure~~net income (loss). By including this information, towe ~~Adjusted~~can ~~EBITDA~~provide ~~for~~investors ~~the~~with ~~three~~a ~~and~~more ~~nine~~complete ~~months~~understanding ~~ended~~of ~~September~~our 30business. Specifically, we ~~2018~~present ~~and~~Adjusted ~~2017~~EBITDA ~~(in~~as ~~thousands)~~supplemental disclosure because of the following:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2018			2017			2018			2017
Net loss	$	(2,408	)	$	(9,745	)	$	(5,399	)	$	(13,919	)
Adjustments:
Non-recurring one-time charges:
Gain on the settlement of obligations		(45	)		--			(254	)		--
Gain on earnout		--			--			(934	)		--
Gain on the sale of contracts		--			--			(601	)		--
Provision for doubtful accounts		--			--			41			--
Severance		--			27			15			27
Impairment of goodwill		--			7,805			--			7,805
Amortization of debt discount		--			205			299			498
Stock-based compensation - compensation and related benefits		--			11			55			119
Interest expense		28			442			764			1,404
Depreciation and amortization		760			475			1,897			1,597
Adjusted EBITDA	$	(1,665	)	$	(780	)	$	(4,117	)	$	(2,469	)

●

we believe Adjusted EBITDA is a useful tool for investors to assess the operating performance of our business without the effect of interest, income taxes, depreciation and amortization and other non-cash items including stock-based compensation, change in the fair value of shares to be issued, impairment of fixed assets and one-time charges including acquisition costs and the costs associated with public offerings; and

~~We rely on Adjusted EBITDA, which is a non-GAAP financial measure for the following:~~72

● towe ~~review~~believe ~~and~~that ~~assess~~it ~~the~~is ~~operating~~useful ~~performance~~to ofprovide ~~our~~to ~~Company~~investors asa ~~permitted~~standard byoperating ~~Accounting~~metric ~~Standards~~used ~~Codification~~by ~~Topic~~management ~~280,~~to ~~Segment~~evaluate ~~Reporting;~~our operating performance.

●Even though we believe Adjusted EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to ~~compare~~consider ~~our~~this ~~current~~metric ~~operating~~in ~~results~~isolation ~~with~~or ~~corresponding~~as ~~periods~~a ~~and~~substitute ~~with~~for net income (loss) and the ~~operating~~other ~~results~~combined carve-out statement of ~~other~~operations data ~~companies~~prepared in ~~our~~accordance ~~industry;~~with GAAP.

●Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business or as a ~~basis~~measure of performance in compliance with GAAP. We compensate for ~~allocating~~these ~~resources~~limitations toby ~~various~~relying ~~projects;~~primarily on our GAAP results and providing Adjusted EBITDA only as supplemental information.

●Off-Balance asSheet ~~a measure to evaluate potential economic outcomes of acquisitions, operational alternatives and strategic decisions; and~~Arrangements

●We do tonot ~~evaluate~~have ~~internally~~any ~~the~~off-balance ~~performance~~sheet ofguarantees, ~~our~~interest ~~personnel~~rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

~~We have~~Recently ~~presented~~Issued ~~Adjusted~~Accounting EBITDA above because we believe it conveys useful information to investors regarding our operating results. We believe it provides an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net income (loss). By including this information we can provide investors with a more complete understanding of our business. Specifically, we present Adjusted EBITDA as supplemental disclosure because of the following:Standards

● we believe Adjusted EBITDA is a useful tool for investors to assess the operating performance of our business without the effect of interest, income taxes, depreciation and amortization and other non-cash items including stock based compensation, amortization of intangibles, change in the fair value of shares to be issued, change in the fair value of derivative liability, impairment of goodwill and one time charges including gain/loss on the settlement of obligations, severance costs, provision for doubtful accounts, acquisition costs and the costs associated with public offerings;None.

~~● we believe that it is useful to provide to investors a standard operating metric used by management to evaluate our operating performance; and~~73

● we believe that the use of Adjusted EBITDA is helpful to compare our results to other companies.

Even though we believe Adjusted EBITDA is useful for investors, it does have limitations as an analytical tool. Thus, we strongly urge investors not to consider this metric in isolation or as a substitute for net income (loss) and the other combined carve-out statement of operations data prepared in accordance with GAAP. Some of these limitations include the fact that:

● Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

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● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

● Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

● Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

● Adjusted EBITDA does not reflect income or other taxes or the cash requirements to make any tax payments; and

● other companies in our industry may calculate Adjusted EBITDA differently than we do, thereby potentially limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered a measure of discretionary cash available to us to invest in the growth of our business or as a measure of performance in compliance with GAAP. We compensate for these limitations by relying primarily on our GAAP results and providing Adjusted EBITDA only as supplemental information.

Adjusted EBITDA for the year ended December 31, 2017 was a loss of $4.9 million compared to a loss of $848,000 for the prior year period.

The following table presents a reconciliation of net loss attributable to stockholders, which is our GAAP operating performance measure, to Adjusted EBITDA for the year ended December 31, 2017 and 2016 (in thousands):

	For the Years Ended December 31,
	2017			2016
Net loss attributable to stockholders	$	(16,914	)	$	(2,207	)
Adjustments:
Non-recurring one-time charges:
Impairment of goodwill		7,805			—
Severance costs		—			42
Acquisition costs		—			829
Gain on earnout		(561	)		—
Provision for doubtful accounts		21			103
Gain on the settlement of obligations		(430	)		(1,541	)
Extinguishment loss for debt modification		869			—
Stock-based compensation – compensation and related benefits		150			301
Interest expense		1,937			659
Depreciation and amortization		2,264			966
Adjusted EBITDA	$	(4,859	)	$	(848	)

We rely on Adjusted EBITDA, which is a non-GAAP financial measure for the following:

● to review and assess the operating performance of our Company as permitted by Accounting Standards Codification Topic 280, Segment Reporting;

● to compare our current operating results with corresponding periods and with the operating results of other companies in our industry;

● as a basis for allocating resources to various projects;

● as a measure to evaluate potential economic outcomes of acquisitions, operational alternatives and strategic decisions; and

● to evaluate internally the performance of our personnel.

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We have presented Adjusted EBITDA above because we believe it conveys useful information to investors regarding our operating results. We believe it provides an additional way for investors to view our operations, when considered with both our GAAP results and the reconciliation to net income (loss). By including this information we can provide investors with a more complete understanding of our business. Specifically, we present Adjusted EBITDA as supplemental disclosure because of the following:

● we believe that it is useful to provide to investors a standard operating metric used by management to evaluate our operating performance; and

● we believe that the use of Adjusted EBITDA is helpful to compare our results to other companies.

● Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

● Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

● Adjusted EBITDA does not reflect the significant interest expense or the cash requirements necessary to service interest or principal payments on our debt;

● Adjusted EBITDA does not reflect income or other taxes or the cash requirements to make any tax payments; and

● other companies in our industry may calculate Adjusted EBITDA differently than we do, thereby potentially limiting its usefulness as a comparative measure.

Liquidity and Capital Resources as of September 30, 2018

Our capital resources and operating results as of and through September 30, 2018, consist of:

1) an overall working capital deficit of $15.5 million;

2) cash of $89,000;

3) we entered into a new unlimited revolving credit facility of which $1.0 million was received on September 30, 2018; and

4) net cash used in operating activities for the year-to date of $16.5 million.

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The breakdown of our overall working capital deficit is as follows (in thousands):

Working Capital	Assets		Liabilities		Net
Cash	$	89	$	-	$	89
Accounts receivable, net / accounts payable		654		15,836		(15,182	)
Other receivables		163				163
Other		1,322		1,899		(577	)
Total	$	2,228	$	17,735	$	(15,507	)

Accounts payable and accrued liabilities exceed the accounts receivable by $15.2 million. These deficits are expected to be funded by our anticipated cash flow from operations and financing activities, as described below, over the next twelve months.

Net cash used in operating activities during the nine months ended September 30, 2018 of $16.5 million consists of net loss of $5.4 million plus non-cash adjustments of $1.2 million and net cash used in changes in operating assets and liabilities of ($12.3 million). We expect net cash from operations to increase during the 4th Quarter of 2018 and into 2019 as a result of, the following:

1) We significantly reduced our cost of operations in mid-August 2017 by reducing headcount and office locations. We estimate this to have a $6 million impact on an annual basis.

2) We are working with our key distributors and financing partners to address our credit limitation issues. Revenues during the nine months ended September 30, 2018 and the year ended December 31, 2017 could have been higher but were negatively impacted by our inability to timely process orders due to past due amounts and credit limitations with various vendors. We expect to relieve some of these issues by continuing to grow our services revenue.

The accompanying condensed 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 condensed 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 condensed consolidated financial statements are issued.

The Company’s continuation is dependent upon attaining and maintaining profitable operations and raising additional capital as needed, but there can be no assurance that we will be able to close on any financing. The Company’s ability to generate positive cash flow from operations is dependent upon sustaining certain cost reductions and generating sufficient revenues. Inpixon, our parent pre-spin-off has funded our operations primarily with proceeds from public and private offerings of its common stock and secured and unsecured debt instruments and made an additional cash contribution of $2 million prior to the Spin-off which amount shall be reduced by the aggregate amount of certain operating and other expenses of Sysorex that have been or will be satisfied by Inpixon from June 30, 2018 through the Spin-off Date. We depend on our vendors and suppliers to provide us with credit financing on our purchases of products and services. Many of our vendors and suppliers are no longer offering the Company the customary net-30 or net-45 payment terms with credit limits ranging from $100,000 to up to $10 million. Due to our past nonpayment issues to vendors and suppliers, the Company is on a prepay basis for those vendors and suppliers that are willing to supply to customers. In 2017 and 2018, we did experience credit limitations imposed by vendors, which contributed to the decline in revenues by approximately 92% during the nine months ended September 30, 2018 as compared to the same period in the prior fiscal year.

As a result of contributions by Inpixon provided following the completion of certain equity financings during the first nine months of 2018, we have been able to begin to improve our credit limitations through negotiated settlements plans with our vendors. Our vendors, however, could seek to limit the availability of vendor credit to us or modify the other terms under which they sell to us, or both, at any time which could negatively impact our liquidity. We have ongoing discussions concerning our liquidity and financial position with the vendor community and third parties that offer various credit protection services to our vendors. The topics discussed have included such areas as pricing, payment terms and ongoing business arrangements. We also used a revolving credit facility to finance purchase orders and invoices in an amount equal to 80% of the face value of purchase orders received, with the remaining 20%, net of fees paid upon collection of the customer receivable which is more specifically described below.

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Based on future debt and /or equity offerings, projected revenues, the revolving credit facility that the Company entered into in order to continue to finance purchase orders and invoices following the Spin-off, credit limitation improvements resulting or anticipated to result from negotiated vendor settlement arrangements and the $2 million contributed from Inpixon in connection with the Spin-off (which amount was reduced by the aggregate amount of certain operating and other expenses of Sysorex that have been or will be satisfied by Inpixon from June 30, 2018 through the Spin-off Date). There are, however, no guarantees that these sources will be sufficient to provide the capital necessary to fund the Company’s operations during the next twelve months, therefore, the Company does intend to seek other sources of capital to supplement and strengthen its financial position under financing structures that are available to it.

Our history of operating losses, the amount of our indebtedness and the potential for significant judgments to be rendered against us may impair our ability to raise capital on terms that we consider reasonable and at the levels that we will require over the coming months. We cannot provide any assurances that we will be able to secure additional funding from public or private offerings or debt financings on terms acceptable to us, if at all. If we are unable to obtain the requisite amount of financing needed to fund our planned operations, it would have a material adverse effect on our business and ability to continue as a going concern, and we may have to curtail, or even to cease, certain operations.

Revolving Credit Facility

On August 31, 2018, the Company and Sysorex Government (together with the Company, the “Borrowers”), 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 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.

The Loan Agreement also includes representations and warranties made by the Borrowers, negative covenants prohibiting certain actions by the Borrowers (including, but not limited to, restrictions on additional borrowing without the consent of Payplant, restrictions on the creation of liens on the Borrowers’ property, restrictions on transactions with affiliates, restrictions on the transfer or sale of assets and restrictions on the payment of dividends) and a definition of “Events of Default” that are customary in agreements of this type. Upon the occurrence and during the continuance of any Event of Default, Payplant may, without notice or demand, declare the entire unpaid principal amount of the loans, all interest accrued and unpaid thereon and all other amounts payable under the Loan Agreement to be immediately due and payable.

As of September 30, 2018, the principal amount outstanding under the Loan Agreement was $1,019,097 and is included in other liabilities in the Working Capital table.

Liquidity and Capital Resources as of September 30, 2018 Compared to September 30, 2017

The Company’s net cash flows used in operating, investing and financing activities for the nine months ended September 30, 2018 and 2017 and certain balances as of the end of those periods are as follows (in thousands):

	For the Nine Months Ended September 30,
(thousands, except per share data)	2018			2017
Net cash (used in) provided by operating activities	$	(16,551	)	$	3,981
Net cash used in financing activities		16,618			(4,906	)
Net increase (decrease) in cash	$	67		$	(925	)

	September 30, 2018			December 31, 2017
Cash	$	89		$	22
Working capital deficit	$	(15,507	)	$	(26,059	)

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Operating Activities:

Net cash used in operating activities during the nine months ended September 30, 2018 was $14.7 million. Net cash provided by operating activities during the nine months ended September 30, 2017 was $4.0 million. Net cash used in operating activities during the nine months ended September 30, 2018 consisted of the following (in thousands):

Net loss	$	(5,399	)
Non-cash income and expenses		1,163
Net change in operating assets and liabilities		(12,315	)
Net cash used in operating activities	$	(16,551	)

The non-cash income and expenses of $1.2 million consisted primarily of (in thousands):

$	108		Depreciation and amortization expense
	1,789		Amortization of intangibles
	55		Stock-based compensation expense attributable to warrants and options issued as part of Company operations and prior acquisitions
	299		Amortization of debt discount
	(1,154	)	Gain on the settlement of liabilities
	66		Other
$	1,163		Total non-cash income and expenses

The net use of cash due to changes in operating assets and liabilities totaled ($12.3 million) and consisted primarily of the following (in thousands):

$	1,194		Decrease in accounts receivable and other receivables
	(1,055	)	Increase in prepaid assets
	(8,010	)	Decrease in accounts payable
	(1,162	)	Decrease in deferred revenue
	(3,264	)	Decrease in accrued liabilities and other liabilities
	(18	)	Decrease in inventory and other assets
$	(12,315	)	Net use of cash in the changes in operating assets and liabilities

Financing Activities:

Net cash provided by financing activities during the nine months ended September 30, 2018 was approximately $16.6 million. Net cash used in financing activities for the nine months ended September 30, 2017 was approximately $4.0 million. The net cash provided by financing activities during the nine months ended September 30, 2018 was primarily comprised of net distributions from Inpixon, advances from Inpixon and proceeds received on the Company’s revolving line of credit with Payplant.

Going Concern and Management Plans

Our condensed consolidated financial statements as of September 30, 2018 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. Footnote 1 to the notes to our financial statements as of September 30, 2018 include language referring to our recurring and continuing losses from operations and expressing substantial doubt in our ability to continue as a going concern without additional capital becoming available. 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 obtain additional equity or debt financing, attain further operating efficiency, reduce expenditures, and, ultimately, to generate sufficient levels of revenue, which together represent the principal conditions that raise substantial doubt about our ability to continue as a going concern. Our condensed consolidated financial statements as of September 30, 2018 do not include any adjustments that might result from the outcome of this uncertainty.

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Liquidity and Capital Resources – Payplant

As of September 30, 2018, the principal amount outstanding under the Loan Agreement was $1,019,097.

Liquidity and Capital Resources as of December 31, 2017 Compared With December 31, 2016

The Company’s net cash flows used in operating, investing and financing activities for the year ended December 31, 2017 and 2016 and certain balances as of the end of those periods are as follows (in thousands):

	For the Years Ended December 31,
	2017			2016
Net cash provided by operating activities	$	5,452		$	7,755
Net cash used in investing activities		(80	)		(619	)
Net cash used in financing activities		(6,288	)		(8,902	)
Net decrease in cash	$	(916	)	$	(1,766	)

	As of December 31, 2017			As of December 31, 2016
Cash and cash equivalents	$	22		$	938
Working capital (deficit)	$	(26,059	)	$	(13,558	)

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Operating Activities for the year ended December 31, 2017

Net cash provided by operating activities during the year ended December 31, 2017 was $5.5 million. Net cash provided by operating activities during the year ended December 31, 2016 was $7.8 million. The cash flows related to the year ended December 31, 2017 consisted of the following (in thousands):

Net loss	$	(16,914	)
Non-cash income and expenses		10,843
Net change in operating assets and liabilities		11,523
Net cash provided by operating activities	$	5,452

The non-cash income and expense of $10.8 million consisted primarily of the following (in thousands):

$	2,264		Depreciation and amortization expenses (including amortization of intangibles) primarily attributable to the Lilien and Integrio operations, which were acquired effective March 1, 2013 and November 21, 2016, respectively
	7,805		Impairment of goodwill
	(430	)	Gain on settlement of liabilities
	150		Stock-based compensation expense attributable to warrants and options issued as part of Company operations
	672		Amortization of debt discount
	869		Extinguishment loss
	21		Provision for doubtful accounts
	(508	)	Other
$	10,843		Total non-cash expenses

The net use of cash in the change in operating assets and liabilities aggregated $11.5 million and consisted primarily of the following (in thousands):

$	9,050		Decrease in accounts receivable and other receivables
	11,588		Decrease in prepaid licenses and maintenance contracts
	656		Decrease in inventory and other assets
	2,376		Increase in accounts payable
	534		Increase in accrued liabilities and other liabilities
	(12,681	)	Decrease in deferred revenue
$	11,523		Net use of cash in the changes in operating assets and liabilities

Operating Activities for the year ended December 31, 2016

Net cash flows provided by operating activities during the year ended December 31, 2016 was $7.8 million and consisted of the following (in thousands):

Net loss	$	(2,207	)
Non-cash income and expenses		1
Net change in operating assets and liabilities		9,961
Net cash used in operating activities	$	(7,755	)

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The non-cash income and expense of $1 million consisted primarily of the following (in thousands):

$	966		Depreciation and amortization expenses (including amortization of intangibles) primarily attributable to the Lilien and Integrio operations, which were acquired effective March 1, 2013 and November 21, 2016, respectively
	301		Stock-based compensation expense attributable to warrants and options issued as part of Company operations
	(1,541	)	Gain on settlement of obligations related to Integrio vendor liabilities
	172		Amortization of debt discount
	103		Provision for doubtful accounts
$	1		Total non-cash expenses

The net use of cash in the change in operating assets and liabilities aggregated $10.0 million and consisted primarily of the following (in thousands):

$	3,208		Decrease in accounts receivable and other receivables
	(232	)	Increase in prepaid licenses and maintenance contracts
	184		Increase in inventory and other assets
	6,432		Increase in accounts payable
	288		Increase in accrued liabilities and other liabilities
	81		Decrease in deferred revenue
$	9,961		Net use of cash in the changes in operating assets and liabilities

Cash Flows from Investing Activities as of December 31, 2017 and 2016

Net cash flows used in investing activities during 2017 was $80,000 compared to net cash flows used in investing activities during 2016 of $619,000. Cash flows related to investing activities during the year ended December 31, 2017 include $80,000 for the purchase of property and equipment. Cash flows related to investing activities during the year ended December 31, 2016 include $125,000 for the purchase of property and equipment and $683,000 related to the acquisition of Integrio, offset by $189,000 of cash acquired in the Integrio acquisition.

Cash Flows from Financing Activities as of December 31, 2017 and 2016

Net cash flows used in financing activities during the year ended December 31, 2017 and 2016 were $6.3 million and $8.9 million, respectively, and were attributable to net distributions to Inpixon.

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MANAGEMENT

The following table sets forth the names and ages of all of our current directors and executive officers. Our officers are appointed by, and serve at the pleasure of, the Company’s Board of Directors (the “Board”) and/or our Chief Executive Officer. On, September 22, 2022, at the Company’s Annual Meeting of its stockholders, Wayne Wasserberg, Zaman Kahn and William Stilley were elected to the Company’s Board of Directors, to serve for a term of one year, until the next annual meeting of stockholders and until their successors have been duly elected. Mr. Stilley resigned from his position as a member of the Company’s board of directors on October 31, 2022.

Name	Age	Position
Nadir Ali	50	Chairman of the Board(1)
Wayne Wasserberg	41	Director, Chief Executive Officer
Zaman Khan	5054	Director, President ~~and Chief Executive Officer~~
Vincent Loiacono	5862	Chief Financial Officer~~(4)~~

~~Nadir Ali~~Wayne Wasserberg

Mr. ~~Ali~~Wasserberg ishas ~~the~~served ~~Chairman~~as of the ~~Board~~Chief ofExecutive ~~Directors~~Officer of Sysorex~~. From November 2015 to August 2018~~, MrInc. ~~Ali~~and ~~served as~~ the ~~company’s Chief~~President ~~Executive~~of ~~Officer.~~TTM HeDigital ~~has~~Assets ~~also~~& ~~served~~Technologies, asInc., and a ~~director~~member of Sysorex’s Board of Directors since ~~March~~April ~~2013~~14, 2021. Mr. ~~Ali~~Wasserberg is ~~also~~an ~~currently~~executive ~~the~~with ~~CEO~~more than 15 years of ~~Inpixon~~experience ~~(Nasdaq:~~working ~~INPX)~~with anclients ~~Indoor~~internationally ~~Positioning~~across ~~Analytics~~industries ~~company.~~including ~~Prior~~structured tofinance, ~~joining~~currency ~~Inpixon,~~trading ~~from~~and ~~1998-2001~~arbitrage, ~~Mr.~~alternative ~~Ali~~assets investments, ~~was~~and ~~the~~infrastructure ~~co-founder~~ and ~~Managing~~ ~~Director~~real ofestate ~~Tira~~development. ~~Capital,~~Prior anto ~~early~~joining ~~stage~~the ~~technology~~Company ~~fund.~~on ~~Immediately~~April ~~prior~~14, ~~thereto~~2021, Mr. ~~Ali~~Wasserberg ~~served~~was asthe ~~Vice~~ President of ~~Strategic~~Quantum ~~Planning for Isadra~~Lexicon, ~~Inc.,~~a ancompany ~~e-commerce~~focused ~~software~~on ~~start-up.~~advisory ~~Mr.~~services ~~Ali~~to ~~led~~technology ~~the~~innovation ~~company’s~~companies ~~capital~~where ~~raising~~he ~~efforts and~~served ~~its~~from ~~eventual~~April ~~sale~~2020 tountil ~~VerticalNet~~April 2021. ~~From 1995 through 1998,~~ Mr. ~~Ali~~Wasserberg ~~was~~founded ~~Vice~~and ~~President~~served ofas ~~Strategic~~CEO ~~Programs~~of atan ~~Sysorex~~international ~~Information Systems~~real ~~(acquired~~estate bybrokerage ~~Vanstar~~and ~~Government~~property ~~Systems~~management ~~in 1997)~~company, awhere ~~leading~~he ~~computer~~was directly ~~systems~~involved ~~integrator.~~in ~~Mr.~~more ~~Ali~~than ~~played~~$200 amillion ~~key~~in ~~operations role~~closed transactions and ~~was~~where ~~responsible~~he ~~for~~served ~~implementing~~from ~~and~~October ~~managing~~2013 ~~the~~to ~~company’s~~December $12021. ~~billion~~In ~~plus~~this inrole, he ~~multi-year~~also ~~contracts.~~provided ~~From~~consulting ~~1989~~ to ~~1994~~large hemultinational ~~was~~companies aregarding ~~management~~their ~~consultant,~~geographic ~~first~~expansions. ~~with~~Mr. ~~Deloitte~~Wasserberg &began ~~Touche~~his ~~LLC~~career inat International ~~San~~Sales ~~Francisco~~Group and ~~then~~was ~~independently.~~responsible ~~Mr.~~for ~~Ali received~~more athan ~~Bachelor~~$500 ofmillion ~~Arts degree~~ in ~~Economics~~international ~~from~~sales ~~the~~within ~~University~~a offlagship ~~California~~Trump ~~at Berkeley in 1989~~property. Mr. ~~Ali’s valuable~~ ~~entrepreneurial,~~Wasserberg ~~management,~~holds ~~mergers~~a ~~and~~Bachelor ~~acquisitions~~of ~~and~~Science ~~technology~~from ~~experience~~State ~~together~~University ~~with his in-depth knowledge~~ of ~~the~~New ~~business of~~York, ~~Sysorex led us to the conclusion that he should serve as a director~~Oneonta.

Zaman Khan

Mr. Khan ishas aserved ~~director,~~as ~~the~~our ~~Chief Executive Officer and the~~ President ofsince ~~Sysorex~~August 2018. Mr. Khan ~~also~~has ~~serves~~served as ~~the~~a ~~President~~member of ~~Sysorex Government~~our Board since July 2018. Mr. Khan ~~possesses~~has aalso ~~strong~~served as ~~background~~the inPresident ~~technology~~of ~~startups,~~SGS ~~international~~since ~~business~~January ~~development, strategic operations, contract administration, and organizational leadership~~2017. From 1997 until heJanuary ~~joined Sysorex~~2017, Mr. Khan ~~was~~served as the Executive Vice President at Intelligent Decisions, Inc., ~~where~~an heinformation ~~was~~technology ~~responsible~~firm ~~for~~specialized ~~leadership~~ in ~~business~~government ~~development,~~contracting ~~strategic~~with ~~programs,~~an ~~professional~~emphasis in intelligence space. From 1991 ~~services~~to 1996, ~~contracts~~Mr. ~~management~~Khan ~~and~~served ~~new~~as ~~business~~the ~~capture.~~Director ~~During~~of ~~his~~Business ~~tenure,~~Development ~~Intelligent~~of ~~Decisions~~WIN Laboratories, ~~Inc.~~LTD, ~~experienced~~ a ~~growth~~manufacturer ~~in revenue~~of ~~from~~WIN ~~$20~~Labs ~~million~~computers inand ~~1997~~reseller specialized toin ~~$548~~government ~~million~~and incommercial ~~2014~~contracting. Mr. Khan’s ~~management~~strong ~~experience~~background ~~encompasses~~in ~~marketing,~~technology ~~operations~~startups, ~~capture~~ ~~management~~international business development, ~~service~~strategic ~~delivery~~operations, ~~finance~~contract administration, ~~financial modeling~~ and ~~administration~~organizational leadership led us to the conclusion that he should serve as a ~~director~~member of our Board.

Vincent Loiacono

Mr. Loiacono ishas ~~the~~served as our Chief Financial Officer ofsince ~~Sysorex~~August 2018. He ishas also served as the Chief Financial Officer of ~~Sysorex~~SGS ~~Government~~since ~~Mr. Loiacono~~March ~~has over 30 years of financial and accounting experience and a strong and diverse background in telecommunication and technology startups, M&A activities and strategic operations~~2018. ~~Prior~~From toOctober ~~joining Inpixon Federal, from~~ 2015 through February 2018, Mr. Loiacono provided consulting and performed tax service projects, primarily in residential real estate, commercial banking and SEC reporting. From October 2014- to September 2015, Mr. Loiacono served as VP Finance, Operations and Analytic at Intelligent Decisions ~~where he led an effort to sell its cyber security division~~, ~~secure private equity funding and develop a plan to enhance the company’s operating efficiencies and achieve cash preservation~~Inc. From 2008- to 2012, Mr. Loiacono served as Chief Financial Officer of TerreStar Networks where he was responsible for scaling its business, providing strategic oversight of the development of its satellite phone and the launch of its commercial satellite. From 2005 through 2008, Mr. Loiacono ~~was~~served as the Senior Vice President and Principal Financial Officer at WorldSpace Radio Satellite Radio where he led the effort to raise $220 million in its initial public offering and ~~was~~the ~~instrumental~~buildout of its international markets. Mr. Loiacono received a Bachelor of Business Administration degree in Accounting from CUNY-Bernard M. Baruch College in 1983. Mr. Loiacono is a member of the ~~buildout~~American Institute of ~~its~~Certified ~~international~~Public ~~markets~~Accountants and is licensed as a Certified Public Accountant in New York.

Involvement in Certain Legal Proceedings

To the best of our knowledge, there is no involvement in legal proceedings during the past ten years that is required to be disclosed pursuant to Regulation S-K 401(f).

Board of Directors

Our Board may establish the authorized number of directors from time to time by resolution. The current authorized number of directors is ~~nine~~three. Our current directors, if elected, will continue to serve as directors until the next annual meeting of stockholders and until his or her successor has been elected and qualified, or until his or her earlier death, resignation, or removal.

We continue to review our corporate governance policies and practices by comparing our policies and practices with those suggested by various groups or authorities active in evaluating or setting best practices for corporate governance of public companies. Based on this review, we have adopted, and will continue to adopt, changes that the Board believes are the appropriate corporate governance policies and practices for our Company.

Our Board held thirteen meetings during 2021. No officer or member of our board of directors was delinquent in filing any Section 16 reports during 2021. No member of our Board attended fewer than 75% of the aggregate of (i) the total number of meetings of the Board (held during the period for which he or she was a director) and (ii) the total number of meetings held by all committees of the Board on which such director served (held during the period that such director served), if any.

Independence of Directors

In determining the independence of our directors, we apply the definition of “independent director” provided under the listing rules of The NASDAQ Stock Market LLC. Pursuant to these rules, none of our directors are independent within the meaning of Nasdaq Listing Rule 5605.

There are no family relationships between any of the individuals who serve as members of our Board and as our executive officers.

57Board Committees

~~Table~~Audit ~~of Contents~~ committee

We do have a separately designated standing audit committee (“AC”). The AC approves the selection of our independent accountants and meets and interacts with the independent accountants to discuss issues related to financial reporting. In addition, the AC reviews the scope and results of the audit with the independent accountants, reviews with management and the independent accountants our annual operating results, considers the adequacy of our internal accounting procedures and considers other auditing and accounting matters including fees to be paid to the independent auditor and the performance of the independent auditor.

Compensation Committee, Corporate Governance and Nominating Committees

We currently are not required to have, and do not have, a compensation committee, a corporate governance and nominating committee, or any other Board committee performing equivalent functions. Currently, the members of our full Board participate in discussions concerning executive officer compensation and Board matters.

Stockholder Communications

Stockholders can communicate with the Company through the Company’s investor relations firm, Crescendo Communications LLC, (“firm”) which is noted on each press release issued by the Company. The firm then communicates with the Board of Directors on any inquiries.

Stockholder Proposals and Director Nominations

Stockholder proposals are reviewed by the Secretary for compliance with the requirements for such proposals set forth in Rule 14a-8 promulgated under the Exchange Act. Stockholder proposals that meet these requirements will be summarized by the Secretary. Summaries and copies of the stockholder proposals are circulated to the Chairman of the Board.

Stockholder nominations for directors are reviewed by the Secretary for compliance with the requirements for director nominations that are set forth in our Articles of Incorporation and Bylaws. Stockholder nominations for directors that meet these requirements are summarized by the Secretary. Summaries and copies of the nominations are then circulated to the Chairman of the Board.

Code of Ethics

We have adopted a Code of Business Conduct and Ethics (the “Code of Ethics”) that applies to members of our Board, our executive officers, and our employees. The Code of Conduct is available on our website at https://sysorexinc.com/?page_id=2. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Ethics by posting such information on our website at the address specified above.

EXECUTIVE COMPENSATION

~~Prior to August 2018, we were a wholly owned subsidiary of Inpixon. The information included in the~~ Summary Compensation Table below reflects compensation earned from Inpixon during fiscal years 2017 and 2016 by all of the officers included in the table with the exception of Mr. Loiacono, who did not receive any compensation during fiscal years 2017 and 2016.

~~Zaman~~The ~~Khan~~following ~~was~~table ~~employed~~summarizes ~~by Sysorex Government prior to~~ the ~~Separation~~total ~~and Bret Osborn was employed by Sysorex; therefore, the information provided below reflects~~ compensation earned ~~pursuant~~by toeach ~~objectives~~ of the following executive ~~compensation~~officers ~~programs in place prior to the Separation. Vincent Loiacono did not serve Sysorex or Inpixon~~ (~~including~~each ~~any~~an ~~subsidiaries)~~“NEO” ~~in any capacity during 2017~~ and ~~2016.~~collectively, ~~All~~our ~~references~~“NEOs”) infor the ~~following~~fiscal ~~tables~~years toended ~~equity~~December ~~awards~~31, ~~are~~2021, toand ~~equity awards granted by Inpixon in respect of Inpixon common stock~~2020.

The historical compensation shown below was determined by Inpixon. Future compensation levels at Sysorex will be determined based on the compensation policies, programs and procedures to be established by the Sysorex board of directors or, if formed, the Compensation Committee of the board of directors.

						Stock			Option		All Other
		Salary		Bonus		Awards			Awards		Compensation		Total
Name and Principal Position	Year	($)		($)		($)			($)		($)		($)

Wayne Wasserberg,	2021	$	286,667	$	100,000	$	400,000	(1)	$	—	$	—	$	786,667
Chief Executive Officer	2020	$	—	$	—	$	—		$	—	$	—	$	—
Zaman Khan,

Filing Compare · Sysorex, Inc.