1 SYSOREX GLOBAL HOLDINGS CORP. A NEVADA CORPORATION INITIAL DISCLOSURES SECTIONS ONE: ISSUERS INITIAL DISCLOSURE OBLIGATIONS PART A Item 1 GENERAL COMPANY INFORMATION The Exact Name of the Issuer and its_predecessor (if any.) LiquidationBid.com - April 1999 Softlead Inc.- September 9, 2003 Sysorex Global Holdings Corp.- June 2, 2011 Item 2 The Address of its principal executive Sysorex Global Holdings Corp., 405 Clyde Avenue Mountain View, CA offices. Tel (650) ; Fax (650) Investor Relations Contact Stanley Altschulcr Strategic Universal Advisors LLC 488 Madison Avenue, 23rd Floor New York, NY Tel (212) stan fa) sua-ir.com
2 Item 3 The State and date of the Issuers Incorporation or organization. The issuer is a corporation organized pursuant to the laws of Nevada, April 1999 as LiquidationBid.com PARTB Item 4 SHARE STRUCTURE The exact title and class of securities outstanding. Preferred Stock; None Common Stock: par value $0.001 CUSIP#:87184N104 Trading Symbol: SYRX Item 5 Par or stated value and description of the security A. Par Value for each class Par value of common stock $0.001 Company has no preferred stock B. Descriptions 1. Common stock holders -dividends None, 1 vote per share, no pre-emptive rights 2. No preferred stock 3. Any other material rights of common or preferred None 4. Describe any provision in the issuer's charter or bylaws that would delay, defer or prevent a change in control of the issuer. - None Item 6 The Total Number of Securities Outstanding for Each Class of Securities Authorized. (i) Period ending December 31, 2009 (ii) (iii) (iv) 20,000,000 Common Stock, par value $0.001 Authorized 13,007,059 Common shares outstanding 3,099,722 Common shares freely tradable
3 (v) 410 (vi) 410 (i) Period ending December 31, 2010 (ii) (iii) (iv) 20,000,000 Common Stock, par value $0.001 Authorized 13,007,059 Common shares outstanding 3,099,722 Common shares freely tradable at DTC (v) 410 (vi) 410 The Company executed a 1 for 20 reverse split and name-change to Sysorex Global Holdings Corp., on June 2, The CUSIP number and symbol were changed with F1NRA approval. On August 3, 2011 it acquired the Sysorex operating companies under new CUSIP No N104 and Symbol: SYRX. (vii) Period ending August 15, 2011 (viii) 30,000,000 Common Stock, par value $0.001 Authorized (ix) (x) 17,858,518 Common shares outstanding 154,987 Common shares are freely tradable and registered with DTC (xi) 498 (xii) 498 Item 7 Name and Address of the Transfer Asent. Corporate Stock Transfer (Registered with SHC) 3200 Cherry Creek Drive South, Suite 430 Denver, Colorado Tel (303) ; Fax (303)
4 PARTC BUSINESS INFORMATION Item 8 PART A. 1. Form of Organization. The issuer is a corporation organized pursuant to the laws of Nevada. 2. Year of Organization. The issuer was organized in April 1999 as LiquidationBid.com. 3. Fiscal Year End Date. The fiscal year end of the Sysorex subsidiary companies is June 30. Sysorex Global fiscal year end is December 31. The subsidiary companies will be moving to a December 31 fiscal year end. 4. Bankruptcy, Receivership. Issuer has not been involved in any bankruptcy or similar proceedings since inception. 5. Material Reclassification, Merger, Consolidation or purchase, sale of Assets. a. On June 2, 2011, the Company executed name change to Sysorex Global Holdings Corp. b. On March 2, 2011 the Company obtained affirmative vote by majority of the stockholders through a shareholder proxy to acquire Sysorex operational units, comprised of three corporations for restricted common shares of the Company. 6. Any defaults of the terms of any note, loan, or other indebtedness. On September 14, 2010, Soft lead, the predecessor company, entered in to an agreement with American Express for $18,500 for satisfaction of past due amounts totaling $44, On August 5, 2011, a subsidiary of the Company negotiated an agreement to settle past debt of the Sysorex Companies of approximately $149, with the bankruptcy estate of Thelen Reid (a law firm) for a total of $30,000. The Agreement will be signed by Septembers, The Company will be proposing settlement discussions with other creditors including Perkins & Coie, ($205,864.92) and possibly its current law firm Sheppard Mullin ($139,973.60). The Company also has vendor payablcs to World Wide Technology ($837,330) and Sun Micro Systems ($399,515.92) related to its product business, which has been discontinued. There are another 9 vendors that make up the trade payables relating to the product business in the amount of $233, One vendor (DLT
5 Solutions) has a judgment against the Company in the aggregate amount of $95,983.10, however Sysorex disputes the amount and feels it owes only $53, Sysorex will pursue settlement discussions with DLT. Creative Edge, a Saudi Company, has a Judgment against Sysorex Arabia for SR 3,511,238 or US $936,330. Of this amount SRI, 930,633 or US $514,836 is from a Performance Bond that Creative Edge provided to Sysorex Arabia for its MODA C4I Contract. This will be returned to Creative Edge upon the completion of the Contract. The remaining balance will be paid upon an agreed upon payment schedule. 7. Change in Control. The Company appointed a new board and management team to operate the company on July 28, 2011 in anticipation of the acquisition of the Sysorex companies. 8. Increase of 10% or more of same class of outstanding equity securities. The Company entered into agreement to sell 2,000,000 shares on a post-split basis to an investor on January 7, 2011 to finance its restructuring. The Company issued 14,600,000 common shares in connection with the acquisition of the Sysorex Companies, on August 3, Any past, pending or anticipated stock split, stock dividend, recapitalization, merger, acquisition, spin-off, or reorganization; a. On March 2, 2011 by majority vote of shareholders in proxy and special meeting, the Company elected to change its name to Sysorex Global Holdings, Corp.; effect a 1 for 20 reverse split of its stock; acquire the Sysorex operational businesses; and increase the number of authorized common shares to 30,000,000. On June 2, 2011 the Company executed a 1 for 20 reverse split and a name change to Sysorex Global Holdings, Corp. Simultaneously its symbol was changed to SYRX. b. On August 3, 2011 the Company acquired U.S. Federal Government business of Sysorex (Sysorex Federal, Inc. and its subsidiary Sysorex Government Services, Inc.) and the operating unit of Sysorex engaged in Saudi Arabian Government contracts (Sysorex Arabia, LLC). The acquisitions was based on a share-exchange, with Sysorex share holders being issued 14,600,000 restricted common shares of the Company for stock of the three operational entities. c. The Company recapitalized itself by amending its articles of incorporation on August 3, 2011 and increased its authorized common stock to 30,000,000 common shares with par value $0.001 per share.
6 10. Any delisting of Issuers securities by any securities exchange or Nasdaq or deletion from the OTC bulletin board. 11. Any current, past, pending or threatened legal proceedings or administrative actions by securities regulators that could materially affect issuers business or trading suspensions by regulator. The Company is not aware of any legal or regulatory actions threatened by any securities regulators against the company. There have been no such actions against the company in the last five years. PART B. 1. The issuer's primary SIC code. The issuer's primary SIC code is 7379, Data Systems consultants and designers. Secondary SIC codes are 7376 computer facilities management services, and 7371 & 7373 computer software design & application development. 2. If the Issuer has never conducted operations or is currently conducting operations. The Company conducts operations. Softlead was a software developer and had revenues. Sysorex is a company that provides a variety of Information Technology Services including software application development and project management. 3. If the issuer is a considered a "shell company" pursuant to Securities Act Rule 405. Issuer is an operating company with leased offices space in excess of 6,000 sq.ft. in three different locations in the US and in Riyadh, Saudi Arabia ("KSA"). The Company also has employees and consultants at these locations. The Company has sufficient assets, facilities and operating activity that it does not fall under the definition of a shell company within the meaning of SEC Rule The names of any parent, subsidiary or affiliate of the user and its business purpose. Company has three subsidiaries, Sysorex Federal Inc. ("SFI") and Sysorex Government Services Inc., ("SGS") which are wholly-owned subsidiaries, both located in the US and in Riyadh, KSA. The Company is the majority shareholder of Sysorex Arabia LLC ("SAL"). 5. The effects of government regulation on the business. Government regulation and budgeting can have a detrimental impact on the company's U.S. business as it is a government focused systems integration and consulting company.
7 6. An estimate of the amount spent during each of the last two fiscal years on research and development activities and the extent to which cost are borne directly by customers. The Company is engaged in minimal research and development. In the last two years it spent no money on research and development. 7. Cost and effect of compliance with environmental laws (federal, slate and local); The Company does not handle hazardous chemicals nor is it directly involved with processes or plans that have an environmental impact. 8. The number of total employees and the number of full time employees. The Company has 18 full-time and 3 part-time employees in the SFI & SGS (not including Headquarters) and another 24 full-time employees in SAL. Item 9 The Nature of the products or services offered The Company provides management, manpower and consulting on Information Technology projects for Government agencies in the United States and Saudi Arabia. The Company has expertise to build and manage data centers, communication systems, develop software applications, and manage large complex IT projects. The Company bids on projects and once it wins such projects, it hires consultants, manpower and equipment to deliver the project. A. principal products or services, and their markets; Sysorex provides information technology and telecommunications solutions and services primarily to government customers in the U.S. & Saudi Arabia. Sysorex is considered a systems integration and consulting company and has a wide range of offerings including but not limited to: custom application/software design, architecture and development; data center design and operations services; Command Control, Computer Communication, Intelligence (C4I) system consulting and program management; security solutions and services; business intelligence/analytics; etc. Usually Sysorex uses commercial-off-the-shelf (COTS) products for implementation, integration, maintenance and support, etc. services to its clients. It will also customize them to meet the needs of the client. B. distribution methods of the products or services; Sysorex responds to request for proposals from government and commercial clients. Sysorex distributes its services and solutions directly through its business development and sales efforts. However, Sysorex does provide many of its services as a subcontractor to a prime contractor servicing the end government customer.
8 C Status of any publicly announced new product or service; None D. competitive business conditions, the issuer's competitive position in the industry, and methods of competition; Sysorex is in a highly competitive market in the geographies and the sectors that it is in. Sysorex leverages the founder's 35-year history, brand, global experience and track record to compete. Sysorex typically provides its customers senior level domain experts that are well versed in their focus area. These individuals help develop a solution that is adopted by the client. E. sources and availability of raw materials and the names of principal suppliers; Sysorex primarily relies on standard products to develop a solution for its customers. Typically multiple equipment suppliers are available. Sysorex primarily relies on its ability to recruit technical staff for its projects. Sysorex has access to various databases and sources and has recruiting staff trained to quickly and accurately source the required candidates. F. dependence on one or a few major customers; Sysorex Government Service's revenue is currently highly dependent on the U.S. Army contract at Rock Island. This contract was renewed last year and has four option years remaining to be exercised. There is a high probability that these option years will be exercised as the Army has done so on the previous two iterations of this contract. However, there is no guarantee of exercise, as there could be unforeseen circumstances. Sysorex Government does have several other contracts that it hopes to market more extensively in the near future. Sysorex Arabia has two primary contracts both with the Ministry of Defense & Aviation (MODA). Sysorex Arabia will continue to bid on future contracts in MODA as well as other civilian ministries, however for the unforeseeable future it will be heavily dependent on its MODA contracts. The MODA C4I Consultancy contract will be ending on October 31, Sysorex Arabia hopes to win the renewal of this contract but it is in a competition with three other bidders. There is no guarantee Sysorex Arabia will win this renewal. This contract makes up a majority of Sysorex Arabia's revenues. G. patents, trademarks, licenses, franchises, concessions, royalty agreements or labor contracts, including their duration; and Sysorex Arabia owns the design of specialty watch but does pay royalties to the designer of the watch - Mr. David Kohler. The watch is over 25 years old and currently the volume of sales is very limited.
9 H. The need for any government approval of principal products or services and the status of any requested government approvals. Item 10 The Nature and Extent of th^lssuer's facilities The Company leases office space in the following areas to house its staff. 4,500 sq.ft. office space. Sysorex Global Holdings Corp. Headquarters office, 405 Clyde Avenue, Mountain View, CA Sysorex Fcderal/Sysorex Government Services office, Coppermine Road, Suite 300, Hcrndon,VA ,000 sq.ft. office space. Sysorex Arabia office, Al - Akaria office Complex 1, Suite 302-2, Riyadh, Saudi Arabia. PART D MANAGEMENT STRUCTURE AND FINANCIAL INFORMATION Item 11 A. Board of Directors Name: Abdus Salam Qureishi, Chairman of Board and Chief Executive officer Business Address: 405 Clyde Avenue, Mountain View, CA Employment History: In the last 10 years Salam Qureishi has been Chief Executive officer and Chairman of Sysorex Consulting, Inc. Board Memberships& Other Affiliations: Sysorex Consulting, lnc.& Sysorex Federal, Inc. Compensation by Issuer: health-care for his family and an annual salary of $36,000 Issuer's securities beneficially owned: Salam Qureishi and his family beneficially own 11,190,369 common shares. Name: Len Oppenheim, Director Business Address: 405 Clyde Avenue, Mountain View, CA Employment History: For the last 10 years Mr. Oppenheim has been an individual investor
10 Board Memberships & Other Affiliations: Board member of APRI a bioscience company listed on Nasdaq Compensation by Issuer: Sole compensation by issuer is 32,935 common shares held by Len Oppenheim Issuer's securities beneficially owned: Len Oppenheim directly owns 32,935 shares Name: Gabriel Del Virginia, Director Business Address: 405 Clyde Avenue, Mountain View, CA Employment History: For the last 10 years Gabriel Del Virginia has been a self-employed lawyer in New York, NY. Board Member & Other Affiliations: Board member of Tiro a member managed recreational club located in New York City. Compensation by Issuer: Sole compensation by the issuer is the 36,594 shares held by Gabriel Del Virginia Issuer's securities beneficially owned: Gabriel Del Virginia beneficially owns 36,594 shares B. Legal/Discipline History None of the Officers, Directors or Beneficial Shareholders has, in the past five years, been the subject of: 1. A conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses); 2. The entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person's involvement in any type of business, securities, commodities, or banking activities; 3. A finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a state securities regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; or 4. The entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended or otherwise limited such person's involvement in any type of business or securities activities.
11 C. Disclosure of Family Relationships. Abdus-Salam Qureishi, Chairman & CEO is the father-in-law of Nadir Ali, the President of Sysorex. There are several shareholders that are family members of Mr. Qureishi and/or Mr. Ali. These shareholders combined own 11,190,369 shares. The largest shareholder among these is a distant relative of Mr. Qureishi who owns 4,336,336, under the SY HOLDINGS name. D. Disclosure of Related Party Transactions E. Conflict of interest. There are no conflicts of interest with the Issuer. Company Management Name: Nadir All, President Business Address: 405 Clyde Avenue, Mountain View, CA Employment History: For the last 10 years Nadir AH has been employed by Sysorex Consulting, Inc., prior to this he was individual investor and Managing Director of Tira Capital Partners, LLC an early-stage venture capital firm. Board Membership & Other Affiliations: Nadir Ali is on the Board of Sysorex Consulting, Inc., Sysorex Federal, Inc., Sysorex Arabia, LLC and Sysorex Government Services, Inc. Compensation by Issuer: Nadir Ali's compensation includes health care for him and his family and an annual salary of $240,000 plus bonus, housing allowance, profit sharing, life insurance. Issuer's securities beneficially owned: Nadir Ali holds 1,097,827 shares and beneficially owns another 658,696 shares. Name: Wendy Loundermon, Chief Financial Officer; President Sysorex Government Services Business Address: Coppermine Road, Suite 300, Herndon, VA Employment History: For the last 10 years Wendy Loundermon has been employed by Sysorex Government Services and its predecessor ISC, Inc. Board & Other Affiliations: Wendy is currently not on the Board of any company. Compensation by Issuer: Wendy has an annual salary of $110,000, bonus plan and health care for herself and her family. Issuer's securities beneficially owned: Wendy Loundermon directly owns 36,594 shares.
12 Name: Subhash Sachdeva, Vice President & Corporate Secretary Business Address: 405 Clyde Avenue, Mountain View, CA Employment History: For the last 10 years Subhash Sachdeva has worked for Sysorex Consulting as an Accountant and financial Consultant. Board & Other Affiliations: Subhash is on the Board of Sysorex Consulting, Inc. Compensation by Issuer: Subhash receives an annual compensation of $97,500 bonus plan and he receives healthcare for himself and his family. Issuer's securities beneficially owned: Subhash Sachdeva and his family beneficially own 200,481 shares. He holds 164,674 shares directly. Name: Nabil Abdul Baqi, Vice President Sysorex Arabia Business Address: Al Akaria Center 1 Olaya District Riyadh Saudi Arabia. Employment History: For the last 7 years Nabil Baqi has worked for Sysorex Arabia and prior to that he was working fornatcom- a Saudi Arabian IT company based in Riyadh Saudi Arabia. Board & Other Affiliations: Nabil is currently not on the Board of any company. Compensation by Issuer: Nabil receives healthcare for himself and his family and an annual salary of $124,800. Issuer's securities beneficially owned: Nabil directly owns 73,188 shares. B. Legal/Discipline History None of the Officers, Directors or Beneficial Shareholders has, in the past five years, been the subject of: 1. A conviction in a criminal proceeding or named as a defendant in a pending criminal proceeding (excluding traffic violations and other minor offenses); 2. The entry of an order, judgment, or decree, not subsequently reversed, suspended or vacated, by a court of competent jurisdiction that permanently or temporarily enjoined, barred, suspended or otherwise limited such person's involvement in any type of business, securities, commodities, or banking activities; 3. A finding or judgment by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission, the Commodity Futures Trading Commission, or a stale securities
13 regulator of a violation of federal or state securities or commodities law, which finding or judgment has not been reversed, suspended, or vacated; or 4. The entry of an order by a self-regulatory organization that permanently or temporarily barred, suspended or otherwise limited such person's involvement in any type of business or securities activities. C. Disclosure of Family Relationships. Abdus-Salam Qureishi, Chairman & CEO is the father-in-law of Nadir Ali, the President of Sysorex. There are several shareholders that are family members of Mr. Qureishi and/or Mr. Ali. These shareholders combined own 11,190,369 shares. D. Disclosure of Related Party Transactions E. Conflict of interest. There are no conflicts of interest with the Issuer. Item 12 Financial Information for the Issuers Most Recent Fiscal Period. The Company is currently organized as non-reporting and does not file financial information. It intends to file registration in the near future to become fully reporting and file regular financial statements and regular disclosures as required by regulation. See attached the unaudited financial statements for last fiscal year ending June 30, 2011 of ONLY the Sysorex operating companies including Sysorex Federal, Sysorex Government Services and Sysorex Arabia, Ltd. Item 13 Similar Financial Information for such part of the two precedingjlscal years as the issuers or its predecessor has been in existence. The Company is currently organized as non-reporting and does not file financial information. It intends to file registration in the near future to become fully reporting and file regular financial statements and regular disclosures as required by regulation. See attached the unaudited financial statements for the last two fiscal years ending June 30, 2011 and June 30, 2010 of ONLY the Sysorex operating companies including Sysorex Federal, Sysorex Government Services and Sysorex Arabia, Ltd.
14 Item 14 Beneficial Owners; Control Group Ownership; Management Shareholdings: Management Shareholding L A. Salam Qureishi, CEO & Chairman 587, % 2 Nadir Ali, President 1,097, % Nabil Mohammad Abdul-Baqi Vice President, Business Development, SAL Wendy Loundermon, Chief Financial Officer Subhash Sachdeva, Vice President & Secretary 73,188 36, , % 0.2% 0.9% 5% or greater ownership summary I SYHoldings Corporation, (Investments held by Mr. QureishTs distant family members) 405 Clyde Avenue, Mountain View, CA ,336, % A. Salam Qureishi and Trusts and Corporations related to family interests, outside of SYIIoldings & Nadir Ali 405 Clyde Avenue, Mountain View, CA Nadir AH, President of Sysorex and related to the founder 405 Clyde Avenue, Mountain view, CA Dr. Shaheen Ahmad, 909 Third Avenue, #7584, New York, NY Qureishi 1998 Family Trust 405 Clyde Avenue, Mountain View, CA ,756,507 1,097,827 2,663,087 1,814, % 6.03% 14.6% 12.4% Item 15 The name, address, telephone number, and address of each of the following outside providers that advise the issuer on matters relating to the operations, business development and disclosure. 1. Investment Banker 2. Promoters
15 3. Counsel Elliot Lutzker, Esq. Davidoff, Malito & Hutcher, LLP Tel: (212) ; Fax: (212) Accountant or Auditor Joseph Amundsen, CPA, PC 110 Wall Street, llthfloor New York City, NY Tel: (212) ; Fax: (212) Public Relations& Investor Relations Consultant Stanley Altschuler, Strategic Universal Advisors LLC 488 Madison Avenue, 23rd Floor New York, NY Tel: (212) Other Advisors None Item 16 Management's, Discussion and Analysis and Plan of Operations A. Not Applicable. B. Management's Discussion and Analysis of Financial Condition and Results of Operations. 1. Full fiscal years. Discuss the issuer's financial condition, changes in financial condition and results of operations for each of the last two fiscal years. This discussion should address the past and future financial condition and results of operation of the issuer, with particular emphasis on the prospects for the future. The discussion should also address those key variable and other qualitative and quantitative factors that are 15
16 necessary to an understanding and evaluation of the issuer. If material, the issuer should disclose the following: i. Any known trends, events or uncertainties that have or are reasonably likely to have a material impact on the issuer's short-term or long-term liquidity; Internal and external sources of liquidity; Any material commitments for capital expenditures and the expected sources of funds for such expenditures; iv. Any known trends, events or uncertainties that have had or that are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations v. Any significant elements of income or loss that do not arise from the issuer's continuing operations; vi. The causes for any material changes from period to period in one or more line items of the issuer's financial statements; and - vii. Any seasonal aspects that had a material effect on the financial condition or results of operation. The Sysorex group consisting of Sysorex Government Services, Inc., Sysorex Federal, Inc. and Sysorex Arabia generated $6.860 million of revenue in FY as compared to $6.264 Million of revenue in FY Gross profit and Net Income were $2.7 Million and $533,625 for FY respectively. Gross profit and net income for FY were $2.307 Million and $220,931 respectively. Sysorex's US operations which include Sysorex Government Services, Inc. and Sysorex Federal, Inc. had a $595k increase in revenue and $200k increase in net income in FY over FY mainly as aresull of larger margins on our current contracts and a FMS (Foreign Military Sales) contract that started in October Sysorex Arabia's revenues increased nominally from $3.387 Million to $3.389 Million and profit increased from a loss of $158,643 to a profit $65,279. Revenue was essentially constant because of no new contracts. Sysorex Arabia was unable to submit new proposals because it could not finance the required bid and performance bonds. Currently all of the Sysorex Arabia revenue comes from 2 contracts that are both with the same customer- Ministry of Defense and Aviation (MODA). Sysorex Arabia is now building a pipeline of projects to increase revenue in the new fiscal year and its new partner in Saudi Arabia will provide financing for the bid and performance bonds as needed. Profit increased due to reduction of overhead costs and adjustment in accrued End of Service liabilities. Our financial statements arc not a guarantee of future performance and are subject to risks, uncertainties and assumptions that are difficult to predict. Therefore, actual results in future periods may differ materially from those expressed or projected in any forwardlooking statements because of a number of risks and uncertainties, including changes in Federal government fiscal spending. The Financials provided herein for fiscal year 2010 and 2011 do not reflect the costs for Sysorex Global Headquarters or the executive management team based in the Mountain
17 View office. We anticipate these expenses to be approximately $400,000 to $450,000 annually. We also expect our expenses to increase starting in FY as we plan to hire a new business development team and will have the additional expenses of being a public company. In addition, Sysorex Federal, Inc. (SFI) is planning on contacting a few of its old creditors in an attempt to settle the amounts owed which will negatively impact our cash flow. One of those SFI creditors has recently filed a court action to resolve the debts outstanding. Sysorex Arabia's MODA C4I contract is under a renewal process and to be awarded in September Sysorex will be competing for this renewal contract and if it does not win this new contract it will have a significant adverse impact on its financials going forward. 2. Interim Periods. Provide a comparable discussion that will enable the reader to assess material changes in financial condition and results of operations since the end of the last fiscal year and for the comparable interim period in the preceding year. Sysorex Government Services, Inc. expects to increase net income by 15% in FY as it pursues task orders on the numerous contracts it holds as either a prime or a subcontractor to large government contractors. Sysorex Arabia expects to achieve results similar to the prior fiscal year as its contract base has not changed significantly assuming that it wins the MODA contract renewal. If it does not win the renewal it's revenues will drop substantially. Sysorex Arabia has made some cost reductions and as of December 28, 2010 Sysorex Arabia has taken on a new partner to grow its business in Saudi Arabia and the region. The new partner will also provide financing for bid and performance bonds as needed on new projects. However, the sales cycle is 12 months for government contracts so revenue may not be recognized until the following year. Off-Balance Sheet Arrangements. I. In a separately-captioned section, discuss the issuer's off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the issuer's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors. The disclosure shall include the items specified in paragraphs C(l)(i), (ii), (Hi) and (iv) of this Item 16 to the extent necessary to an understanding of such arrangements and effect and shall also include such other information that the issuer believes is necessary for such an understanding. i. The nature and business purpose to the issuer of such off-balance sheet arrangements; ii. The importance to the issuer of such off-balance sheet arrangements in respect of its liquidity, capital resources, market risk support, credit risk support or other benefits;
18 Hi. iv. The amounts of revenues, expenses and cashflows of the issuer arising from such arrangements; the nature and amounts of any interests retained, securities issued and other indebtedness incurred by the issuer in connection with such arrangements; and the nature and amounts of any other obligations or liabilities (including contingent obligations or liabilities) of the issuer arising from such arrangements that are or are reasonably likely to become material and the triggering events or circumstances that could cause them to arise; and Any known event, demand, commitment, trend or uncertainty that will result in or is reasonably likely to result in the termination, or material reduction in availability to the issuer, of its off-balance sheet arrangements that provide material benefits to it, and the course of action that the issuer has taken or proposes to take in response to any such circumstances. 2. As used in paragraph C of this Item 16, the term off-balance sheet arrangement means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the issuer is a party, under which the issuer has: i. Any obligation under a guarantee contract that has any of the characteristics identified in paragraph 3 of FASB Interpretation No. 45, Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others (November 2002) ("FIN 45"), as may be modified or supplemented, and that is not excluded from the initial recognition and measurement provisions of FIN 45 pursuant to paragraphs 6 or 7 of that Interpretation; ii. A retained or contingent interest in assets transferred to an unconsolidated entity or similar arrangement that serves as credit, liquidity or market risk support to such entity for such assets; Hi. Any obligation, including a contingent obligation, under a contract that would be accounted for as a derivative instrument, except that it is both indexed to the issuer's own stock and classified in stockholders' equity in the issuer's statement of financial position, and therefore excluded from the scope of FASB Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities (June 1998), pursuant to paragraph 11 (a) of that Statement, as may he modified or supplemented; or iv. Any obligation, including a contingent obligation, arising out of a variable interest (as referenced in FASB Interpretation No. 46, Consolidation of Variable Interest Entities (January 2003), as may be modified or supplemented) in an unconsolidated entity that is held by, and material to, the issuer, where such entity provides financing, liquidity, market risk or credit risk support to, or engages in leasing, hedging or research and development services with, the issuer. In satisfying the requirements of paragraph C of this Item 16, the discussion of off-balance sheet arrangements need not repeat information provided in the footnotes to the financial statements, provided that such discussion clearly cross-references to specific information in the relevant
19 footnotes and integrates the substance of the footnotes into such discussion in a manner designed to inform readers of the significance of the information that is not included within the body oj such discussion. Sysorex Arabia - Off Balance Sheet Items Sysorex Arabia has been included as a defendant on a case involving a Sysorex partner for SR3 million or US$800,000. Sysorex Arabia does not have any direct liability in this case and is pursuing to resolve this matter with the partner and plaintiff. However there is a risk that the Plaintiff could seek to collect damages from Sysorex Arabia. Sysorex Global could potentially have a liability for its 50.2% ownership in Sysorex Arabia. Item 17 PARTE List of Securities offerings & Shares issued for services in the past two years ISSUANCE HISTORY Shares issued in the Year Endinz 6/30/2009 Shares Issuedjn the Year Ending 6/30/2010 Shares Issued in the Year Endinz 6/30/2011 Shares issued since 6/30/2011 (i) Private Placement subjected to Rule 4(2), during March 2, July 2011 (ii) None (iii) 2,350,000 (iii) 2,350,000 (iv) $0.01, $23,500 (v) Restricted common shares (vii) Yes shares were described (1) Non registered (2)Non Transferable (i) Private Placement subjected to Rule 504 July 28, 2011 (ii) None (iii) 14,600,000 (iii) 14,600,000 (iv) $0.01 per share cost basis, stock swap Acquisition (v) Restricted Common shares (vii) Yes shares were described (l)non registered (2)Non Transferable (i) Private Placement subjected to Rule 504, August 2011 (ii)none (iii) 216,000 (iii) 216,000 a -!
20 (iv) $0.50, $108,000 (v) Restricted Common Shares (vii) Yes shares were described (l)non registered (2)Non Transferable Outstanding Stock Purchase^Warrants Outstanding Common stock Purchase Warrants Year Ended (Common Shares Equivalent) 6/30/2010 6/30/2011 since 6/30/201 Price Expiry Outstanding at beginning None Warrants Issued None None Outstanding Warrants None None Share Issued for Services 30, , ,000 $ /31/11 $0.50 6/30/16 $0.463 (Avg. Price) 1. Arshad Waheed previous CEO and Chairman of the Company accrued a fee of $18,000 for services rendered for which he was issued 36,000 shares of restricted common stock in August Three consultants were issued 6,000 shares total in August for services rendered in the past year. 3. The Company entered in to an agreement with its public relations firm on July 201 1, the PR firm can purchase 300,000 shares at $0.50 per share. These options expire 6/30/2016. Item 18 Material Contracts. A. Every material contract, not made in the ordinary course of business, that will be performed after the disclosure statement is posted through the OTC Disclosure and News Service or was entered into not more than two years before such posting. Also include the following contracts: 1) Any contract to which directors, officers, promoters, voting trustees, security holders named in the disclosure statement, or the Designated Advisor for Disclosure are parties other than contracts involving only the purchase or sale of current assets having a determinable market price, at such market price;