any-20240630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from___________________________to ___________________________

Commission File Number: 001-36532

__________________________________

Sphere 3D Corp.

(Exact name of Registrant as specified in its charter)

__________________________________


Ontario, Canada						98-1220792
(State or other jurisdiction of incorporation or organization)						(IRS Employer Identification No.)

243 Tresser Blvd, 17th Floor
Stamford, CT						06901
(Address of principal executive offices)						(Zip Code)

647 952-5049

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Shares	ANY	NASDAQ Capital Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or 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 ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2024, there were 20,743,205 shares of the registrant’s common shares outstanding.

TABLE OF CONTENTS

PART I — FINANCIAL INFORMATION

Item 1.

Financial Statements:

Page

Condensed Consolidated Balance Sheets (unaudited) - June 30, 2024 and December 31, 2023

Condensed Consolidated Statements of Operations (unaudited) - Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Comprehensive Income (Loss) (unaudited) - Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Shareholders’ Equity (unaudited)- Three and Six Months Ended June 30, 2024 and 2023

Condensed Consolidated Statements of Cash Flows (unaudited) - Six Months Ended June 30, 2024 and 2023

Notes to Condensed Consolidated Financial Statements (unaudited)

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Item 4.

Controls and Procedures

PART II — OTHER INFORMATION

Item 1.

Legal Proceedings

Item 1A.

Risk Factors

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 3.

Defaults Upon Senior Securities

Item 4.

Mine Safety Disclosures

Item 5.

Other Information

Item 6.

Exhibits

Signature

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Sphere 3D Corp.

Condensed Consolidated Balance Sheets

(in thousands of U.S. dollars, except shares)

(unaudited)


	June 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	4,263	$	586
Digital assets	450		986
Investment in equity securities	9,542		—


Other current assets	3,018		11,938
Total current assets	17,273		13,510
Property and equipment, net	19,535		24,166
Intangible assets, net	3,838		4,581
Other non-current assets	3,380		3,406
Total assets	$	44,026	$	45,663
Liabilities, Temporary Equity and Shareholders’ Equity
Current liabilities:
Accounts payable	$	926	$	2,374
Accrued liabilities	1,600		1,179
Accrued payroll and employee compensation	1,365		1,482
Warrant liabilities	44		205

Other current liabilities	—		106
Total current liabilities	3,935		5,346




Commitments and contingencies (Note 12)
Temporary equity:
Series H preferred shares, no par value, unlimited shares authorized, 15,208 and 43,515 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	6,656		13,794

Shareholders’ equity:

Common shares, no par value; unlimited shares authorized, 20,334,921 and 15,373,616 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively	484,953		475,702
Accumulated other comprehensive loss	(1,814)		(1,808)
Accumulated deficit	(449,704)		(447,371)
Total shareholders’ equity	33,435		26,523
Total liabilities, temporary equity, and shareholders’ equity	$	44,026	$	45,663

See accompanying notes to condensed consolidated financial statements.

Sphere 3D Corp.

Condensed Consolidated Statements of Operations

(in thousands of U.S. dollars, except share and per share amounts)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Revenues:
Bitcoin mining revenue	$	4,666	$	4,966	$	11,612	$	7,490
Service and product revenue	—		500		—		1,002
Total revenues	4,666		5,466		11,612		8,492
Operating costs and expenses:
Cost of Bitcoin mining revenue (exclusive of depreciation and amortization shown below)	3,959		4,074		8,266		6,039
Cost of service and product revenue	—		209		—		507
Sales and marketing	—		277		—		551
Research and development	—		227		—		497
General and administrative	2,986		3,634		6,438		7,105
Depreciation and amortization	1,816		1,375		3,637		2,400
Impairment of property and equipment	860		—		860		—
Loss on disposal of property and equipment	691		251		691		251
Change in fair value of Bitcoin	65		—		(703)		—
Realized gain on sale of Bitcoin	—		(139)		—		(772)
Impairment of Bitcoin	—		254		—		350
Total operating costs and expenses	10,377		10,162		19,189		16,928
Loss from operations	(5,711)		(4,696)		(7,577)		(8,436)
Other income (expense):

Unrealized gain on investment in equity securities	7,279		—		4,539		—
Interest income and other income, net	558		1,113		687		1,364
Interest expense	—		(1,173)		—		(1,173)


Net income (loss) before taxes	2,126		(4,756)		(2,351)		(8,245)
Provision for income taxes	2		4		2		4
Net income (loss)	2,124		(4,760)		(2,353)		(8,249)
Less: Non-controlling interest - income	—		67		—		83
Net income (loss) available to common shareholders	$	2,124	$	(4,827)	$	(2,353)	$	(8,332)

Net income (loss) per share:
Basic	$	0.11	$	(0.44)	$	(0.13)	$	(0.78)
Diluted	$	0.10	$	(0.44)	$	(0.13)	$	(0.78)
Shares used in computing net income (loss) per share:
Basic	18,711,718		11,051,588		17,644,315		10,673,876
Diluted	20,884,287		11,051,588		17,644,315		10,673,876

See accompanying notes to condensed consolidated financial statements.

Sphere 3D Corp.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(in thousands of U.S. dollars)

(unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
	2024		2023		2024		2023

Net income (loss)	$	2,124	$	(4,760)	$	(2,353)	$	(8,249)
Other comprehensive loss:
Foreign currency translation adjustment	(3)		(3)		(6)		(5)
Total other comprehensive loss	(3)		(3)		(6)		(5)
Comprehensive income (loss)	$	2,121	$	(4,763)	$	(2,359)	$	(8,254)

See accompanying notes to condensed consolidated financial statements.

Sphere 3D Corp.

Condensed Consolidated Statements of Shareholders’ Equity

(in thousands of U.S. dollars, except shares)

(unaudited)







	Common Shares		Accumulated Other Comprehensive Loss		Accumulated Deficit			Non-controlling Interest		Total Shareholders' Equity
		Shares					Amount
Balance at January 1, 2024		15,373,616	$	475,702	$	(1,808)		$	(447,371)	$	—	$	26,523

Cumulative adjustment from adoption of ASU 2023-08		—	—		—			20		—		20
Issuance of common shares for conversion of preferred shares		2,422,710	4,327		—			—		—		4,327
Share-based compensation		—	1,086		—			—		—		1,086
Other comprehensive loss		—	—		(3)			—		—		(3)
Net loss		—	—		—			(4,477)		—		(4,477)
Balance at March 31, 2024		17,796,326	481,115		(1,811)			(451,828)		—		27,476

Issuance of common shares for conversion of preferred shares		1,621,140	2,811		—			—		—		2,811
Issuance of common shares for vested restricted stock units		717,858	—		—			—		—		—
Issuance of common shares for settlement of liabilities		199,597	255		—			—		—		255
Share-based compensation		—	772		—			—		—		772
Other comprehensive loss		—	—		(3)			—		—		(3)
Net income		—	—		—			2,124		—		2,124
Balance at June 30, 2024		20,334,921	$	484,953	$	(1,814)		$	(449,704)	$	—	$	33,435

See accompanying notes to condensed consolidated financial statements.

Sphere 3D Corp.

Condensed Consolidated Statements of Shareholders’ Equity (continued)

(in thousands of U.S. dollars, except shares)

(unaudited)


	Common Shares		Accumulated Other Comprehensive Loss		Accumulated Deficit			Non-controlling Interest		Total Shareholders' Equity
		Shares					Amount
Balance at January 1, 2023		9,804,609	$	456,402	$	(1,799)		$	(419,732)	$	(306)	$	34,565
Cumulative adjustment from adoption of ASU 2016-13		—	—		—			(3,821)		—		(3,821)
Issuance of common shares for conversion of preferred shares		748,427	2,311		—			—		—		2,311

Issuance of common shares pursuant to the vesting of restricted stock units		10,656	—		—			—		—		—
Share-based compensation		—	485		—			—		—		485
Remeasurement of redeemable non-controlling interest		—	—		—			(376)

SEC Form 10-Q filed by Sphere 3D Corp.