any-20240930

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 September 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 November 5, 2024, there were 21,238,243 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) - September 30, 2024 and December 31, 2023

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

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

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

Condensed Consolidated Statements of Cash Flows (unaudited) - Nine Months Ended September 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)


	September 30, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	4,950	$	586
Digital assets	79		986
Investment in equity securities	6,950		—


Other current assets	2,522		11,938
Total current assets	14,501		13,510
Property and equipment, net	23,391		24,166
Intangible assets, net	3,467		4,581
Other non-current assets	2,896		3,406
Total assets	$	44,255	$	45,663
Liabilities, Temporary Equity and Shareholders’ Equity
Current liabilities:
Accounts payable	$	612	$	2,374
Accrued liabilities	1,778		1,179
Accrued payroll and employee compensation	1,127		1,482
Warrant liabilities	32		205

Other current liabilities	—		106
Total current liabilities	3,549		5,346




Commitments and contingencies (Note 12)
Temporary equity:
Series H preferred shares, no par value, unlimited shares authorized, 11,132 and 43,515 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	4,858		13,794

Shareholders’ equity:

Common shares, no par value; unlimited shares authorized, 20,940,530 and 15,373,616 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively	487,262		475,702
Accumulated other comprehensive loss	(1,814)		(1,808)
Accumulated deficit	(449,600)		(447,371)
Total shareholders’ equity	35,848		26,523
Total liabilities, temporary equity, and shareholders’ equity	$	44,255	$	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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Revenues:
Bitcoin mining revenue	$	2,355	$	5,102	$	13,967	$	12,592
Service and product revenue	—		622		—		1,624
Total revenues	2,355		5,724		13,967		14,216
Operating costs and expenses:
Cost of Bitcoin mining revenue (exclusive of depreciation and amortization shown below)	2,731		4,292		10,997		10,331
Cost of service and product revenue	—		221		—		728
Sales and marketing	—		217		—		768
Research and development	—		362		—		859
General and administrative	3,032		3,399		9,470		10,504
Depreciation and amortization	1,737		2,028		5,374		4,428
Impairment of acquired intangible assets	—		1,231		—		1,231
Impairment of property and equipment	—		—		860		—
Loss on disposal of property and equipment	—		315		691		566
Change in fair value of Bitcoin	8		—		(695)		—
Realized gain on sale of Bitcoin	—		(136)		—		(908)
Impairment of Bitcoin	—		199		—		549
Total operating costs and expenses	7,508		12,128		26,697		29,056
Loss from operations	(5,153)		(6,404)		(12,730)		(14,840)
Other income (expense):

Unrealized (loss) gain on investment in equity securities	(446)		—		4,093		—
Other income, net	5,775		100		6,462		1,464
Interest expense	—		(10)		—		(1,183)


Net income (loss) before taxes	176		(6,314)		(2,175)		(14,559)
Provision for income taxes	72		—		74		4
Net income (loss)	104		(6,314)		(2,249)		(14,563)
Less: Non-controlling interest - (loss) income	—		(7)		—		76
Net income (loss) available to common shareholders	$	104	$	(6,307)	$	(2,249)	$	(14,639)

Net income (loss) per share:
Basic	$	0.01	$	(0.50)	$	(0.12)	$	(1.29)
Diluted	$	0.005	$	(0.50)	$	(0.12)	$	(1.29)
Shares used in computing net income (loss) per share:
Basic	20,733,022		12,653,413		18,681,399		11,340,973
Diluted	22,323,306		12,653,413		18,681,399		11,340,973

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 September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023

Net income (loss)	$	104	$	(6,314)	$	(2,249)	$	(14,563)
Other comprehensive loss:
Foreign currency translation adjustment	—		(1)		(6)		(6)
Total other comprehensive loss	—		(1)		(6)		(6)
Comprehensive income (loss)	$	104	$	(6,315)	$	(2,255)	$	(14,569)

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
Issuance of common shares for conversion of preferred shares

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