Sphere 3D Reports Second Quarter 2022 Financial Results and Operational Updates

Rhea-AI Summary

Sphere 3D Corp. (NASDAQ: ANY) reported Q2 2022 revenues of $1.9 million, a significant increase from $0.9 million in Q2 2021, driven by mining 37.1 bitcoin. However, the company faced substantial operating expenses of $17.3 million, largely from depreciation and administrative costs, leading to a net loss of $40.7 million or $0.62 per share. The first half of 2022 saw total revenues of $3.3 million and a net loss of $55.3 million. The company is focused on maintaining a conservative capital strategy and has avoided long-term debt while scaling operations. CEO Patricia Trompeter emphasizes transparency with investors.

Positive

• Revenue growth in Q2 2022: $1.9 million vs. $0.9 million in Q2 2021.
• Increased bitcoin production: 37.1 bitcoin mined in Q2 2022, total holdings at 55.26.
• Maintaining a conservative capital strategy without long-term debt.

Negative

• Operating costs surged to $17.3 million, up from $4.4 million in Q2 2021.
• Net loss of $40.7 million in Q2 2022 compared to $3.1 million in Q2 2021.
• Impairment losses on investments totaling $12.4 million in Q2 2022.

TORONTO--(BUSINESS WIRE)-- Sphere 3D Corp. ("Sphere 3D" or the "Company") (NASDAQ: ANY), dedicated to becoming the leading carbon-neutral Bitcoin mining company operating at an industrial scale, is pleased to announce financial results for quarter ended June 30, 2022.

CEO Comments

“During the second quarter we remained focused on energizing our miners, optimizing operations, and navigating the transition into bitcoin mining. Like most miners in the industry, we have been affected by market volatility, but have continued to onboard more miners with our hosting partners and scale our mining operations during the quarter.”

“We continue to increase our bitcoin holdings and with our conservative approach to maintaining our balance sheet – I believe we are positioned to grow,” said Patricia Trompeter, CEO of Sphere 3D.

“We will continue to prioritize transparency with our shareholders and have expanded disclosures to include monthly investor reports that provide our mining production totals as well as insights into the operations of the Company. As Sphere 3D grows, we will continue to share relevant news while adhering to all SEC and Nasdaq disclosure regulations.

“I am grateful for your ongoing support as we reposition Sphere 3D and am looking forward to the second half of 2022.”

Second Quarter FY 2022 Highlights:

• The Company recorded revenues of $1.9 million during the quarter, including digital mining revenues of $1.2 million from production of 37.1 bitcoin, compared with revenues of $0.9 million in the prior-year period.
• The company mined 37.1 bitcoin in the quarter ended June 30, 2022, bringing the total holdings to 55.26 at quarter close due to the energization of additional miners. We continue to employ a HODL strategy only liquidating when needed for additional working capital.
• The Company continued to strengthen its management team as follows:
  - Patricia Trompeter took over as Sphere 3D's CEO on April 5^th
  - Kurt Kalbfleisch finalized an employment agreement as CFO
  - Duncan McEwan became Chairman of the Board
  - Timothy Hanley, Veteran Finance Executive, was added to the Sphere 3D Board of Directors

Second Quarter FY 2022 Financial Results:

• The Company recorded revenues of $1.9 million during the quarter, including digital mining revenues of $1.2 million from production of 37.1 bitcoin, compared with revenues of $0.9 million in the prior-year period.
• Operating costs and expenses for the quarter totaled $17.3 million, compared to $4.4 million for the second quarter of 2021. The increase in operating costs and expenses is primarily attributable to depreciation and amortization of $7.5 million, compared to $0.2 million for the second quarter of 2021, higher general and administrative expenses of $7.8 million in the second quarter of 2022 compared to $3.2 million for the same period in 2021 relating to management turnover and start-up costs associated with scaling our bitcoin mining operations.
• In connection with the termination of the Merger Agreement with Gryphon Digital Mining on April 4, 2022, the Company incurred a loss on the forgiveness of outstanding notes totaling $13.1 million during the quarter.
• Impairment of investments was $12.4 million and nil for the second quarter of 2022 and 2021, respectively. The increase of $12.4 million was due to impairment losses recognized on our Filecoiner investments. The fair value of these investments was impacted by the decrease in the price of Filecoin since the time of the investments resulting in an impairment.
• The Company recorded a net loss of $40.7 million, or $0.62 per share, during the quarter, compared to a net loss of $3.1 million, or $0.19 per share, for the second quarter of 2021.

Six Months Ended June 30, 2022, Financial Results:

• The Company recorded revenues of $3.3 million during the first six months of 2022, including digital mining revenues of $2.0 million from production of 55.3 bitcoin, compared with revenues of $1.8 million in the prior-year period.
• Operating costs and expenses for the first six months of 2022 totaled $33.8 million, compared to $6.7 million for the first six months of 2021. The increase in operating costs and expenses is primarily attributable to depreciation and amortization of $13.8 million compared to $0.3 million in the first six months of 2021, higher general and administrative expenses of $16.8 million in the first half of 2022 compared to $4.3 million for the same period in 2021 relating to management turnover and start-up costs associated with scaling our bitcoin mining operations.
• In connection with the termination of the Merger Agreement with Gryphon Digital Mining on April 4, 2022, the Company incurred a loss on the forgiveness of outstanding notes totaling $13.1 million during the first six months of 2022.
• Impairment of investments was $12.4 million and nil for the first six months of 2022 and 2021, respectively. The increase of $12.4 million was due to impairment losses recognized on our Filecoiner investments. The fair value of these investments was impacted by the decrease in the price of Filecoin since the time of the investments resulting in an impairment.
• Net loss available to common shareholders for the first six months of 2022 was $55.3 million, or a net loss of $0.85 per share, compared to a net loss available to common shareholders of $5.6 million, or a net loss of $0.44 per share, in the first six months of 2021.

Corporate Financial Strategy

The Company has been actively exploring options for financing the balance of miners comprising the unfunded miners acquired from Bitmain as announced in September 2021. Based on current market conditions and the multiple financing options explored, the Company has determined that it will not take on long-term debt or initiate an equity raise to fund the purchase of additional miners in 2022. It was determined prudent to maintain a conservative capital strategy and remain debt-free until market conditions improve.

About Sphere 3D

Sphere 3D Corp. (Nasdaq: ANY) is a net carbon-neutral cryptocurrency miner with decades of proven enterprise data-services expertise. The Company is growing its industrial-scale mining operation through the capital-efficient procurement of next-generation mining equipment and partnering with best-in-class data center operators. Sphere 3D is dedicated to increasing shareholder value while honoring its commitment to strict environmental, social, and governance standards. For more information about the Company, please visit Sphere3D.com.

Forward-Looking Statements

This communication contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events, including the timing of the proposed transaction and other information related to the proposed transaction. In some cases, you can identify forward-looking statements because they contain words such as "may," "will," "should," "expects," "plans," "anticipates," "could," "intends," "target," "projects," "contemplates," "believes," "estimates," "predicts," "potential" or "continue" or the negative of these words or other similar terms or expressions. Expectations and beliefs regarding matters discussed herein may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. The forward-looking statements contained in this communication are also subject to other risks and uncertainties, including those more fully described in filings with the SEC, including Sphere 3D's reports filed on Form 20-F and Form 6-K and in other filings made by Sphere 3D with the SEC from time to time and available at www.sec.gov. These forward-looking statements are based on current expectations, which are subject to change.

SPHERE 3D CORP.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands of U.S. dollars, except share and per share amounts)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
			2022				2021				2022				2021
Revenues:		(Unaudited)								(Unaudited)
Digital mining revenue		$	1,211			$	-			$	1,958			$	-
Service and product revenue			710				894				1,335				1,834
Total revenues			1,921				894				3,293				1,834
Operating costs and expenses:
Cost of digital mining revenue			619				-				974				-
Cost of service and product revenue			341				406				700				821
Sales and marketing			264				407				495				711
Research and development			139				269				253				506
General and administrative			7,788				3,197				16,757				4,302
Depreciation and amortization			7,485				157				13,849				311
Impairment of digital assets			679				-				770				-
Total operating expenses			17,315				4,436				33,798				6,651
Loss from operations			(15,394	)			(3,542	)			(30,505	)			(4,817	)
Other income (expense):
Forgiveness of note receivable			(13,145	)			-				(13,145	)			-
Impairment of investments			(12,429	)			-				(12,429	)			-
Interest expense			-				(6	)			-				(515	)
Interest and other income, net			281				667				745				79
Net loss			(40,687	)			(2,881	)			(55,334	)			(5,253	)
Dividends on preferred shares			-				169				-				362
Net loss available to common shareholders		$	(40,687	)		$	(3,050	)		$	(55,334	)		$	(5,615	)
Net loss per share:
Basic and diluted		$	(0.62	)		$	(0.19	)		$	(0.85	)		$	(0.44	)
Shares used in computing net loss per share:
Basic and diluted			66,148,147				15,990,564				65,001,147				12,724,287

SPHERE 3D CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars)
		June 30,			December 31,
		2022			2021
		(Unaudited)			(Unaudited)
ASSETS
Cash and cash equivalents		$	10,724		$	54,355
Digital assets			962			-
Accounts receivable, net			193			181
Notes receivable			339			1,859
Other current assets			37,405			22,027
Total current assets			49,623			78,422
Notes receivable			3,665			11,988
Investments			7,520			19,949
Mining equipment, net			8,484			-
Intangible assets, net			51,898			63,017
Other assets			109,295			102,548
Total assets		$	230,485		$	275,924
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities		$	4,092		$	5,208
Other long-term liabilities			1,106			1,090
Total shareholders' equity			225,287			269,626
Total liabilities and shareholders' equity		$	230,485		$	275,924

 

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Sphere 3D Contacts

NMN Advisors

Sphere3d@nmnadvisors.com



Kurt Kalbfleisch, CFO, Sphere 3D

Investor.relations@sphere3d.com

Source: Sphere 3D Corp.

FAQ

What were Sphere 3D's revenues for Q2 2022?

Sphere 3D reported revenues of $1.9 million for Q2 2022.

How much bitcoin did Sphere 3D mine in Q2 2022?

Sphere 3D mined 37.1 bitcoin in Q2 2022.

What was the net loss for Sphere 3D in Q2 2022?

Sphere 3D recorded a net loss of $40.7 million for Q2 2022.

What is Sphere 3D's financial strategy regarding debt?

Sphere 3D is maintaining a conservative capital strategy and is avoiding long-term debt.

How did Sphere 3D's performance in 2022 compare to 2021?

Revenues increased from $1.8 million in the first half of 2021 to $3.3 million in the same period of 2022, but net loss worsened from $5.6 million to $55.3 million.