Sphere 3D(ANY) - 2025 Q2 - Quarterly Report

Filing Information This section outlines the company's filing details, including registrant information and outstanding common shares - Sphere 3D Corp. filed a Quarterly Report on Form 10-Q for the period ended June 30, 2025[2] Registrant Details | Detail | Value | | :--- | :--- | | Registrant Name | Sphere 3D Corp. | | Commission File Number | 001-36532 | | Jurisdiction of Incorporation | Ontario, Canada | | Principal Executive Offices | 243 Tresser Blvd, 17th Floor, Stamford, CT 06901 | | Telephone Number | 647 952-5049 | | Trading Symbol | ANY | | Exchange | NASDAQ Capital Market | | Filer Status | Non-accelerated filer, Smaller reporting company | - As of July 31, 2025, there were 28,320,832 common shares outstanding[4] PART I — FINANCIAL INFORMATION This section encompasses the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial performance Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of Sphere 3D Corp. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, along with accompanying notes detailing significant accounting policies, fair value measurements, and other financial disclosures Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (in thousands of U.S. dollars) | Account | June 30, 2025 | December 31, 2024 | Change (2025 vs 2024) | | :--- | :--- | :--- | :--- | | Assets | | | | | Cash and cash equivalents | $4,703 | $5,425 | $(722) | | Bitcoin | $2,200 | $1,394 | $806 | | Investment in equity securities | $3,414 | $7,530 | $(4,116) | | Total current assets | $11,317 | $17,787 | $(6,470) | | Property and equipment, net | $19,644 | $21,967 | $(2,323) | | Total assets | $34,418 | $43,228 | $(8,810) | | Liabilities & Equity | | | | | Total current liabilities | $1,692 | $3,895 | $(2,203) | | Total shareholders' equity | $32,708 | $39,315 | $(6,607) | | Total liabilities, temporary equity, and shareholders' equity | $34,418 | $43,228 | $(8,810) | Condensed Consolidated Statements of Operations This section details the company's financial performance, including Bitcoin mining revenue, operating costs, and net income (loss) for the three and six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Operations (in thousands of U.S. dollars, except share and per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Bitcoin mining revenue | $3,018 | $4,666 | $5,835 | $11,612 | | Total operating costs and expenses | $5,645 | $10,377 | $13,650 | $19,189 | | Loss from operations | $(2,627) | $(5,711) | $(7,815) | $(7,577) | | Investment gain | $4,309 | $7,791 | $659 | $5,051 | | Net income (loss) | $1,667 | $2,124 | $(7,118) | $(2,353) | | Basic EPS | $0.06 | $0.11 | $(0.26) | $(0.13) | | Diluted EPS | $0.06 | $0.10 | $(0.26) | $(0.13) | - Bitcoin mining revenue decreased by $1.648 million (35.3%) for the three months ended June 30, 2025, compared to the same period in 2024, and by $5.777 million (49.7%) for the six months ended June 30, 2025, compared to 2024[12] - Net income decreased by $0.457 million (21.5%) for the three months ended June 30, 2025, compared to the same period in 2024. Net loss increased by $4.765 million (202.5%) for the six months ended June 30, 2025, compared to 2024[12] Condensed Consolidated Statements of Comprehensive Income (Loss) This section presents the company's comprehensive income (loss), including net income (loss) and foreign currency translation adjustments for the reported periods Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands of U.S. dollars) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) | $1,667 | $2,124 | $(7,118) | $(2,353) | | Foreign currency translation adjustment | $17 | $(3) | $14 | $(6) | | Comprehensive income (loss) | $1,684 | $2,121 | $(7,104) | $(2,359) | Condensed Consolidated Statements of Shareholders' Equity This section outlines changes in the company's shareholders' equity, including common shares, accumulated other comprehensive loss, and accumulated deficit Changes in Shareholders' Equity (in thousands of U.S. dollars, except shares) | Metric | Balance at Jan 1, 2025 | Issuance of common shares | Share-based compensation | Other comprehensive loss/income | Net income (loss) | Balance at Jun 30, 2025 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Common Shares (Amount) | $497,957 | $108 | $318 | — | — | $498,454 | | Accumulated Other Comprehensive Loss | $(1,821) | — | — | $14 | — | $(1,807) | | Accumulated Deficit | $(456,821) | — | — | — | $(7,118) | $(463,939) | | Total Shareholders' Equity | $39,315 | $108 | $318 | $14 | $(7,118) | $32,708 | | Common Shares (Number) | 25,453,327 | 1,804,635 | — | — | — | 27,950,462 | - Total shareholders' equity decreased from $39.315 million at January 1, 2025, to $32.708 million at June 30, 2025, primarily due to a net loss of $7.118 million[18] Condensed Consolidated Statements of Cash Flows This section details the company's cash flows from operating, investing, and financing activities for the six months ended June 30, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands of U.S. dollars) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,928) | $(3,354) | | Net cash provided by investing activities | $9,098 | $7,031 | | Net cash provided by financing activities | $108 | $0 | | Net (decrease) increase in cash and cash equivalents | $(722) | $3,677 | | Cash and cash equivalents, end of period | $4,703 | $4,263 | - Net cash used in operating activities significantly increased to $9.928 million in H1 2025 from $3.354 million in H1 2024, primarily due to a higher net loss[20][124] - Investing activities provided $9.098 million in H1 2025, mainly from Bitcoin sales ($5.3 million) and equity securities sales ($4.8 million), partially offset by property and equipment purchases ($1.2 million)[20][125] Notes to Condensed Consolidated Financial Statements This section provides detailed disclosures on the company's significant accounting policies, fair value measurements, Bitcoin activities, and other financial statement items 1. Organization and Business Sphere 3D Corp. commenced Bitcoin mining operations in January 2022, aiming to be a leader in the blockchain and cryptocurrency industry. The company faces substantial doubt about its ability to continue as a going concern due to recurring losses and negative operating cash flows, necessitating additional funding and strategic initiatives to lower mining costs and improve efficiency - Company commenced Bitcoin mining operations in January 2022, aiming to be a leader in the blockchain and cryptocurrency industry[22] - Management projects substantial doubt about the Company's ability to continue as a going concern within 12 months due to recurring losses, negative operating cash flows, and current hashing rate, requiring additional funding[23] - Mitigation strategies include lowering mining costs and refreshing the mining fleet to increase efficiency[23] 2. Summary of Significant Accounting Policies This note outlines the company's key accounting policies, including the principles of consolidation, use of estimates, foreign currency translation, and specific treatments for cash, equity investments, Bitcoin, property and equipment, and intangible assets. It also details the revenue recognition model for Bitcoin mining, comprehensive income, concentration risks, share-based compensation, operating segments, and recently issued accounting pronouncements - Bitcoin is accounted for as an intangible asset with an indefinite useful life, valued at fair value at each period-end, with changes recorded in operating expenses. Gains/losses from sales are measured on a FIFO basis[31] - Revenue from Bitcoin mining is recognized over time as hash calculation services are provided to mining pool operators (e.g., Foundry Digital LLC), with noncash consideration (Bitcoin) measured at fair value at contract inception[38][41] - The Company faces concentration risk with one mining pool operator (Foundry Digital LLC) and dependence on a small number of Bitcoin mining equipment suppliers[44][45] - New accounting pronouncements include ASU 2024-03 (Expense Disaggregation Disclosures, effective 2027) and ASU 2023-09 (Income Tax Disclosures, effective 2025), with the Company evaluating their impact[49][50] 3. Fair Value Measurements The company categorizes fair value measurements into a three-tier hierarchy. Recurring fair value measurements include investment in equity securities and Bitcoin (Level 1), and warrant liabilities (Level 3). Nonrecurring measurements apply to property and equipment and intangible assets upon impairment or acquisition Assets and Liabilities Measured at Fair Value on a Recurring Basis (in thousands) | Item | June 30, 2025 Fair Value | Level 1 | Level 2 | Level 3 | December 31, 2024 Fair Value | Level 1 | Level 2 | Level 3 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Investment in equity securities | $3,414 | $3,414 | $— | $— | $7,530 | $7,530 | $— | $— | | Bitcoin | $2,200 | $2,200 | $— | $— | $1,394 | $1,394 | $— | $— | | Warrant liabilities | $2 | $— | $— | $2 | $31 | $— | $— | $31 | - Unrealized gain of $1.2 million and unrealized loss of $2.5 million were recognized for investment in equity securities for the three and six months ended June 30, 2025, respectively[54] Warrant Liabilities Activity (in thousands) | Activity | Amount | | :--- | :--- | | Warrant liability as of January 1, 2025 | $31 | | Change in fair value (Jan 1 - Mar 31, 2025) | $(28) | | Warrant liability as of March 31, 2025 | $3 | | Change in fair value (Apr 1 - Jun 30, 2025) | $(1) | | Warrant liability as of June 30, 2025 | $2 | 4. Bitcoin This note details the company's Bitcoin activities, including revenue from mining, sales, and changes in fair value. As of June 30, 2025, the company held 20.5 Bitcoin, valued at $2.2 million, with all additions from mining and dispositions for funding operations Bitcoin Activity (in thousands) | Activity | Amount | | :--- | :--- | | Balance at January 1, 2025 | $1,394 | | Revenue recognized from Bitcoin mined | $5,835 | | Proceeds from sale of Bitcoin | $(5,301) | | Change in fair value of Bitcoin | $272 | | Balance at June 30, 2025 | $2,200 | Bitcoin Holdings (in thousands except for number of Bitcoin) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Number of Bitcoin held | 20.5 | 14.9 | | Carrying basis of Bitcoin | $2,129 | $1,450 | - For the six months ended June 30, 2025, the Company had a realized gain of $0.2 million on the sale of Bitcoin, compared to $0.6 million in the prior year[57] 5. Note Receivable The company holds a Senior Secured Convertible Promissory Note with Rainmaker Worldwide Inc., with a principal amount revised to $4.6 million and a due date extended to January 14, 2026. All related amounts have been fully reserved in prior periods - Rainmaker Promissory Note principal amount revised to $4.6 million and due date extended to January 14, 2026, bearing 10.0% interest per annum[59] - All amounts related to the Rainmaker Note have been fully reserved in prior periods[59] 6. Certain Balance Sheet Items This note provides a breakdown of other current assets, property and equipment (net), and other non-current assets. Key changes include a decrease in Bitcoin mining hosting deposits due to a terminated agreement and the completion of an 8 MW infrastructure site in Iowa Other Current Assets (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Bitcoin mining hosting deposit | $730 | $2,490 | | Total other current assets | $1,000 | $3,438 | Property and Equipment, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Mining equipment | $26,709 | $27,214 | | Infrastructure | $1,516 | $— | | Construction in progress | $323 | $1,750 | | Property and equipment, net | $19,644 | $21,967 | - In March 2025, infrastructure for an 8 MW site in Iowa was completed, and a management services agreement was entered into with Simple Mining LLC[63] - No impairment charges for property and equipment were incurred for the three and six months ended June 30, 2025, compared to $0.9 million in the prior year periods[64] 7. Intangible Assets Intangible assets, primarily supplier agreements, are amortized over five years. Net intangible assets decreased to $2.353 million at June 30, 2025, from $3.095 million at December 31, 2024 Intangible Assets, Net (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Supplier agreements | $37,525 | $37,525 | | Accumulated amortization | $(35,172) | $(34,430) | | Intangible assets, net | $2,353 | $3,095 | - Amortization expense for intangible assets was $0.4 million for both three-month periods and $0.7 million for both six-month periods ended June 30, 2025 and 2024[66] - Estimated future amortization expense is $0.7 million for the remainder of 2025, $1.5 million in 2026, and $0.1 million in 2027[67] 8. Preferred Shares The company has Series H Preferred Shares, which are convertible into common shares subject to shareholder approval and beneficial ownership limitations. These shares are non-voting, do not accrue dividends, and are classified as temporary equity due to certain redemption features - Series H Preferred Shares are convertible into 142.857 common shares per preferred share, subject to Nasdaq rules and a 9.99% beneficial ownership limit[68] - Series H Preferred Shares are non-voting, do not accrue dividends, and are classified as temporary equity due to redemption features beyond the company's control[68][69] - No common shares were issued for Series H conversion in H1 2025, compared to 4,043,850 common shares for 28,307 Series H Preferred Shares in H1 2024[69] 9. Share Capital The company has an At-the-Market (ATM) offering program for up to $8.0 million in common shares. All Pre-Funded Warrants were exercised by June 30, 2025, and a table of other outstanding warrants is provided - The AGP Agreement allows the company to offer and sell up to $8.0 million in common shares through an ATM offering program[70] - For the six months ended June 30, 2025, 210,448 common shares were issued under the AGP Agreement for approximately $0.1 million in net proceeds[71] - All Pre-Funded Warrants to purchase 1,594,000 common shares were exercised during the six months ended June 30, 2025, with none outstanding at period-end[72] Outstanding Warrants to Purchase Common Shares as of June 30, 2025 | Date issued | Contractual life (years) | Exercise price | Number outstanding | Expiration | | :--- | :--- | :--- | :--- | :--- | | September 2021 | 5 | $66.50 | 1,471,441 | September 8, 2026 | | February 2022 | 5 | $28.00 | 14,286 | February 7, 2027 | | February 2022 | 5 | $35.00 | 14,286 | February 7, 2027 | | February 2022 | 5 | $42.00 | 14,286 | February 7, 2027 | | April 2023 | 3 | $1.342 | 73,556 | April 17, 2026 | | August 2023 | 3 | $2.75 | 800,000 | August 11, 2026 | | August 2023 | 3 | $2.75 | 2,162,922 | August 23, 2026 | | November 2024 | 5.5 | $1.50 | 142,858 | May 21, 2030 | | November 2024 | 5.5 | $1.50 | 4,225,353 | May 21, 2030 | | Total | | | 8,918,988 | | 10. Equity Incentive Plan Shareholders approved the 2025 Performance Incentive Plan in May 2025, authorizing awards of up to 4.5 million common shares, with an annual increase mechanism. The note details activity for stock options and restricted stock units (RSUs), including grants, vesting, forfeitures, and related share-based compensation expense - The 2025 Performance Incentive Plan, approved in May 2025, initially authorizes 4.5 million common shares for awards, with an annual increase of up to 10% of outstanding common shares[74] Stock Option Activity | Activity | Shares Subject to Options | Weighted Average Exercise Price | | :--- | :--- | :--- | | Options outstanding — January 1, 2025 | 443,170 | $5.11 | | Granted | 149,500 | $0.79 | | Forfeited | (26,785) | $12.60 | | Options outstanding — June 30, 2025 | 565,885 | $3.62 | | Exercisable — June 30, 2025 | 416,385 | $4.63 | Restricted Stock Unit (RSU) Activity | Activity | Number of Shares | Weighted Average Grant Date Fair Value | | :--- | :--- | :--- | | Outstanding — January 1, 2025 | 760,834 | $1.98 | | Granted | 3,037,383 | $0.73 | | Vested and released | (876,344) | $1.07 | | Forfeited | (1,226,417) | $1.28 | | Outstanding — June 30, 2025 | 1,695,456 | $0.72 | Share-Based Compensation Expense (in thousands) | Period | 2025 | 2024 | | :--- | :--- | :--- | | Three Months Ended June 30, | $318 | $772 | | Six Months Ended June 30, | $389 | $1,858 | 11. Net Income (Loss) per Share This note provides the reconciliation for basic and diluted net income (loss) per share, detailing the weighted-average common shares outstanding and the impact of dilutive and anti-dilutive common share equivalents Net Income (Loss) per Share Reconciliation (in thousands, except share and per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income (loss) available to common shareholders | $1,667 | $2,124 | $(7,118) | $(2,353) | | Weighted average common shares outstanding for basic EPS | 27,700,956 | 18,711,718 | 27,454,024 | 17,644,315 | | Basic EPS | $0.06 | $0.11 | $(0.26) | $(0.13) | | Diluted EPS | $0.06 | $0.10 | $(0.26) | $(0.13) | Anti-Dilutive Common Share Equivalents Excluded from Diluted EPS | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Common share purchase warrants | 8,918,988 | 5,842,354 | 8,918,988 | 5,842,354 | | Options and RSUs outstanding | 2,261,341 | 1,700,910 | 2,261,341 | 1,700,910 | | Preferred shares | — | — | 23,000 | 2,172,569 | 12. Commitments and Contingencies The company has various hosting agreements with Simple Mining LLC and Joshi Petroleum, LLC, and terminated the Rebel Hosting Agreement in January 2025. A management services agreement for the Iowa site was also established. The company settled litigation with Gryphon Digital Mining, Inc. in March 2025 without payment - The company has Master Hosting Agreements with Simple Mining LLC (Iowa facilities) and a Hosting Agreement with Joshi Petroleum, LLC (three-year term)[82][83] - The Rebel Hosting Agreement was terminated in January 2025, resulting in a $2.4 million settlement payable to the Company[84] - In March 2025, the company entered into a 12-month management services agreement with Simple Mining LLC for its 8 MW Iowa site[85] - Litigation with Gryphon Digital Mining, Inc. was settled in March 2025, with all claims resolved on mutually acceptable terms and no payments required from the Company[88] 13. Subsequent Events On July 3, 2025, the company granted 740,740 Restricted Stock Units (RSUs) with a fair value of $0.5 million to outside consultants, with 50% vesting immediately - On July 3, 2025, 740,740 RSUs (fair value $0.5 million) were granted to outside consultants, with 50% vesting immediately and the remainder vesting upon completion of certain business transactions[89] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations for the three and six months ended June 30, 2025. It covers the Bitcoin mining business overview, operational strategies, detailed financial performance comparisons, liquidity, capital resources, and critical accounting estimates, highlighting the ongoing transition to more efficient mining operations and the going concern risk Overview This overview details the company's Bitcoin mining operations, hybrid treasury strategy, mining fleet status, hashrate capacity, and Bitcoin production and holdings - The company commenced Bitcoin mining operations in January 2022, aiming to be a leader in the blockchain and cryptocurrency industry through enterprise-scale mining and strategic partnerships[94] - A hybrid treasury strategy involves holding Bitcoin when possible and selling it to fund working capital requirements, with decisions based on market monitoring and forecasts[95] - As of June 30, 2025, the company owned approximately 13,000 miners, with 5,600 in service, and a total hashrate capacity of 0.73 EH/s. It is refreshing its fleet with newer-generation machines and has a self-owned 8 MW facility in Iowa[98] - During the first six months of 2025, the company mined 61.3 Bitcoin, a 13.4% decrease from the last six months of 2024, primarily due to the April 2024 halving event and the transition to lower-cost hosting sites and newer machines[98] - As of June 30, 2025, the company held approximately 20.5 Bitcoin with a fair value of $2.2 million[99] Mining Pools This section describes the company's engagement with Bitcoin mining pool operators, specifically Foundry Digital LLC, and its compensation model - The company engages with Bitcoin mining pool operators, specifically Foundry Digital LLC, to provide hash calculation services, which is its sole performance obligation[101] - Compensation is based on a Full Pay Per Share (FPPS) model, a fractional share of the fixed Bitcoin award and transaction fees, regardless of whether the mining pool operator successfully records a block[101] Results of Operations This section analyzes the company's financial performance, comparing key metrics for the second quarter and first six months of 2025 against the corresponding periods in 2024 The Second Quarter of 2025 Compared with the Second Quarter of 2024 In Q2 2025, revenue decreased by $1.7 million (36.5%) to $3.0 million, primarily due to the Bitcoin halving event and fleet refresh. Operating costs also decreased, leading to a reduced loss from operations, but net income declined due to a lower investment gain Q2 2025 vs. Q2 2024 Financial Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Bitcoin mining revenue | $3,018 | $4,666 | $(1,648) | -35.3% | | Cost of revenue | $2,301 | $3,959 | $(1,658) | -41.9% | | General and administrative | $2,126 | $2,986 | $(860) | -28.8% | | Depreciation and amortization | $1,667 | $1,816 | $(149) | -8.2% | | Impairment of property and equipment | $0 | $860 | $(860) | -100.0% | | Loss on disposal of property and equipment | $51 | $691 | $(640) | -92.6% | | Change in fair value of Bitcoin | $500 (gain) | $(65) (loss) | $565 | N/A | | Loss from operations | $(2,627) | $(5,711) | $3,084 | -54.0% | | Investment gain | $4,309 | $7,791 | $(3,482) | -44.7% | | Net income (loss) | $1,667 | $2,124 | $(457) | -21.5% | - General and administrative expenses decreased by $0.9 million, driven by lower share-based compensation ($0.5 million), legal fees ($0.4 million), and director fees ($0.2 million), partially offset by strategic business growth costs ($0.3 million)[105] The First Six Months of 2025 Compared with the First Six Months of 2024 For the first six months of 2025, revenue decreased by $5.8 million (49.7%) to $5.8 million, primarily due to the Bitcoin halving and fleet refresh. Operating expenses also saw significant reductions, but a substantial decrease in investment gain led to a higher net loss compared to the prior year H1 2025 vs. H1 2024 Financial Performance (in thousands) | Metric | H1 2025 | H1 2024 | Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Bitcoin mining revenue | $5,835 | $11,612 | $(5,777) | -49.7% | | Cost of revenue | $4,495 | $8,266 | $(3,771) | -45.6% | | General and administrative | $5,295 | $6,438 | $(1,143) | -17.7% | | Depreciation and amortization | $3,273 | $3,637 | $(364) | -10.0% | | Impairment of property and equipment | $0 | $860 | $(860) | -100.0% | | Loss on disposal of property and equipment | $859 | $691 | $168 | 24.3% | | Change in fair value of Bitcoin | $(272) (loss) | $(703) (loss) | $431 | -61.3% | | Loss from operations | $(7,815) | $(7,577) | $(238) | 3.1% | | Investment gain | $659 | $5,051 | $(4,392) | -86.9% | | Net income (loss) | $(7,118) | $(2,353) | $(4,765) | 202.5% | - General and administrative expenses decreased by $1.1 million, primarily due to a $1.5 million decrease in share-based compensation and a $0.4 million decrease in employee expenses, partially offset by an $0.8 million increase in strategic business growth efforts and $0.4 million in legal fees[113] Liquidity and Capital Resources This section discusses the company's sources of liquidity, working capital, ATM offering program, and the ongoing going concern risk due to recurring losses and negative operating cash flows - Principal liquidity sources are existing cash, cash equivalents, and available-for-sale equity securities. The company expects to fund operations through these sources, anticipated Bitcoin mining revenue, and future financing[119] Liquidity Metrics (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $4,703 | $5,425 | | Working capital | $9,600 | $13,900 | | Change in working capital | $(4,300) | N/A | - The company has an At-the-Market (ATM) offering program (AGP Agreement) for up to $8.0 million in common shares, with $0.1 million net proceeds received in H1 2025, intended for working capital, fleet upgrades, and vertical integration[120][121] - Management projects substantial doubt about the company's ability to continue as a going concern within 12 months due to recurring losses and negative operating cash flows, necessitating additional funding and strategic initiatives to lower mining costs and improve efficiency[122][123] Summary of Cash Flows (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,928) | $(3,354) | | Net cash provided by investing activities | $9,098 | $7,031 | | Net cash provided by financing activities | $108 | $0 | Off-Balance Sheet Information This section confirms that the company had no outstanding standby letters of credit as of June 30, 2025 - As of June 30, 2025, the company had no outstanding standby letters of credit[127] Critical Accounting Estimates This section highlights that financial statement preparation involves management estimates and judgments, with actual results potentially differing - The preparation of financial statements requires management to make estimates and judgments that affect reported amounts, with actual results potentially differing from these estimates[128] - Significant accounting policies are detailed in Note 2 of the Annual Report on Form 10-K for December 31, 2024[128] Recent Accounting Pronouncements This section directs readers to Note 2 for a discussion of recent accounting pronouncements and their potential impact on the company - Refer to Note 2 - Summary of Significant Accounting Policies for a discussion of recent accounting pronouncements and their potential impact[129] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section states that there are no quantitative and qualitative disclosures about market risk applicable to the company for the reporting period - This item is not applicable to the company[130] Item 4. Controls and Procedures This section details management's evaluation of the company's disclosure controls and procedures and reports on any changes in internal control over financial reporting Disclosure Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, ensuring timely and accurate reporting - Management, including the principal executive and financial officers, concluded that disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[131] Changes in Internal Control over Financial Reporting There were no material changes in internal control over financial reporting during the quarter ended June 30, 2025 - There were no changes in internal control over financial reporting during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[132] PART II — OTHER INFORMATION This part covers various other information, including legal proceedings, risk factors, sales of equity securities, defaults, mine safety, and a list of exhibits Item 1. Legal Proceedings This section refers to Note 12, 'Commitments and Contingencies,' for a detailed discussion of the company's legal proceedings - For a discussion of legal proceedings, refer to Note 12. Commitments and Contingencies[134] Item 1A. Risk Factors Investors are advised that an investment in the company involves a high degree of risk and should carefully consider the risk factors described in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - An investment in the company involves a high degree of risk. Investors should consider risk factors detailed in the Annual Report on Form 10-K for December 31, 2024[135] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section states that there were no unregistered sales of equity securities and no use of proceeds to report for the period - None to report for unregistered sales of equity securities and use of proceeds[136] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - None to report for defaults upon senior securities[136] Item 4. Mine Safety Disclosures This section states that mine safety disclosures are not applicable to the company - This item is not applicable to the company[136] Item 5. Other Information This section states that there is no other information to report for the period - None to report for other information[137] Item 6. Exhibits This section provides a comprehensive list of all exhibits filed as part of this Quarterly Report on Form 10-Q, including organizational documents, employment agreements, incentive plans, certifications, and XBRL data files Selected Exhibits Filed | Exhibit Number | Description | Filed Herewith | Incorporated by Reference | | :--- | :--- | :--- | :--- | | 3.1-3.13 | Certificates of Amendment to Articles of Amalgamation | | Yes | | 3.14-3.17 | By-laws | | Yes | | 10.1+ | Amended and Restated Employment Agreement (Kurt Kalbfleisch) | | Yes | | 10.2+ | Sphere 3D Corp. 2025 Performance Incentive Plan | | Yes | | 10.3+ | Form of Nonqualified Stock Option Agreement | X | | | 10.4+ | Form of Restricted Stock Unit Agreement | X | | | 31.1 | Certification of CEO (Sarbanes-Oxley Act) | X | | | 31.2 | Certification of CFO (Sarbanes-Oxley Act) | X | | | 32.1 | Certification of CEO (18 U.S.C. Section 1350) | X | | | 32.2 | Certification of CFO (18 U.S.C. Section 1350) | X | | | 101.INS-104 | XBRL Instance Document and Taxonomies | X | | Signature The report is duly signed on behalf of Sphere 3D Corp. by its Interim Chief Executive Officer and CFO, Kurt L. Kalbfleisch, on August 5, 2025 - The report was signed by Kurt L. Kalbfleisch, Interim Chief Executive Officer and CFO (Principal Executive Officer, Principal Financial and Accounting Officer) on August 5, 2025[144]