Sphere 3D(US:ANY)2023-05-10 16:00Financial Performance - Total revenues for the three months ended March 31, 2023, were $3,026,000, a 120% increase from $1,372,000 in the same period of 2022[7] - Digital mining revenue increased to $2,524,000, up from $747,000 year-over-year, representing a 237% growth[7] - Net loss for the three months ended March 31, 2023, was $3,489,000, significantly improved from a net loss of $14,647,000 in the same period of 2022, a reduction of 76%[10] - The company reported a basic and diluted net loss per share of $0.05 for the three months ended March 31, 2023, compared to $0.23 for the same period in 2022[7] - Total operating expenses decreased to $6,766,000 for the three months ended March 31, 2023, down from $16,480,000 in the prior year, a reduction of 59%[7] - Revenue for the first quarter of 2023 was $3.0 million, an increase of $1.6 million from $1.4 million in the first quarter of 2022, primarily driven by a $1.8 million increase in digital mining revenues[94] Assets and Liabilities - Total current assets decreased to $6,333,000 as of March 31, 2023, down from $10,284,000 at the end of 2022, a decline of 38%[5] - Total liabilities reduced to $10,697,000 as of March 31, 2023, compared to $11,984,000 at the end of 2022, a decrease of 11%[5] - Cash and cash equivalents increased to $2,713,000 as of March 31, 2023, compared to $1,337,000 at the end of 2022, an increase of 103%[5] - The company’s accumulated deficit as of March 31, 2023, was $427,434,000, compared to $419,732,000 at the end of 2022[5] - The balance of digital assets at March 31, 2023, was $590,000, down from $1.7 million at the beginning of the year[28] Cash Flow and Operating Activities - The company reported a net cash used in operating activities of $164,000 for the three months ended March 31, 2023, compared to $15.9 million for the same period in 2022[16] - Cash and cash equivalents at the end of the period were $2.9 million, a significant decrease from $25.7 million at the end of March 31, 2022[16] - The company generated proceeds of $3.9 million from the sale of digital assets during the three months ended March 31, 2023[16] - The company incurred costs of $1.3 million under the GC Data Center Master Agreement for the three months ended March 31, 2023, compared to nil in the same period of 2022[72] Shareholder Information - The number of common shares outstanding increased to 73,944,714 as of March 31, 2023, from 68,631,104 at the end of 2022[5] - The number of preferred shares issued and outstanding decreased from 96,000,000 as of March 31, 2022 to 54,761,000 as of March 31, 2023, a reduction of approximately 43.1%[70] - The company had 19,752,538 outstanding common share purchase warrants as of March 31, 2023, slightly down from 19,858,539 in the previous year[70] - The company recorded an unrecognized estimated compensation cost of $1,759,000 for RSUs as of March 31, 2023, with a remaining weighted-average recognition period of 1.2 years[68] Expenses - General and administrative expenses decreased to $3.5 million in Q1 2023 from $9.0 million in Q1 2022, a reduction of approximately 61.1%[96] - Depreciation and amortization expense fell to $1.0 million in Q1 2023 from $6.4 million in Q1 2022, a decrease of about 84.4%[96] - Sales and marketing expenses were $0.3 million in Q1 2023, up from $0.2 million in Q1 2022, reflecting a 50% increase[95] - Research and development expenses increased to $0.3 million in Q1 2023 from $0.1 million in Q1 2022, representing a 200% increase[95] Future Projections and Concerns - The company has projected that cash on hand may not be sufficient to continue operations beyond the next 12 months without raising additional funding[19] - The company anticipates an increase in working capital needs as it continues to expand and enhance its operations[19] - Management projected that cash on hand may not be sufficient to continue operations beyond the next 12 months without additional funding[99] - The company expects working capital needs to increase in the future as it continues to expand and enhance operations[99] Strategic Initiatives - The company is focused on establishing an enterprise-scale carbon-neutral Bitcoin mining operation and enhancing its data management solutions[18] - The company is focused on establishing an enterprise-scale carbon-neutral Bitcoin mining operation through procurement of next-generation mining equipment[87] - The Digital Mining segment generates revenue solely from one mining pool operator, with all revenue generated in the United States[80] Legal and Compliance - The company filed litigation against Gryphon Digital Mining, Inc. for several breaches of contract on April 7, 2023[92] - The company has received an additional 180-day grace period from Nasdaq to regain compliance with the minimum bid price requirement of $1.00 per share[91]