Sphere 3D(US:ANY)2023-08-13 16:00Revenue Performance - Revenue for the second quarter of 2023 was $5.5 million, up from $1.9 million in the same period of 2022, representing a 189.5% increase[124] - Revenue for the first six months of 2023 was $8.5 million, a 158% increase from $3.3 million in the same period of 2022, primarily driven by a $5.5 million increase in digital mining operations[132] Cost and Expenses - Direct cost of revenues for the second quarter of 2023 was $4.3 million, compared to $1.0 million in the second quarter of 2022, reflecting a 330% increase due to more miners deployed[125] - Direct cost of revenues increased to $6.5 million in the first six months of 2023 from $1.7 million in 2022, reflecting a $4.8 million rise due to more miners deployed in digital mining[133] - General and administrative expenses decreased to $7.1 million in the first six months of 2023 from $16.8 million in 2022, a reduction of $9.7 million attributed to lower share-based compensation and costs related to terminated merger transactions[133] - Depreciation and amortization expense dropped to $2.4 million in the first six months of 2023 from $13.8 million in 2022, a decrease of $11.4 million due to fully amortized supplier agreements[133] - Interest expense for the first six months of 2023 was $1.2 million, compared to nil in 2022, primarily due to warrants issued with convertible debt[135] Cash Flow and Financial Position - Cash and cash equivalents as of June 30, 2023, were $0.5 million, down from $1.3 million at December 31, 2022, with a working capital deficit of $2.5 million[136] - The company generated a net cash used in operating activities of $2.0 million for the first six months of 2023, compared to $24.5 million in 2022[139] - The company expects negative operating cash flows as it aims to increase digital mining revenue and maintain operational efficiencies[136] - The company sold 2,531 miners for cash proceeds of $3.7 million during the first six months of 2023[139] Financing Activities - A Securities Purchase Agreement was entered into on August 11, 2023, resulting in gross proceeds of $3.5 million from the issuance of 13,764 Series H Preferred Shares and 1,966,292 common share purchase warrants[123] - The company issued a senior convertible promissory note with a principal amount of $1.0 million in April 2023, with an additional tranche of up to $2.0 million expected[141] - The company repaid a total of $1.3 million for the LDA Note on August 14, 2023, allowing the redemption of 40% of the outstanding LDA Warrants[122] - On August 14, 2023, the company repaid the full amount of the LDA Note, totaling $1.3 million, which allows the company to redeem 40% of the outstanding LDA Warrants[143] Compliance and Regulatory Matters - The company regained compliance with Nasdaq's minimum bid requirement on July 14, 2023, after receiving a grace period[120] - The company has faced risks related to compliance with Nasdaq listing requirements and market volatility affecting its common shares[120] Operational Focus - The increase in revenue was primarily driven by a $3.8 million rise in revenues from the digital mining operation[124] - The company is focused on establishing a carbon-neutral Bitcoin mining operation through next-generation mining equipment[115] Accounting and Estimates - There were no material changes to critical accounting estimates during the three months ended June 30, 2023[145] - The company’s financial statements are prepared in accordance with U.S. GAAP, requiring estimates and judgments affecting reported amounts of assets, liabilities, revenues, and expenses[145]