(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) | |||||||
(Address of principal executive offices) | (Zip Code) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
TABLE OF CONTENTS | ||||||||||||||
Item 1. | Page | |||||||||||||
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 |
June 30, 2023 | December 31, 2022 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Digital assets | |||||||||||
Restricted cash | |||||||||||
Accounts receivable, net | |||||||||||
Note receivable, net of allowance for credit losses of $ | |||||||||||
Other current assets | |||||||||||
Total current assets | |||||||||||
Property and equipment, net | |||||||||||
Intangible assets, net | |||||||||||
Funds held in trust account | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities, Temporary Equity and Shareholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable | $ | $ | |||||||||
Accrued liabilities | |||||||||||
Accrued payroll and employee compensation | |||||||||||
Warrant liabilities | |||||||||||
Convertible debt | |||||||||||
Other current liabilities | |||||||||||
Total current liabilities | |||||||||||
Deferred underwriting fee | |||||||||||
Warrant liabilities | |||||||||||
Convertible debt, long-term | |||||||||||
Other non-current liabilities | |||||||||||
Total liabilities | |||||||||||
Commitments and contingencies (Note 13) | |||||||||||
Series H preferred shares, | |||||||||||
Redeemable non-controlling interest | |||||||||||
Total temporary equity | |||||||||||
Shareholders’ equity: | |||||||||||
Common shares, | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Accumulated deficit | ( | ( | |||||||||
Total Sphere 3D Corp. shareholders’ equity | |||||||||||
Non-controlling interest | ( | ( | |||||||||
Total shareholders’ equity | |||||||||||
Total liabilities, temporary equity, and shareholders’ equity | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Revenues: | |||||||||||||||||||||||
Digital mining revenue | $ | $ | $ | $ | |||||||||||||||||||
Service and product revenue | |||||||||||||||||||||||
Total revenues | |||||||||||||||||||||||
Operating costs and expenses: | |||||||||||||||||||||||
Cost of digital mining revenue | |||||||||||||||||||||||
Cost of service and product revenue | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Research and development | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
Loss on disposal of property and equipment | |||||||||||||||||||||||
Realized gain on sale of digital assets | ( | ( | |||||||||||||||||||||
Impairment of digital assets | |||||||||||||||||||||||
Total operating expenses | |||||||||||||||||||||||
Loss from operations | ( | ( | ( | ( | |||||||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense | ( | ( | |||||||||||||||||||||
Interest income and other expense, net | |||||||||||||||||||||||
Forgiveness of note receivable | ( | ( | |||||||||||||||||||||
Impairment of investments | ( | ( | |||||||||||||||||||||
Net loss before taxes | ( | ( | ( | ( | |||||||||||||||||||
Provision for income taxes | |||||||||||||||||||||||
Net loss | ( | ( | ( | ( | |||||||||||||||||||
Less: Non-controlling interest - income | |||||||||||||||||||||||
Net loss available to common shareholders | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Net loss per share: | |||||||||||||||||||||||
Net loss per share basic and diluted | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Shares used in computing net loss per share: | |||||||||||||||||||||||
Basic and diluted | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Net loss | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Other comprehensive (loss) income: | |||||||||||||||||||||||
Foreign currency translation adjustment | ( | ( | ( | ||||||||||||||||||||
Total other comprehensive (loss) income | ( | ( | ( | ||||||||||||||||||||
Comprehensive loss | $ | ( | $ | ( | $ | ( | $ | ( |
Common Shares | Accumulated Other Comprehensive Loss | Accumulated Deficit | Non-controlling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance at January 1, 2023 | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
— | — | — | ( | — | ( | ||||||||||||||||||||||||||||||
Issuance of common shares for conversion of preferred shares | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of common shares pursuant to the vesting of restricted stock units | — | — | — | — | — | ||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Remeasurement of redeemable non-controlling interest | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ( | ||||||||||||||||||||||||||||||
Balance at March 31, 2023 | ( | ( | ( | ||||||||||||||||||||||||||||||||
Issuance of common shares for conversion of preferred shares | — | — | — | ||||||||||||||||||||||||||||||||
Exercise of stock options | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of common shares for vested restricted stock units, net of shares withheld for income taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Remeasurement of redeemable non-controlling interest | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Other comprehensive loss | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | ( | ( | ||||||||||||||||||||||||||||||
Balance at June 30, 2023 | $ | $ | ( | $ | ( | $ | ( | $ | |||||||||||||||||||||||||||
Common Shares | Accumulated Other Comprehensive Loss | Accumulated Deficit | Non-controlling Interest | Total Shareholders' Equity | |||||||||||||||||||||||||||||||
Shares | Amount | ||||||||||||||||||||||||||||||||||
Balance at January 1, 2022 | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||
Issuance of common shares and warrants for the settlement of liabilities | — | — | — | ||||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive income | — | — | — | — | |||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance at March 31, 2022 | ( | ( | |||||||||||||||||||||||||||||||||
Issuance of common shares for the purchase of intangible assets | — | — | — | ||||||||||||||||||||||||||||||||
Issuance of common shares for vested restricted stock units, net of shares withheld for income taxes | — | — | — | — | — | ||||||||||||||||||||||||||||||
Share-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
Other comprehensive loss | — | — | ( | — | — | ( | |||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
Balance at June 30, 2022 | $ | $ | ( | $ | ( | $ | $ | ||||||||||||||||||||||||||||
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Operating activities: | |||||||||||
Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to cash used in operating activities: | |||||||||||
Digital currency issued for services | |||||||||||
Depreciation and amortization | |||||||||||
Share-based compensation | |||||||||||
Change in fair value of warrant liabilities | ( | ||||||||||
Warrants issued with convertible debt | |||||||||||
Realized gain on sale of digital assets | ( | ( | |||||||||
Impairment of digital assets | |||||||||||
Loss on disposal of property and equipment | |||||||||||
Change in fair value of debt | |||||||||||
Noncash lease cost | |||||||||||
Forgiveness of note receivable | |||||||||||
Impairment of investments | |||||||||||
Issuance of common shares and warrants for settlement of liabilities | |||||||||||
Change in fair value of crypto asset payable | ( | ||||||||||
Changes in operating assets and liabilities: | |||||||||||
Proceeds from sale of digital assets | |||||||||||
Digital assets | ( | ( | |||||||||
Accounts receivable | ( | ||||||||||
Accounts payable and accrued liabilities | ( | ||||||||||
Accrued payroll and employee compensation | ( | ||||||||||
Other assets and liabilities, net | ( | ( | |||||||||
Net cash used in operating activities | ( | ( | |||||||||
Investing activities: | |||||||||||
Proceeds from sale of property and equipment | |||||||||||
Redemption of non-controlling interest | ( | ||||||||||
Payments for purchase of property and equipment | ( | ( | |||||||||
Notes receivable | ( | ||||||||||
Purchase of intangible assets | ( | ||||||||||
Net cash provided by (used in) investing activities | ( | ||||||||||
Financing activities: | |||||||||||
Proceeds from convertible debt, net of debt issuance costs | |||||||||||
Proceeds from exercise of stock options | |||||||||||
Net cash provided by financing activities | |||||||||||
Net decrease in cash, cash equivalents and restricted cash | ( | ( | |||||||||
Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
See accompanying notes to condensed consolidated financial statements. |
Sphere 3D Corp. | |||||||||||
Condensed Consolidated Statements of Cash Flows (continued) | |||||||||||
(in thousands of U.S. dollars) | |||||||||||
Six Months Ended June 30, | |||||||||||
2023 | 2022 | ||||||||||
Reconciliation of cash, cash equivalents and restricted cash to consolidated balance sheets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Restricted cash | |||||||||||
Total cash, cash equivalents and restricted cash | $ | $ | |||||||||
Supplemental disclosures of non-cash investing activities: | |||||||||||
Remeasurement of redeemable non-controlling interest | $ | $ | |||||||||
Reclassification from deposit for mining equipment to mining equipment | $ | $ | |||||||||
Issuance of common shares for purchase of intangible assets | $ | $ |
Balance at January 1, 2023 | $ | ||||
Addition of digital assets | |||||
Digital assets sold for cash | ( | ||||
Digital assets issued for services | ( | ||||
Impairment loss | ( | ||||
Balance at June 30, 2023 | $ |
June 30, 2023 | |||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Convertible note | $ | $ | $ | $ | |||||||||||||||||||
Warrant liabilities | $ | $ | $ | $ |
December 31, 2022 | |||||||||||||||||||||||
Fair Value | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||
Warrant liabilities | $ | $ | $ | $ | |||||||||||||||||||
Warrant liability as of January 1, 2023 | $ | |||||||
Change in fair value MEOA warrant | ( | |||||||
Warrant liability as of March 31, 2023 | ||||||||
Issuance of LDA warrant | ||||||||
Change in fair value MEOA warrant | ( | |||||||
Change in fair value LDA warrant | ( | |||||||
Warrant liability as of June 30, 2023 | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Prepaid digital hosting services | $ | $ | |||||||||
Prepaid services | |||||||||||
Prepaid insurance | |||||||||||
Other | |||||||||||
$ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Mining equipment | $ | $ | |||||||||
Accumulated depreciation | ( | ( | |||||||||
Subtotal | |||||||||||
Property and equipment, net | $ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Prepaid digital hosting services | $ | $ | |||||||||
Prepaid insurance and services | |||||||||||
Other | |||||||||||
$ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Advance from target for SPAC | $ | $ | |||||||||
Taxes payable for SPAC | |||||||||||
Deferred revenue | |||||||||||
Other | |||||||||||
$ | $ |
June 30, 2023 | December 31, 2022 | ||||||||||
Supplier agreements | $ | $ | |||||||||
Developed technology | |||||||||||
Channel partner relationships | |||||||||||
Customer relationships | |||||||||||
Capitalized development costs | |||||||||||
Accumulated amortization: | |||||||||||
Supplier agreements | ( | ( | |||||||||
Developed technology | ( | ( | |||||||||
Channel partner relationships | ( | ( | |||||||||
Customer relationships | ( | ( | |||||||||
Capitalized development costs | ( | ( | |||||||||
( | ( | ||||||||||
Total finite-lived intangible assets, net | |||||||||||
Carbon credits held for future use | |||||||||||
Total intangible assets, net | $ | $ |
April 17, 2023 | June 30, 2023 | ||||||||||
Common share price | $ | $ | |||||||||
Expected volatility | % | % | |||||||||
Risk-free interest rate | % |
Date issued | Contractual life (years) | Exercise price | Number outstanding | Expiration | ||||||||||||||||||||||
July 2021 | $ | |||||||||||||||||||||||||
August 2021 | $ | |||||||||||||||||||||||||
August 2021 | $ | |||||||||||||||||||||||||
September 2021 | $ | |||||||||||||||||||||||||
October 2021 | $ | |||||||||||||||||||||||||
February 2022 | $ | |||||||||||||||||||||||||
February 2022 | $ | |||||||||||||||||||||||||
February 2022 | $ | |||||||||||||||||||||||||
April 2023 | $ | |||||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Expected volatility | % | % | % | % | |||||||||||||||||||
Expected term (in years) | |||||||||||||||||||||||
Risk-free interest rate | |||||||||||||||||||||||
Dividend yield |
Shares | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value | ||||||||||||||||||||
Options outstanding — January 1, 2023 | $ | ||||||||||||||||||||||
Granted | $ | ||||||||||||||||||||||
Exercised | ( | $ | |||||||||||||||||||||
Forfeited | ( | $ | |||||||||||||||||||||
Options outstanding — June 30, 2023 | $ | $ | |||||||||||||||||||||
Vested and expected to vest — June 30, 2023 | $ | $ | |||||||||||||||||||||
Exercisable — June 30, 2023 | $ | $ |
Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
Outstanding — January 1, 2023 | $ | ||||||||||
Granted | $ | ||||||||||
Vested and released | ( | $ | |||||||||
Forfeited | ( | $ | |||||||||
Outstanding — June 30, 2023 | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Sales and marketing | $ | $ | $ | $ | |||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Total share-based compensation expense | $ | $ | $ | $ |
June 30, 2023 | |||||||||||
Unrecognized Expense | Remaining Weighted-Average Recognition Period (years) | ||||||||||
RSUs | $ | ||||||||||
Stock options | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Preferred shares issued and outstanding | |||||||||||||||||||||||
Common share purchase warrants | |||||||||||||||||||||||
Options and RSUs outstanding | |||||||||||||||||||||||
Convertible debt |
Deferred Revenue | |||||
Liability at January 1, 2023 | $ | ||||
Revenue recognized during the period | ( | ||||
Change in liability for warranties issued during the period | |||||
Liability at June 30, 2023 | $ | ||||
Current liability, included in other current liabilities | |||||
Non-current liability, included in other non-current liabilities | |||||
Liability at June 30, 2023 | $ |
Three months ended June 30, 2023 | Digital Mining | Service and Product | Unallocated | Total Consolidated | |||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Segment gross profit | $ | $ | $ | $ | |||||||||||||||||||
Segment loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Interest expense | |||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ |
Six months ended June 30, 2023 | Digital Mining | Service and Product | Unallocated | Total Consolidated | |||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Segment gross profit | $ | $ | $ | $ | |||||||||||||||||||
Segment loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
Interest expense | |||||||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ |
Three months ended June 30, 2022 | Digital Mining | Service and Product | Unallocated | Total Consolidated | |||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Segment gross profit | $ | $ | $ | $ | |||||||||||||||||||
Segment loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ |
Six months ended June 30, 2022 | Digital Mining | Service and Product | Unallocated | Total Consolidated | |||||||||||||||||||
Revenue | $ | $ | $ | $ | |||||||||||||||||||
Segment gross profit | $ | $ | $ | $ | |||||||||||||||||||
Segment loss from operations | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
Capital expenditures | $ | $ | $ | $ | |||||||||||||||||||
Depreciation and amortization | $ | $ | $ | $ |
As of June 30, 2023 | Digital Mining | Service and Product | Unallocated | Total Consolidated | |||||||||||||||||||
Total assets | $ | $ | $ | $ |
As of December 31, 2022 | Digital Mining | Service and Product | Unallocated | Total Consolidated | |||||||||||||||||||
Total assets | $ | $ | $ | $ |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||
Customer A | % | % | % | % | |||||||||||||||||||
Customer B | % | % | % | % | |||||||||||||||||||
Customer C | % | % | % | % |
June 30, 2023 | December 31, 2022 | ||||||||||
Customer A | % | % | |||||||||
Customer B | % | % | |||||||||
Customer C | % | % | |||||||||
Customer D | % | % | |||||||||
Customer E | % | % | |||||||||
Customer F | % | % |
Six Months Ended June 30, | ||||||||||||||
2023 | 2022 | |||||||||||||
Net cash used in operating activities | $ | (2,034) | $ | (24,530) | ||||||||||
Net cash provided by (used in) investing activities | $ | 220 | $ | (19,101) | ||||||||||
Net cash provided by financing activities | $ | 979 | $ | — |
Exhibit | Filed | Incorporated by Reference | |||||||||||||||
Number | Description | Herewith | Form | File No. | Date Filed | ||||||||||||
3.1 | 6-K | 001-36532 | 3/25/2015 | ||||||||||||||
3.2 | 6-K | 001-36532 | 7/17/2017 | ||||||||||||||
3.3 | 8-K | 001-36532 | 10/2/2018 | ||||||||||||||
3.4 | 8-K | 001-36532 | 11/5/2018 | ||||||||||||||
3.5 | 8-K | 001-36532 | 11/14/2018 | ||||||||||||||
3.6 | 8-K | 001-36532 | 7/12/2019 | ||||||||||||||
3.7 | 8-K | 001-36532 | 11/8/2019 | ||||||||||||||
3.8 | 8-K | 001-36532 | 5/8/2020 | ||||||||||||||
3.9 | 8-K | 001-36532 | 9/29/2020 | ||||||||||||||
3.10 | 6-K | 001-36532 | 1/7/2021 | ||||||||||||||
3.11 | 6-K | 001-36532 | 7/15/2021 | ||||||||||||||
3.12 | 6-K | 001-36532 | 10/4/2021 | ||||||||||||||
3.13 | 8-K | 001-36532 | 6/28/2023 | ||||||||||||||
3.14 | 6-K | 001-36532 | 7/17/2017 | ||||||||||||||
3.15 | 6-K | 001-36532 | 2/1/2022 | ||||||||||||||
3.16 | 8-K | 001-36532 | 1/13/2023 | ||||||||||||||
3.17 | 6-K | 001-36532 | 5/12/2017 | ||||||||||||||
4.1 | 8-K | 001-36532 | 8/14/2023 | ||||||||||||||
10.1 | 8-K | 001-36532 | 4/21/2023 | ||||||||||||||
10.2 | 8-K | 001-36532 | 4/21/2023 | ||||||||||||||
10.3 | 8-K | 001-36532 | 4/21/2023 | ||||||||||||||
10.4 | 10-Q | 001-36532 | 5/11/2023 | ||||||||||||||
10.5 | 8-K | 001-36532 | 8/14/2023 |
10.6 | 8-K | 001-36532 | 8/14/2023 | ||||||||||||||
31.1 | X | ||||||||||||||||
31.2 | X | ||||||||||||||||
32.1 | X | ||||||||||||||||
32.2 | X | ||||||||||||||||
101.INS | XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | X | |||||||||||||||
101.SCH | Inline XBRL Taxonomy Extension Schema | X | |||||||||||||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase | X | |||||||||||||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | X | |||||||||||||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | X | |||||||||||||||
101.PRE | Inline XBRL Taxonomy Presentation Linkbase | X | |||||||||||||||
104 | Cover Page Interactive Data File (formatted as inline XBRL as contained in Exhibit 101) | X |
Sphere 3D Corp. | ||||||||||||||
Date: | August 14, 2023 | By: | /s/ Patricia Trompeter | |||||||||||
Patricia Trompeter | ||||||||||||||
Chief Executive Officer | ||||||||||||||
(Principal Executive Officer) |
1. | I have reviewed this quarterly report on Form 10-Q of Sphere 3D Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Patricia Trompeter | ||
Patricia Trompeter | ||
Chief Executive Officer |
1. | I have reviewed this quarterly report on Form 10-Q of Sphere 3D Corp.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
(a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
(b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
/s/ Kurt L. Kalbfleisch | ||
Kurt L. Kalbfleisch | ||
Senior Vice-President and | ||
Chief Financial Officer |
• | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and | |||||||
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Patricia Trompeter | ||
Patricia Trompeter | ||
Chief Executive Officer |
• | The Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and | |||||||
• | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
/s/ Kurt L. Kalbfleisch | ||
Kurt L. Kalbfleisch | ||
Senior Vice-President and | ||
Chief Financial Officer |
Condensed Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Note receivable, allowance for credit losses | $ 3,821 | $ 0 |
Preferred shares , no par value | $ 0 | $ 0 |
Preferred shares, shares issued (in shares) | 49,981 | 60,000 |
Preferred shares, outstanding (in shares) | 49,981 | 60,000 |
Common shares, no par value | $ 0 | $ 0 |
Common shares, issued (in shares) | 11,423,310 | 9,804,609 |
Common shares, outstanding (in shares) | 11,423,310 | 9,804,609 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Revenue | $ 5,466 | $ 1,921 | $ 8,492 | $ 3,293 |
Sales and marketing | 277 | 264 | 551 | 495 |
Research and development | 227 | 139 | 497 | 253 |
General and administrative | 3,634 | 7,788 | 7,105 | 16,757 |
Depreciation and amortization | 1,375 | 7,485 | 2,400 | 13,849 |
Loss on disposal of property and equipment | 251 | 0 | 251 | 0 |
Realized gain on sale of digital assets | (139) | 0 | (772) | 0 |
Impairment of digital assets | 254 | 679 | 350 | 770 |
Total operating expenses | 10,162 | 17,315 | 16,928 | 33,798 |
Loss from operations | (4,696) | (15,394) | (8,436) | (30,505) |
Other income (expense): | ||||
Interest expense | (1,173) | 0 | (1,173) | 0 |
Interest income and other, net | 1,113 | 281 | 1,364 | 745 |
Forgiveness of note receivable | 0 | (13,145) | 0 | (13,145) |
Impairment of investments | 0 | (12,429) | 0 | (12,429) |
Net loss | (4,756) | (40,687) | (8,245) | (55,334) |
Provision for income taxes | 4 | 0 | 4 | 0 |
Net loss | (4,760) | (40,687) | (8,249) | (55,334) |
Less: Non-controlling interest - income | 67 | 0 | 83 | 0 |
Net Income (Loss) Available to Common Stockholders, Basic | $ (4,827) | $ (40,687) | $ (8,332) | $ (55,334) |
Net loss per share: | ||||
Net loss per share, basic (in USD per share) | $ (0.44) | $ (4.31) | $ (0.78) | $ (5.96) |
Net loss per share, diluted (in USD per share) | $ (0.44) | $ (4.31) | $ (0.78) | $ (5.96) |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||||
Basic (in shares) | 11,051,588 | 9,449,735 | 10,673,876 | 9,285,878 |
Diluted (in shares) | 11,051,588 | 9,449,735 | 10,673,876 | 9,285,878 |
Digital Mining | ||||
Revenue | $ 4,966 | $ 1,211 | $ 7,490 | $ 1,958 |
Cost of revenue | 4,074 | 619 | 6,039 | 974 |
Service and Product | ||||
Revenue | 500 | 710 | 1,002 | 1,335 |
Cost of revenue | $ 209 | $ 341 | $ 507 | $ 700 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (4,760) | $ (40,687) | $ (8,249) | $ (55,334) |
Other comprehensive (loss) income: | ||||
Foreign currency translation adjustment | (3) | (8) | (5) | 1 |
Total other comprehensive (loss) income | (3) | (8) | (5) | 1 |
Comprehensive loss | $ (4,763) | $ (40,695) | $ (8,254) | $ (55,333) |
Organization and Business |
6 Months Ended |
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Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | Organization and Business Sphere 3D Corp. was incorporated under the Business Corporations Act (Ontario) on May 2, 2007 as T.B. Mining Ventures Inc. On March 24, 2015, the Company completed a short-form amalgamation with a wholly-owned subsidiary. In connection with the short-form amalgamation, the Company changed its name to “Sphere 3D Corp.” Any reference to the “Company”, “Sphere 3D”, “we”, “our”, “us”, or similar terms refers to Sphere 3D Corp. and its subsidiaries. In January 2022, the Company commenced operations of its digital mining operation dedicated to becoming a leading carbon-neutral Bitcoin mining company. The Company is establishing an enterprise-scale mining operation through procurement of next-generation mining equipment and partnering with experienced service providers. In addition, the Company delivers data management and desktop and application virtualization solutions through hybrid cloud, cloud and on premise implementations by its global reseller network. The Company achieves this through a combination of containerized applications, virtual desktops, virtual storage and physical hyper-converged platforms. The Company’s products allow organizations to deploy a combination of public, private or hybrid cloud strategies while backing them up with the latest storage solutions. The Company’s brands include HVE ConneXions (“HVE”) and Unified ConneXions (“UCX”). Liquidity and Going Concern The Company has recurring losses from operations and incurred a net loss of approximately $8.2 million for the six months ended June 30, 2023. Management has projected that based on our hashing rate at June 30, 2023, cash on hand may not be sufficient to allow the Company to continue operations beyond the next 12 months from the date the financial statements are issued if we are unable to raise additional funding for operations. We expect our working capital needs to increase in the future as we continue to expand and enhance our operations. Our ability to raise additional funds for working capital through equity or debt financings or other sources may depend on the financial success of our then current business and successful implementation of our key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond our control. No assurance can be given that we will be successful in raising the required capital at a reasonable cost and at the required times, or at all. Further equity financings may have a dilutive effect on shareholders and any debt financing, if available, may require restrictions to be placed on our future financing and operating activities. We require additional capital and if we are unsuccessful in raising that capital, we may not be able to continue our business operations in the cryptocurrency mining industry or we may be unable to advance our growth initiatives, either of which could adversely impact our business, financial condition and results of operations. Significant changes from the Company’s current forecasts, including but not limited to: (i) shortfalls from projected sales levels; (ii) unexpected increases in product costs; (iii) increases in operating costs; (iv) fluctuations in the value of cryptocurrency; and (v) inability to maintain compliance with the requirements of the NASDAQ Capital Market and/or inability to maintain listing with the NASDAQ Capital Market could have a material adverse impact on the Company’s ability to access the level of funding necessary to continue its operations at current levels. If any of these events occurs or the Company is unable to generate sufficient cash from operations or financing sources, the Company may be forced to liquidate assets where possible and/or curtail, suspend or cease planned programs or operations generally or seek bankruptcy protection or be subject to an involuntary bankruptcy petition, any of, which would have a material adverse effect on the Company’s business, results of operations, financial position and liquidity. These factors, among others, raise substantial doubt that the Company will be able to continue as a going concern beyond the next 12 months from the date the financial statements are issued. The accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business and do not include any adjustments that might result from the outcome of this uncertainty. Share Consolidation On June 28, 2023, the Company filed Articles of Amendment to effect a share consolidation (also known as a reverse stock split) of its issued and outstanding common shares on a one-for-seven basis. The share consolidation became effective on June 28, 2023. All share and per share amounts have been restated for all periods presented to reflect the share consolidation.
|
Summary of Significant Accounting Policies |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Principles of Consolidation The condensed consolidated financial statements of the Company have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”), applied on a basis consistent for all periods. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for a complete set of financial statements. These condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 31, 2023. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been appropriately eliminated in consolidation. Use of Estimates The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. Reclassifications Certain prior period amounts have been reclassified for consistency with the current period presentation. The reclassifications did not have a material impact on the Company's condensed interim consolidated financial statements and related disclosures. Foreign Currency Translation The financial statements of the Company’s foreign subsidiary, for which the functional currency is the local currency, is translated into U.S. dollars using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during the year for revenue, expenses, gains and losses. Translation adjustments are recorded as accumulated other comprehensive income (loss) within shareholders’ equity. Gains or losses from foreign currency transactions are recognized in the condensed consolidated statements of operations. Such transactions resulted in minimal gains or losses for the three and six months ended June 30, 2023 and 2022. Cash and Cash Equivalents Highly liquid investments with insignificant interest rate risk and original maturities of three months or less, when purchased, are classified as cash equivalents. Cash equivalents are composed of money market funds. The Company maintains cash and cash equivalent balances with financial institutions that exceed federally insured limits. The Company has not experienced any losses related to these balances and believes credit risk to be minimal. Restricted Cash and Cash Equivalents Restricted cash is cash held in a separate bank account with restrictions on withdrawal. The Company’s restricted cash classified as current, is pledged as collateral for a standby letter of credit used for the bonding purpose necessary for the Company to receive mining machines. Funds held in trust account are restricted and invested in U.S. government treasury money market funds, except with respect to interest earned on the funds held in the trust account that may be released to MEOA, to pay its franchise and income tax obligations (less up to $100,000 of interest to pay dissolution expenses). In the third quarter of 2023, the trust account proceeds were released and used for the redemption of the public shares of MEOA as a result of the initial business combination not being completed prior to the applicable deadline. Digital Assets The Company accounts for digital assets as indefinite-lived intangible assets. The digital assets are recorded at cost less impairment. An impairment analysis is performed at each reporting period or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. The fair value of digital assets is determined on a nonrecurring basis based on the lowest intraday quoted price on the active exchange(s) that the Company has determined as the principal market for digital assets (Level 1 inputs). If the carrying value of the digital asset exceeds the fair value based on the lowest price quoted in the active exchanges during the period, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the price determined. Impairment losses are recognized in operating expenses in the consolidated statements of operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale or disposition. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of digital assets are included within operating activities in the accompanying condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in operating costs and expenses in the condensed consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. The following table presents the activities of the digital assets (in thousands):
Allowance for Credit Losses The Company’s assessment of its allowance for credit losses requires it to incorporate considerations of historical information, current conditions and reasonable and supportable forecasts. The Company manages credit risk through review of available public company information. For the Company’s note receivable, the Company has recorded an allowance for credit losses and elected to write off accrued interest receivables by reversing interest income. Leases The Company has entered into operating leases primarily for real estate. These leases have contractual terms which range from 12 months to 5 years. The Company determines if an arrangement contains a lease at inception. Right of use (“ROU”) assets and liabilities resulting from operating leases are included in on our consolidated balance sheets. Operating lease ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the leases typically do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the discount rate to calculate the present value of future payments. The operating lease ROU asset may also include any lease payments made and exclude lease incentives and initial direct costs incurred. The Company’s leases do not include options to extend the lease. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Property and Equipment Property and equipment primarily consists of mining equipment and is stated at cost, including purchase price and all shipping and custom fees, and depreciated using the straight-line method over the estimated useful lives of the assets, generally five years. The Company reviews the carrying amounts of property and equipment when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the fair value of the asset is estimated in order to determine the extent of the impairment loss, if any. Intangible Assets For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values. For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearly evident) are used to establish their recorded values. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. Purchased intangible assets are amortized on a straight-line basis over their economic lives of 5 years to 15 years for supplier agreements, six years for channel partner relationships, and seven years for customer relationships as this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. The Company has purchased carbon credits. As it intends to use these carbon credits, the assets have been classified as intangible assets. When the carbon credit is used, it will be expensed as an operating expense. Impairment of Intangible Assets The Company performs regular reviews of intangible assets to determine if any event has occurred that may indicate that intangible assets with finite useful lives and other long-lived assets are potentially impaired. Triggering events for impairment reviews may be indicators such as adverse industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in our market capitalization. Intangible assets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values. If the carrying value exceeds the fair value, the difference is recorded as an impairment. Convertible Debt The Company accounts for convertible debt in accordance with the applicable authoritative guidance and has elected to apply the fair value option. The convertible debt is reflected at fair value in the condensed consolidated balance sheets and changes in fair value are recorded in the condensed consolidated statements of operations as a fair value adjustment to the convertible debt each reporting period (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The Company expenses any issuance costs allocated to a freestanding or an embedded financial instrument that is subsequently measured at fair value through earnings as of the issuance date. Warrant Liabilities Warrant liabilities are for warrants for shares of MEOA’s common stock that are not indexed to its own stock and for warrants for a common share purchase warrant issued in connection with the Company’s convertible debt. The warrants are presented as liabilities at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in interest income and other expense, net, in the consolidated statements of operations. The fair value of the warrants issued in connection with MEOA's public offering were measured based on the listed market price of such warrants. The fair value of the LDA Warrant was measured using a Monte Carlo valuation model. Redeemable Non-controlling Interest Redeemable non-controlling interest is interest in a subsidiary of the Company that are redeemable outside of the Company’s control either for cash or other assets. This interest is classified as temporary equity and measured at the estimated redemption value at the end of each reporting period. The resulting increases or decreases in the estimated redemption amount are effected by corresponding charges to accumulated deficit. At June 30, 2023, redeemable non-controlling interest recorded within the Company’s consolidated balance sheets relates to its subsidiary, MEOA. Revenue Recognition The Company accounts for revenue pursuant to ASU 2014-09, Revenue from Contracts with Customers and all the related amendments (“Topic 606”). Under Topic 606, an entity is required to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and contract consideration will be recognized on a “sell-in basis” or when control of the purchased goods or services transfer to the distributor. The Company is engaged with digital asset mining pool operators to provide computing power to the mining pools. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed Bitcoin award the mining pool operator receives for successfully adding a block to the blockchain, plus a fractional share of the transaction fees attached to that blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. The Company satisfies its performance obligation over time with daily settlement in Bitcoin. The transaction price is the fair value of the digital asset mined, Bitcoin, being the fair value per the prevailing market rate for that digital asset on the date earned. The transaction consideration the Company receives is noncash consideration, in the form of Bitcoin, which the Company measures at fair value on the date earned which is not materially different from the fair value at contract inception. Fair value of the Bitcoin received is determined using the spot price of the Bitcoin on the date earned. The Company cannot determine, during the course of solving for a block, that a reversal of revenue is not probable and therefore revenue is recognized when the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive. Expenses associated with running the digital asset mining operations, such as rent, operating supplies, utilities and monitoring services are recorded as cost of revenues. The Company also generates revenue from: (i) solutions for standalone storage and integrated hyper-converged storage; (ii) professional services; and (iii) warranty and customer services. The Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers the Company performs the following five steps: (i) identify the promised goods or services in the contract; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligations. The majority of the Company’s product and service revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied at a point in time. These contracts are generally comprised of a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when change of control has been transferred to the customer, generally at the time of shipment of products. The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically less than 45 days. Revenue on direct product sales, excluding sales to distributors, are not entitled to any specific right of return or price protection, except for any defective product that may be returned under our standard product warranty. Product sales to distribution customers that are subject to certain rights of return, stock rotation privileges and price protections, contain a component of “variable consideration.” Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated fixed price and is net of estimates for variable considerations. For performance obligations related to warranty and customer services, such as extended product warranties, the Company transfers control and recognizes revenue on a time-elapsed basis. The performance obligations are satisfied as services are rendered typically on a stand-ready basis over the contract term, which is generally 12 months. The Company also enters into revenue arrangements that may consist of multiple performance obligations of its product and service offerings such as for sales of hardware devices and extended warranty services. The Company allocates contract fees to the performance obligations on a relative stand-alone selling price basis. The Company determines the stand-alone selling price based on its normal pricing and discounting practices for the specific product and/or service when sold separately. When the Company is unable to establish the individual stand-alone price for all elements in an arrangement by reference to sold separately instances, the Company may estimate the stand-alone selling price of each performance obligation using a cost plus a margin approach, by reference to third party evidence of selling price, based on the Company’s actual historical selling prices of similar items, or based on a combination of the aforementioned methodologies; whichever management believes provides the most reliable estimate of stand-alone selling price. Extended Warranty Separately priced extended on-site warranties and service contracts are offered for sale to customers on all product lines. Extended warranty and service contract revenue and recognized as service revenue over the period of the service agreement. The Company will typically apply the practical expedient to agreements wherein the period between transfer of any good or service in the contract and when the customer pays for that good or service is one year or less. Research and Development Costs Research and development expenses include payroll, employee benefits, share-based compensation expense, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Research and development expenses are charged to operating expenses as incurred when these expenditures relate to the Company’s research and development efforts and have no alternative future uses. Comprehensive Income (Loss) Comprehensive income (loss) and its components encompass all changes in equity other than those arising from transactions with shareholders, including net loss and foreign currency translation adjustments, and is disclosed in a separate condensed consolidated statement of comprehensive loss. Share-based Compensation The Company accounts for share-based awards, and similar equity instruments, granted to employees, non-employee directors, and consultants in accordance with the authoritative guidance for share-based compensation. Share-based compensation award types include stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). Share-based compensation expense is recognized on a straight-lined basis over the requisite service period (usually the vesting period) except for options with graded vesting which is recognized pursuant to an accelerated method. Forfeitures are recognized as a reduction in share-based compensation expense as they occur. Non-controlling Interest The Company accounts for its non-controlling interest in accordance with the authoritative guidance for consolidation which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of the guidance indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations. Segment Reporting Operating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company has two operating segments. Recently Issued and Adopted Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. If not discussed, the Company believes that the impact of recently issued standards will not have a material impact on the Company’s consolidated financial statements upon adoption. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. The Company adopted ASU 2016-13 on January 1, 2023 on a modified retrospective basis which resulted in a $3.8 million increase to the opening balance of accumulated deficit, representing the cumulative allowance for credit losses for the Company’s note receivable. In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 amends ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The Company adopted the new standard beginning January 1, 2023, however it did not have an effect on its financial position, results of operations or cash flows.
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Fair Value Measurements |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures | Fair Value Measurements The authoritative guidance for fair value measurements establishes a three tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions. Assets and Liabilities that are Measured at Fair Value on a Recurring Basis The Company’s consolidated financial instruments include cash equivalents, accounts receivable, notes receivable, accounts payable, accrued liabilities, warrant liabilities and convertible debt. Fair value estimates of these instruments are made at a specific point in time, based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The carrying amount of cash equivalents, accounts receivable, notes receivable, accounts payable and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments. The Company has elected to record its convertible debt at fair value. The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis (in thousands):
The following table presents the activities of warrant liabilities that are measured at fair value (in thousands):
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis As discussed in Note 2, Summary of Significant Accounting Policies, to the Condensed Consolidated Financial Statements, the Company accounts for its bitcoin as indefinite-lived intangible assets, which are subject to impairment losses if the fair value of its bitcoin held decreases below their carrying value during the reporting period. The Company's non-financial assets such as property and equipment and intangible assets are recorded at fair value when an impairment is recognized or at the time acquired in an asset acquisition or business combination measured using significant unobservable inputs (Level 3).
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Notes Receivable |
6 Months Ended |
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Jun. 30, 2023 | |
Receivables [Abstract] | |
Notes Receivable | Note Receivable Rainmaker Promissory Note In September 2020, the Company entered into a Senior Secured Convertible Promissory Note with Rainmaker (the “Rainmaker Note”), pursuant to which the Company loaned Rainmaker the principal amount of $3.1 million. The Rainmaker Note is secured as a registered lien under the Uniform Commercial Code and the Personal Property Security Act (Ontario) against the assets of Rainmaker and bears interest at the rate of 10.0% per annum. The principal and interest accrue monthly and are due and payable in full on September 14, 2023. The Company has the right, at any time, to convert all or any portion of the then outstanding and unpaid Rainmaker Note and interest into non-assessable shares of Rainmaker common stock, or any shares of capital stock or other securities of Rainmaker, at the conversion price as defined in the Rainmaker Note. On January 1, 2023, as a result of adopting ASU 2016-13, the Company recorded an allowance for credit losses of $3.8 million and reversed accrued interest of $0.1 million. As of June 30, 2023 and December 31, 2022, the Rainmaker Note balance, including accrued interest, was nil and $3.8 million, respectively.
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Certain Balance Sheet Items |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Certain Balance Sheet Items | Certain Balance Sheet Items The following table summarizes other current assets (in thousands):
The following table summarizes property and equipment, net (in thousands):
Depreciation expense for property and equipment was $1.0 million and $0.5 million during the three months ended June 30, 2023 and 2022, respectively, inclusive of ROU asset amortization of $15,000 and nil, respectively. Depreciation expense for property and equipment was $1.6 million and $0.6 million during the six months ended June 30, 2023 and 2022, respectively, inclusive of ROU asset amortization of $25,000 and nil, respectively. During the six months ended June 30, 2023, the Company sold 2,531 miners that were included in mining equipment, for cash proceeds of $3.7 million. The following table summarizes other assets (in thousands):
The following table summarizes other current liabilities (in thousands):
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Intangible Assets |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible Assets | Intangible Assets The following table summarizes intangible assets, net (in thousands):
Amortization expense for intangible assets was $0.4 million and $7.0 million during the three months ended June 30, 2023 and 2022, respectively. Amortization expense for intangible assets was $0.8 million and $13.2 million during the six months ended June 30, 2023 and 2022, respectively. Estimated amortization expense for intangible assets is expected to be approximately $0.8 million for the remainder of 2023 and $1.6 million, $1.6 million, $1.6 million, $0.2 million, and $0.1 million in fiscal 2024, 2025, 2026, 2027 and 2028, respectively.
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Investments |
6 Months Ended |
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Jun. 30, 2023 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Special Purpose Acquisition Company In April 2021, the Company sponsored a special purpose acquisition company (“SPAC”), Minority Equality Opportunities Acquisition Inc. (“MEOA”), through the Company’s wholly owned subsidiary, Minority Equality Opportunities Acquisition Sponsor, LLC (“SPAC Sponsor”). MEOA’s purpose is to focus initially on transactions with companies that are minority owned businesses. MEOA’s IPO was completed on August 30, 2021. As of both June 30, 2023 and December 31, 2022, the Company held an aggregate of 3,162,500 shares of MEOA’s Class B common stock. In August 2022, MEOA entered into a business combination agreement with MEOA Merger Sub, Inc., a Delaware corporation and wholly owned subsidiary of MEOA (“Merger Sub”), and Digerati Technologies, Inc., a Nevada corporation (“Digerati”), pursuant to which, subject to the satisfaction or waiver of certain conditions set forth therein, Merger Sub will merge with and into Digerati (the “Digerati Merger”), with Digerati surviving the Digerati Merger as a wholly owned subsidiary of MEOA, and with Digerati’s equity holders receiving shares of MEOA common stock. On November 29, 2022, MEOA held a special meeting of stockholders (the “MEOA Meeting”). At the MEOA Meeting, MEOA’s stockholders approved an amendment (the “Extension Amendment”) to MEOA’s amended and restated certificate of incorporation to extend the date by which MEOA must consummate its initial business combination from November 30, 2022 to May 30, 2023, or such earlier date as determined by MEOA’s board of directors. On November 30, 2022, after giving effect to the redemption of public shares of MEOA, the Company’s subsidiary owns a controlling interest of MEOA and it has been consolidated in the Condensed Consolidated Financial Statements. On July 3, 2023, MEOA announced that it did not complete an initial business combination on or prior to June 30, 2023, the deadline by which it must have completed an initial business combination, and intends to dissolve and liquidate in accordance with the provisions of its amended charter. As of the close of business on July 3, 2023, MEOA’s public shares were deemed cancelled and represent only the right to receive the redemption amount. MEOA instructed Continental Stock Transfer & Trust Company, the trustee of the trust account, to take all necessary actions to liquidate the securities held in the trust account. The redemption of MEOA’s public shares was completed in the third quarter of 2023. The SPAC Sponsor agreed to waive its redemption rights with respect to its outstanding Class B common stock issued prior to MEOA’s initial public offering. There were no redemption rights or liquidating distributions with respect to MEOA’s warrants, which expired worthless.
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Debt |
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Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Text Block] | Convertible Debt On April 17, 2023, the Company entered into a Securities Purchase Agreement (the “LDA Purchase Agreement”) pursuant to which the Company issued to an investor, LDA Capital Limited (the “Investor”), a senior convertible promissory note having an aggregate principal amount of $1.0 million (the “LDA Note”), as amended April 25, 2023, and a common share purchase warrant (the “LDA Warrant”) to purchase up to 455,927 common shares of the Company (the “LDA Warrant Shares”). The Company received proceeds of approximately $0.8 million, which were net of fees associated with the transaction, on April 18, 2023 (the “Closing Date”), with an additional tranche of up to $2.0 million (the “Second Tranche”) to be provided to the Company, subject to certain conditions precedent, within business days of the date on which an effective registration statement is filed to cover the resale of the conversion shares (as defined below) and the LDA Warrant Shares. Upon receipt of the Second Tranche, the Company shall issue an additional senior convertible promissory note with a principal amount equal to the amount of the Second Tranche, and a common share purchase warrant. The LDA Note matures 24 months after issuance, bears interest at a rate of 7.5% per annum and is convertible into the Company's common shares (the “Conversion Shares”), at the Investor's election, at an initial conversion price equal to the greater of (i) $2.0832 per share, or (ii) 85% of the VWAPS (as defined in the LDA Note) during the trading days prior to delivery of a conversion notice by the Investor, subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. Commencing on the date that is 12 months from the date of issuance, the Company is required to pay the Investor back the amount of the outstanding principal in twelve consecutive monthly installments. The Company may prepay all, but not less than all, of the then outstanding principal amount of the LDA Note plus an additional prepayment amount equal to the greater of (i) the total amount of interest that would have been payable in respect of initial principal amount under the LDA Note from the issuance date through (A) its original maturity date or (B) if the date of applicable prepayment is prior to the date that is 120 days from the issuance date, the date that is 12 months from the issuance date, and (ii) the amount of interest that would have been payable in respect of initial principal amount under the LDA Note from the date of the applicable prepayment through (A) its original maturity date or (B) if the date of applicable prepayment is prior to the date that is 120 days from the issuance date, the date that is 12 months from the issuance date, at any time prior to the maturity date. The LDA Note contains a number of customary events of default. Additionally, the LDA Note is secured by certain property and equipment owned by the Company, pursuant to a security agreement between the Company and the Investor dated as of April 17, 2023. At June 30, 2023, the fair value balance of the LDA Note was $1,051,000. As of June 30, 2023, the Company was not in compliance with a financial covenant of the LDA Note. Subsequent to June 30, 2023, the Company received a waiver for the financial covenant noncompliance. The fair value of the LDA Note was estimated based on a pay-off scenario upon maturity using discount rates of 16.2% and 14.0% as of April 17, 2023 and June 30, 2023, respectively. The Company recorded a change in fair value adjustment of $51,000 for both the three and six months ended June 30, 2023. The LDA Warrant is exercisable at an initial exercise price of $3.29 per share and expires three years from the date of issuance or earlier if the closing of a Fundamental Transaction occurs (defined as merger or consolidation, any sale of substantially all of the Company’s assets, any tender offer or exchange offer pursuant to which common shareholders can tender or exchange their shares for other securities, cash or property, as well as any reclassification of common shares into other securities, cash or property). On the date that is six months from the date of issuance of the LDA Warrant, the exercise price will be adjusted to the lower of (i) $3.29, and (ii) a price equal to 110% of the average of the VWAPS (as defined in the LDA Warrant) of the Company's common shares over trading days preceding such date. Additionally, the exercise price of the LDA Warrant is subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. Pursuant to the terms of the LDA Purchase Agreement, the Company will reserve for issuance 200% of the maximum aggregate number of common shares as are issuable upon repayment or conversion in full of the LDA Note and exercise in full of the LDA Warrant at any time. The LDA Warrant contains a contingent put option. In the event of a Fundamental Transaction, the Investor may, at the Investor’s option, require the Company to purchase the LDA Warrant for an amount of cash equal to the Black Scholes value of the remaining unexercised portion of the warrant on the date of consummation of such Fundamental Transaction. The Company has recorded the warrant as a liability and will adjust the warrant liability to fair value each reporting period until settled. The fair value of the LDA Warrant was measured using a Monte Carlo valuation model with the following assumptions:
On April 17, 2023, upon issuance of the LDA Note and LDA Warrant, which are accounted for as freestanding financial instruments, the Company determined that the aggregate fair value of $2.0 million for the instruments issued exceeds the net proceeds received under the transaction. Accordingly, the excess of the fair value over the proceeds received of $1.0 million was recognized as interest expense.
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Preferred Shares |
6 Months Ended |
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Jun. 30, 2023 | |
Class of Stock Disclosures [Abstract] | |
Preferred Stock | Preferred Shares Series H Preferred Shares On October 1, 2021, the Company filed articles of amendment to create a series of preferred shares, being, an unlimited number of Series H Preferred Shares and to provide for the rights, privileges, restrictions and conditions attaching thereto. The Series H Preferred Shares are convertible provided (and only if and to the extent) that prior shareholder approval of the issuance of all Sphere 3D common shares issuable upon conversion of the Series H Preferred Shares has been obtained in accordance with the rules of the Nasdaq Stock Market, at any time from time to time, at the option of the holder thereof, into 142.857 Sphere 3D common shares for every Series H Preferred Share. Each holder of the Series H Preferred Shares, may, subject to prior shareholder approval, convert all or any part of the Series H Preferred Shares provided that after such conversion the common shares issuable, together with all the common shares held by the shareholder in the aggregate would not exceed 9.99% of the total number of outstanding common shares of the Company. Each Series H Preferred Share has a stated value of $1,000. The Series H Preferred Shares are non-voting and do not accrue dividends. These features include, in the event of the liquidation, dissolution or winding-up of the Company, whether voluntary or involuntary, deemed liquidation or any other distribution of the assets of the Company among its shareholders for the purpose of winding-up its affairs, the Series H Preferred Shares shall entitle each of the holders thereof to receive an amount equal to the Series H subscription price per Series H Preferred Share, as defined in the agreement, to be paid before any amount is paid or any assets of the Company are distributed to the holders of its common shares. In November 2022, the Company entered into the Modified Hertford Agreement. The Modified Hertford Agreement provides for certain resale restrictions applicable to the common shares that are issuable upon the conversion of the remaining Series H Preferred Shares during the two-year period ending on December 31, 2024, which are different from the restrictions contained in the Hertford Agreement, as well, commencing January 1, 2023 and terminating on December 31, 2023, holders of Series H Preferred Shares are permitted to (a) convert Series H Preferred Shares in an aggregate amount up to or equal to 3.0% of the aggregate number of Series H Preferred Shares outstanding on the first day of each such month and (b) sell the resulting number (and no greater number) of such converted common shares within such month. Commencing January 1, 2024 and terminating on December 31, 2024, holders of Series H Preferred Shares are permitted to (a) convert Series H Preferred Shares in an aggregate amount up to or equal to 10.0% of the aggregate number of Series H Preferred Shares outstanding on the first day of each such month and (b) sell the resulting number (and no greater number) of such converted common shares within such month. During the six months ended June 30, 2023, pursuant to the Modified Hertford Agreement, the Company issued 1,431,283 common shares for the conversion of 10,019 Series H Preferred Shares. In accordance with the authoritative guidance for distinguishing liabilities from equity, the Company has determined that its Series H preferred shares carry certain redemption features beyond the control of the Company. Accordingly, the Series H Preferred Shares are presented as temporary equity.
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Share Capital |
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Share Capital | Share Capital On June 28, 2023, the Company filed an Articles of Amendment to effect a share consolidation (also known as a reverse stock split) of its issued and outstanding common shares on a one-for-seven basis. The share consolidation became effective on June 28, 2023. All share and per share amounts have been restated for all periods presented to reflect the share consolidation. In April 2022, the Company issued 192,857 unregistered common shares, with a fair value of $1.7 million, to Bluesphere Ventures Inc. for the right to acquire up to 1,040,000 carbon credits. As of June 30, 2023, none of the carbon credits have been retired. In March 2022, in connection with the Merger Agreement, the Company issued into escrow 121,428 common shares with a fair value of $1.2 million. On April 4, 2022, the Merger Agreement with Gryphon Digital Mining, Inc. (“Gryphon”) was terminated by the Company and the common shares were released to Gryphon as stated by the escrow agreement. In February 2022, the Company issued 14,286 common shares and 42,858 warrants to purchase up to 42,858 common shares, with a combined fair value of $0.7 million to PGP Capital Advisors for financial advisory services provided. Unlimited authorized common shares at no par value are available to the Company. At June 30, 2023, the Company had the following outstanding warrants to purchase common shares:
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Equity Incentive Plan |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity Incentive Plan | Equity Incentive Plans Stock Options The fair value of option awards are estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility was based on historical volatility of the Company’s common shares. The expected term of options granted was based on the simplified formula. The risk-free interest rate was based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The dividend yield assumption was based on the expectation of no future dividend payments. The assumptions used in the Black-Scholes model were as follows:
The following table summarizes option activity:
Restricted Stock The following table summarizes RSU activity:
The estimated fair value of RSUs was based on the market value of the Company’s common shares on the date of grant. RSUs typically vest over a period of to three years from the original date of grant. The total grant date fair value of RSUs vested during the six months ended June 30, 2023 and 2022 was approximately $0.5 million and $2.0 million, respectively. The fair value of RSUs vested during the six months ended June 30, 2023 and 2022 was approximately $0.2 million and $1.5 million, respectively. Share-Based Compensation Expense The Company recorded the following compensation expense related to its share-based compensation awards (in thousands):
Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):
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Net Loss Per Share |
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Net Loss per Share Basic net loss per share is computed by dividing net loss applicable to common shareholders by the weighted-average number of common shares outstanding during the period. Preferred shares, outstanding common share purchase warrants, and outstanding options and RSUs are considered common stock equivalents and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive. Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share were as follows:
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Commitments and Contingencies |
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies | Commitments and Contingencies Service Agreements On August 19, 2021, the Company entered into a Master Services Agreement with Gryphon (the “Gryphon MSA”). To provide greater certainty as to the term of the Gryphon MSA, on December 29, 2021, the Company and Gryphon entered into Amendment No. 1 to the Gryphon MSA (the “Gryphon MSA Amendment”) which extended the initial term of the Gryphon MSA to five years, as the Company did not receive delivery of a specified minimum number of digital mining machines during 2022. Subject to written notice from the Company and an opportunity by Gryphon to cure for a period of up to 180 days, the Company shall be entitled to terminate the Gryphon MSA in the event of: (i) Gryphon’s failure to perform the services under the Gryphon MSA in a professional and workmanlike manner in accordance with generally recognized digital mining industry standards for similar services, or (ii) Gryphon’s gross negligence, fraud or willful misconduct in connection with performing the services. Gryphon shall be entitled to specific performance or termination for cause in the event of a breach by the Company, subject to written notice and an opportunity to cure for a period of up to 180 days. As consideration for the Gryphon MSA, Gryphon shall receive the equivalent of 22.5% of the net operating profit, as defined in the Gryphon MSA, of all of the Company’s blockchain and digital currency related operations as a management fee. In addition, any costs Gryphon incurs on the Company's behalf are to be reimbursed to Gryphon as defined in the Gryphon MSA. The Company paid costs under this agreement of $3.3 million and $0.4 million during the three months ended June 30, 2023 and 2022, respectively. The Company paid costs under this agreement of $3.9 million and $0.8 million during the six months ended June 30, 2023 and 2022, respectively. On April 7, 2023, the Company filed litigation against Gryphon citing several breaches to the Gryphon MSA, including but not limited to, several fiduciary and operational breaches. On June 3, 2022, the Company entered into a Master Agreement with Compute North LLC (the “Compute North MA”) for, the colocation, management and other services of certain of the Company’s mining equipment. In September 2022, Compute North filed for Chapter 11 bankruptcy. In December 2022, the Compute North MA was assigned to GC Data Center Granbury, LLC (the “GC Data Center MA”) and has a term of five years from such assignment date. Under the GC Data Center MA, the monthly service fee is payable based on the actual hashrate performance of the equipment per miner type per location as a percentage of the anticipated monthly hashrate per miner type. A deposit of $0.5 million previously paid to Compute North for the last two months of monthly service fees was remitted to GC Data Center on behalf of the Company and is included in prepaid digital hosting services at June 30, 2023. During the three months ended June 30, 2023 and 2022, the Company incurred costs under the GC Data Center MA of $1.3 million and nil, respectively. During the six months ended June 30, 2023 and 2022, the Company incurred costs under the GC Data Center MA of $2.6 million and nil, respectively. For both the three and six months ended June 30, 2023, $0.9 million of the costs incurred under the GC Data Center MA were paid through the Gryphon MSA and are included in the Gryphon MSA costs above. On February 8, 2023, the Company entered into a Hosting Agreement with Lancium FS 25, LLC (the “Lancium Hosting Agreement”) for rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of the Company’s mining equipment. The Lancium Hosting Agreement has a term of two years with subsequent one year renewal periods. During both the three and six months ended June 30, 2023, the Company incurred costs under the Lancium Hosting Agreement of $0.5 million. The costs incurred under the Lancium Hosting Agreement are paid through the Gryphon MSA and included in the Gryphon MSA costs above. On April 4, 2023, the Company entered into a Master Hosting Services Agreement with Rebel Mining Company, LLC (the “Rebel Hosting Agreement”) for rack space, network services, electrical connections, routine facility maintenance, and technical support of certain of the Company’s mining equipment. The Rebel Hosting Agreement has a term of three years with subsequent one year renewal periods. As required by the Rebel Hosting Agreement, the Company paid deposits of $2.6 million representing the last two months of estimated service fees. During both the three and six months ended June 30, 2023, the Company incurred costs under the Rebel Hosting Agreement of $1.2 million. The costs incurred under the Rebel Hosting Agreement are paid through the Gryphon MSA and included in the Gryphon MSA costs above. Digital Mining Hosting Sub-License On October 5, 2021, the Company entered into a Sub-License and Delegation Agreement (“Hosting Sub-Lease”) by and between Gryphon and the Company, which assigned to the Company certain Master Services Agreement, dated as of September 12, 2021 (the “Core Scientific MSA”), by and between Core Scientific, Inc. (“Core Scientific”), and Gryphon and Master Services Agreement Order #2 (“Order 2”). On December 29, 2021, the Company and Gryphon entered into Amendment No. 1 to the Sub-Lease Agreement (the “Sub-Lease Amendment”) to provide Gryphon the right to recapture the usage of up to 50% of the hosting capacity to be managed by Core Scientific. The agreement allows for approximately 230 MW of net carbon neutral digital mining hosting capacity to be managed by Core Scientific as hosting partner. As part of the agreement, Core Scientific will provide digital mining fleet management and monitoring solution, Minder™, data analytics, alerting, monitoring, and miner management services. The Hosting Sub-Lease shall automatically terminate upon the termination of the Core Scientific MSA and/or Order 2 in accordance with their respective terms. On October 31, 2022, the Company filed an arbitration request against Core Scientific regarding the Hosting Sub-Lease. The Company has requested that certain advanced deposits paid be refunded back to it as a result of the modification to the Company’s machine purchase agreement with FuFu Technology Limited (now Ethereal Tech Pte. Ltd.). In December 2022, Core Scientific filed Chapter 11 bankruptcy. The Company incurred costs under this agreement of $0.2 million and $0.2 million during the three months ended June 30, 2023 and 2022, respectively. The Company incurred costs under this agreement of $0.4 million and $0.2 million during the six months ended June 30, 2023 and 2022, respectively. The costs incurred under the Sub-Lease Amendment are paid through the Gryphon MSA and included in the Gryphon MSA costs above. Underwriting Agreement Subject to the terms of the underwriting agreement for MEOA’s initial public offering, as amended on August 30, 2022, the underwriter is entitled to a deferred underwriting fee of $4.6 million, which is recorded as deferred underwriting fee in the Company’s consolidated balance sheets. Letters of credit During the ordinary course of business, the Company provides standby letters of credit to third parties as required for certain transactions initiated by the Company. As of June 30, 2023, the Company has one outstanding standby letter of credit used for the bond necessary for the Company to receive mining machines. Extended Warranty Changes in the liability for deferred revenue associated with extended warranties and service contracts were as follows (in thousands):
Litigation The Company is, from time to time, subject to claims and suits arising in the ordinary course of business. In the opinion of management, the ultimate resolution of such pending proceedings will not have a material effect on the Company’s results of operations, financial position or cash flows.
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Segment Reporting |
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting | Segment Information The Company has two operating segments, (1) Digital Mining and (2) Service and Product. The segment disclosures present the measure(s) used by the chief operating decision maker to decide how to allocate resources and for purposes of assessing such segments’ performance. The Digital Mining segment generates revenue from the digital currency the Company earns through its bitcoin mining activities. The Company generates its digital mining revenue from two mining pool operators. The Company’s revenue from digital mining is generated in the United States. The Service and Product segment generates revenue from customer contracts for service and extended service contract and the sale of products related to the Company’s data storage product line. The Company’s revenue from service and product is generated in the United States. Summary information by segment (in thousands):
A summary of segment assets is as follows (in thousands):
Service and product had the following customers that represented more than 10% of revenue.
Service and product had the following receivable’s that represented more than 10% of accounts receivable.
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Subsequent Events |
6 Months Ended |
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Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Subsequent to June 30, 2023, the Company issued 421,856 common shares for the conversion of 2,953 Series H Preferred Shares. Private Placement On August 11, 2023, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) pursuant to which the Company issued to two investors, a total of 13,764 of the Company’s Series H Preferred Shares and a total of 1,966,292 common share purchase warrants (the “Warrants”), each of which entitled the holder to purchase one common share of the Company (the “Warrant Shares”). Per the terms of the Purchase Agreement, the Company will receive gross proceeds of $3.5 million. The Company issued a total of 1,377 Series H Preferred Shares and 196,629 Warrants as a finder’s fee for the transaction. The Warrants issued to the investors are exercisable beginning February 12, 2024 at an initial exercise price of $2.75 per share and have a term of three years from the date of issuance. The Warrants issued for a finder’s fee are immediately exercisable. The exercise price of the Warrant is subject to adjustment for certain stock splits, stock combinations and dilutive share issuances. Pursuant to the terms of the Purchase Agreement, the Company will reserve for issuance the maximum aggregate number of common shares that are issuable upon exercise in full of the Warrants at any time. Amendment to Hertford Agreement On August 11, 2023, the Company entered into an Amended and Restated Agreement (the “Hertford Amendment”) with Hertford Advisors Ltd. and certain other parties listed in the Hertford Amendment (together, the “Hertford Group”), which amends and restates in its entirety the purchase agreement between the Company and Hertford Advisors Ltd. dated July 31, 2021, as modified by the amendment to such agreement dated November 7, 2022 (together, the “Original Hertford Agreement”). As an inducement to enter into the Hertford Amendment, the Company shall issue to Hertford 1,376 Series H Preferred Shares and 800,000 Warrants. Hertford shall have the right to exchange 14,980 Series H Preferred Shares for Series H Preferred Shares held by other persons (the “Exchanged Series H Preferred Shares”), provided that at no time shall any recipient of Exchanged Series H Preferred Shares be permitted to convert Series H Preferred Shares that, when aggregated with any common shares beneficially owned by the recipient of Exchanged Series H Preferred Shares prior to such conversion, would result in exceeding 9.99% of the common shares outstanding immediately after giving effect to such conversion. The offer and sale of the Series H Preferred Shares and the Warrants have not been registered under the Securities Act and may not be offered or sold in the United States in the absence of an effective registration statement or exemption from the registration requirements, and in each case in compliance with applicable state securities laws. Convertible Debt On August 14, 2023, in accordance with the terms of the LDA Purchase Agreement prepayment option, the Company repaid the full amount of the LDA Note, including interest and fees, in the amount of $1.3 million. As a result of the Company’s repayment, the Company shall have the right to redeem from the holder of the LDA Warrants 40% of the then outstanding LDA Warrants.
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Summary of Significant Accounting Policies (Policies) |
6 Months Ended |
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Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of ConsolidationThe condensed consolidated financial statements of the Company have been prepared by management in accordance with accounting principles generally accepted in the United States of America (“GAAP”), applied on a basis consistent for all periods. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for a complete set of financial statements. These condensed consolidated financial statements and notes thereto should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022, filed with the Securities and Exchange Commission on March 31, 2023. In the opinion of management, all adjustments of a normal recurring nature considered necessary for a fair presentation have been included. The results of operations of any interim period are not necessarily indicative of the results of operations to be expected for the full fiscal year. These condensed consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been appropriately eliminated in consolidation. |
Use of Estimates | Use of EstimatesThe preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates. |
Reclassifications | Reclassifications Certain prior period amounts have been reclassified for consistency with the current period presentation. The reclassifications did not have a material impact on the Company's condensed interim consolidated financial statements and related disclosures.
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Foreign Currency Translation | Foreign Currency TranslationThe financial statements of the Company’s foreign subsidiary, for which the functional currency is the local currency, is translated into U.S. dollars using the exchange rate at the consolidated balance sheet date for assets and liabilities and a weighted-average exchange rate during the year for revenue, expenses, gains and losses. Translation adjustments are recorded as accumulated other comprehensive income (loss) within shareholders’ equity. Gains or losses from foreign currency transactions are recognized in the condensed consolidated statements of operations. |
Cash Equivalents | Cash EquivalentsHighly liquid investments with insignificant interest rate risk and original maturities of three months or less, when purchased, are classified as cash equivalents. Cash equivalents are composed of money market funds. The Company maintains cash and cash equivalent balances with financial institutions that exceed federally insured limits. The Company has not experienced any losses related to these balances and believes credit risk to be minimal. |
Restricted Cash and cash equivalents | Restricted Cash and Cash Equivalents Restricted cash is cash held in a separate bank account with restrictions on withdrawal. The Company’s restricted cash classified as current, is pledged as collateral for a standby letter of credit used for the bonding purpose necessary for the Company to receive mining machines. Funds held in trust account are restricted and invested in U.S. government treasury money market funds, except with respect to interest earned on the funds held in the trust account that may be released to MEOA, to pay its franchise and income tax obligations (less up to $100,000 of interest to pay dissolution expenses). In the third quarter of 2023, the trust account proceeds were released and used for the redemption of the public shares of MEOA as a result of the initial business combination not being completed prior to the applicable deadline.
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Digital Assets | Digital Assets The Company accounts for digital assets as indefinite-lived intangible assets. The digital assets are recorded at cost less impairment. An impairment analysis is performed at each reporting period or more frequently, when events or changes in circumstances occur indicating that it is more likely than not that the indefinite-lived asset is impaired. The fair value of digital assets is determined on a nonrecurring basis based on the lowest intraday quoted price on the active exchange(s) that the Company has determined as the principal market for digital assets (Level 1 inputs). If the carrying value of the digital asset exceeds the fair value based on the lowest price quoted in the active exchanges during the period, an impairment loss has occurred with respect to those digital assets in the amount equal to the difference between their carrying values and the price determined. Impairment losses are recognized in operating expenses in the consolidated statements of operations in the period in which the impairment is identified. The impaired digital assets are written down to their fair value at the time of impairment and this new cost basis will not be adjusted upward for any subsequent increase in fair value. Gains are not recorded until realized upon sale or disposition. Digital assets awarded to the Company through its mining activities are included within operating activities on the accompanying consolidated statements of cash flows. The sales of digital assets are included within operating activities in the accompanying condensed consolidated statements of cash flows and any realized gains or losses from such sales are included in operating costs and expenses in the condensed consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting.
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Allowance for Credit Losses | Allowance for Credit Losses The Company’s assessment of its allowance for credit losses requires it to incorporate considerations of historical information, current conditions and reasonable and supportable forecasts. The Company manages credit risk through review of available public company information. For the Company’s note receivable, the Company has recorded an allowance for credit losses and elected to write off accrued interest receivables by reversing interest income.
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Lessee, Leases | Leases The Company has entered into operating leases primarily for real estate. These leases have contractual terms which range from 12 months to 5 years. The Company determines if an arrangement contains a lease at inception. Right of use (“ROU”) assets and liabilities resulting from operating leases are included in on our consolidated balance sheets. Operating lease ROU assets and liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the leases typically do not provide an implicit rate, the Company uses the incremental borrowing rate based on the information available at commencement date in determining the discount rate to calculate the present value of future payments. The operating lease ROU asset may also include any lease payments made and exclude lease incentives and initial direct costs incurred. The Company’s leases do not include options to extend the lease. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term.
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Property and Equipment | Property and Equipment Property and equipment primarily consists of mining equipment and is stated at cost, including purchase price and all shipping and custom fees, and depreciated using the straight-line method over the estimated useful lives of the assets, generally five years. The Company reviews the carrying amounts of property and equipment when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the fair value of the asset is estimated in order to determine the extent of the impairment loss, if any.
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Intangible Assets | Intangible Assets For intangible assets purchased in a business combination, the estimated fair values of the assets received are used to establish their recorded values. For intangible assets acquired in a non-monetary exchange, the estimated fair values of the assets transferred (or the estimated fair values of the assets received, if more clearly evident) are used to establish their recorded values. Valuation techniques consistent with the market approach, income approach and/or cost approach are used to measure fair value. Purchased intangible assets are amortized on a straight-line basis over their economic lives of 5 years to 15 years for supplier agreements, six years for channel partner relationships, and seven years for customer relationships as this method most closely reflects the pattern in which the economic benefits of the assets will be consumed. The Company has purchased carbon credits. As it intends to use these carbon credits, the assets have been classified as intangible assets. When the carbon credit is used, it will be expensed as an operating expense.
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Impairment of Intangible Assets | mpairment of Intangible AssetsThe Company performs regular reviews of intangible assets to determine if any event has occurred that may indicate that intangible assets with finite useful lives and other long-lived assets are potentially impaired. Triggering events for impairment reviews may be indicators such as adverse industry or economic trends, restructuring actions, lower projections of profitability, or a sustained decline in our market capitalization. Intangible assets are quantitatively assessed for impairment, if necessary, by comparing their estimated fair values to their carrying values. If the carrying value exceeds the fair value, the difference is recorded as an impairment. |
Convertible Debt | Convertible Debt The Company accounts for convertible debt in accordance with the applicable authoritative guidance and has elected to apply the fair value option. The convertible debt is reflected at fair value in the condensed consolidated balance sheets and changes in fair value are recorded in the condensed consolidated statements of operations as a fair value adjustment to the convertible debt each reporting period (with the portion of the change that results from a change in the instrument-specific credit risk recorded separately in other comprehensive income, if applicable). The Company expenses any issuance costs allocated to a freestanding or an embedded financial instrument that is subsequently measured at fair value through earnings as of the issuance date.
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Warrant Liabilities | Warrant LiabilitiesWarrant liabilities are for warrants for shares of MEOA’s common stock that are not indexed to its own stock and for warrants for a common share purchase warrant issued in connection with the Company’s convertible debt. The warrants are presented as liabilities at fair value on the consolidated balance sheets. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in interest income and other expense, net, in the consolidated statements of operations. The fair value of the warrants issued in connection with MEOA's public offering were measured based on the listed market price of such warrants. The fair value of the LDA Warrant was measured using a Monte Carlo valuation model. |
Redeemable non-controlling interests, Policy | Redeemable Non-controlling Interest Redeemable non-controlling interest is interest in a subsidiary of the Company that are redeemable outside of the Company’s control either for cash or other assets. This interest is classified as temporary equity and measured at the estimated redemption value at the end of each reporting period. The resulting increases or decreases in the estimated redemption amount are effected by corresponding charges to accumulated deficit. At June 30, 2023, redeemable non-controlling interest recorded within the Company’s consolidated balance sheets relates to its subsidiary, MEOA.
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Revenue Recognition | Revenue Recognition The Company accounts for revenue pursuant to ASU 2014-09, Revenue from Contracts with Customers and all the related amendments (“Topic 606”). Under Topic 606, an entity is required to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services, and contract consideration will be recognized on a “sell-in basis” or when control of the purchased goods or services transfer to the distributor. The Company is engaged with digital asset mining pool operators to provide computing power to the mining pools. In exchange for providing computing power, the Company is entitled to a fractional share of the fixed Bitcoin award the mining pool operator receives for successfully adding a block to the blockchain, plus a fractional share of the transaction fees attached to that blockchain. The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator to the total computing power contributed by all mining pool participants in solving the current algorithm. The Company satisfies its performance obligation over time with daily settlement in Bitcoin. The transaction price is the fair value of the digital asset mined, Bitcoin, being the fair value per the prevailing market rate for that digital asset on the date earned. The transaction consideration the Company receives is noncash consideration, in the form of Bitcoin, which the Company measures at fair value on the date earned which is not materially different from the fair value at contract inception. Fair value of the Bitcoin received is determined using the spot price of the Bitcoin on the date earned. The Company cannot determine, during the course of solving for a block, that a reversal of revenue is not probable and therefore revenue is recognized when the mining pool operator successfully places a block (by being the first to solve an algorithm) and the Company receives confirmation of the consideration it will receive. Expenses associated with running the digital asset mining operations, such as rent, operating supplies, utilities and monitoring services are recorded as cost of revenues. The Company also generates revenue from: (i) solutions for standalone storage and integrated hyper-converged storage; (ii) professional services; and (iii) warranty and customer services. The Company recognizes revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. To determine revenue recognition for contracts with customers the Company performs the following five steps: (i) identify the promised goods or services in the contract; (ii) identify the performance obligations in the contract, including whether they are distinct in the context of the contract; (iii) determine the transaction price, including the constraint on variable consideration; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies the performance obligations. The majority of the Company’s product and service revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied at a point in time. These contracts are generally comprised of a single performance obligation to transfer products. Accordingly, the Company recognizes revenue when change of control has been transferred to the customer, generally at the time of shipment of products. The Company sells its products both directly to customers and through distributors generally under agreements with payment terms typically less than 45 days. Revenue on direct product sales, excluding sales to distributors, are not entitled to any specific right of return or price protection, except for any defective product that may be returned under our standard product warranty. Product sales to distribution customers that are subject to certain rights of return, stock rotation privileges and price protections, contain a component of “variable consideration.” Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products and is generally based upon a negotiated fixed price and is net of estimates for variable considerations. For performance obligations related to warranty and customer services, such as extended product warranties, the Company transfers control and recognizes revenue on a time-elapsed basis. The performance obligations are satisfied as services are rendered typically on a stand-ready basis over the contract term, which is generally 12 months. The Company also enters into revenue arrangements that may consist of multiple performance obligations of its product and service offerings such as for sales of hardware devices and extended warranty services. The Company allocates contract fees to the performance obligations on a relative stand-alone selling price basis. The Company determines the stand-alone selling price based on its normal pricing and discounting practices for the specific product and/or service when sold separately. When the Company is unable to establish the individual stand-alone price for all elements in an arrangement by reference to sold separately instances, the Company may estimate the stand-alone selling price of each performance obligation using a cost plus a margin approach, by reference to third party evidence of selling price, based on the Company’s actual historical selling prices of similar items, or based on a combination of the aforementioned methodologies; whichever management believes provides the most reliable estimate of stand-alone selling price.
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Extended Warranty | Extended Warranty Separately priced extended on-site warranties and service contracts are offered for sale to customers on all product lines. Extended warranty and service contract revenue and recognized as service revenue over the period of the service agreement. The Company will typically apply the practical expedient to agreements wherein the period between transfer of any good or service in the contract and when the customer pays for that good or service is one year or less.
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Research and Development Costs | Research and Development CostsResearch and development expenses include payroll, employee benefits, share-based compensation expense, and other headcount-related expenses associated with product development. Research and development expenses also include third-party development and programming costs. Research and development expenses are charged to operating expenses as incurred when these expenditures relate to the Company’s research and development efforts and have no alternative future uses. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) and its components encompass all changes in equity other than those arising from transactions with shareholders, including net loss and foreign currency translation adjustments, and is disclosed in a separate condensed consolidated statement of comprehensive loss.
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Share-based Compensation | Share-based Compensation The Company accounts for share-based awards, and similar equity instruments, granted to employees, non-employee directors, and consultants in accordance with the authoritative guidance for share-based compensation. Share-based compensation award types include stock options, restricted stock units (“RSUs”) and restricted stock awards (“RSAs”). Share-based compensation expense is recognized on a straight-lined basis over the requisite service period (usually the vesting period) except for options with graded vesting which is recognized pursuant to an accelerated method. Forfeitures are recognized as a reduction in share-based compensation expense as they occur.
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Non-controlling Interest, Policy | Non-controlling Interest The Company accounts for its non-controlling interest in accordance with the authoritative guidance for consolidation which governs the accounting for and reporting of non-controlling interests (“NCIs”) in partially owned consolidated subsidiaries and the loss of control of subsidiaries. Certain provisions of the guidance indicate, among other things, that NCIs be treated as a separate component of equity, not as a liability, that increases and decreases in the parent’s ownership interest that leave control intact be treated as equity transactions rather than as step acquisitions or dilution gains or losses, and that losses of a partially owned consolidated subsidiary be allocated to the NCI even when such allocation might result in a deficit balance. The net income (loss) attributed to the NCI is separately designated in the accompanying consolidated statements of operations.
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Segment Reporting | Segment ReportingOperating segments are defined as components of an enterprise for which separate financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding the method to allocate resources and assess performance. The Company has two operating segments. |
Recently Issued and Adopted Accounting Pronouncements and Accounting Pronouncements Pending Adoption | Recently Issued and Adopted Accounting Pronouncements From time to time, new accounting pronouncements are issued by the FASB that are adopted by the Company as of the specified effective date. If not discussed, the Company believes that the impact of recently issued standards will not have a material impact on the Company’s consolidated financial statements upon adoption. In June 2016, the FASB issued Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. Entities will no longer be permitted to consider the length of time that fair value has been less than amortized cost when evaluating when credit losses should be recognized. The Company adopted ASU 2016-13 on January 1, 2023 on a modified retrospective basis which resulted in a $3.8 million increase to the opening balance of accumulated deficit, representing the cumulative allowance for credit losses for the Company’s note receivable. In October 2021, the FASB issued Accounting Standards Update No. 2021-08, Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 amends ASC 805 to require acquiring entities to apply Topic 606 to recognize and measure contract assets and contract liabilities in a business combination. The Company adopted the new standard beginning January 1, 2023, however it did not have an effect on its financial position, results of operations or cash flows.
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Summary of Significant Accounting Policies (Tables) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||
Schedule of Digital Assets | The following table presents the activities of the digital assets (in thousands):
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Fair Value Measures and Disclosures (Tables) |
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Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following tables provide a summary of the financial instruments that are measured at fair value on a recurring basis (in thousands):
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Fair Value, Liabilities Measured on Recurring and Nonrecurring Basis | The following table presents the activities of warrant liabilities that are measured at fair value (in thousands):
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Certain Balance Sheet Items (Tables) |
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Balance Sheet Related Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Current Assets | The following table summarizes other current assets (in thousands):
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Schedule of Property and Equipment | The following table summarizes property and equipment, net (in thousands):
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Schedule of Other Assets, Noncurrent | The following table summarizes other assets (in thousands):
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Schedule of Other Current Liabilities | The following table summarizes other current liabilities (in thousands):
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Intangible Assets (Tables) |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Finite-Lived Intangible Assets | The following table summarizes intangible assets, net (in thousands):
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Debt (Tables) |
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Fair Value Measurement Inputs and Valuation Techniques | The fair value of the LDA Warrant was measured using a Monte Carlo valuation model with the following assumptions:
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Share Capital (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Warrants | At June 30, 2023, the Company had the following outstanding warrants to purchase common shares:
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Equity Incentive Plan (Tables) |
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Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | The assumptions used in the Black-Scholes model were as follows:
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Share-based Payment Arrangement, Option, Activity | The following table summarizes option activity:
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Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | The following table summarizes RSU activity:
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||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount | The Company recorded the following compensation expense related to its share-based compensation awards (in thousands):
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Share-based Payment Arrangement, Nonvested Award, Cost | Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):
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Net Loss Per Share (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Anti-dilutive common share equivalents excluded from the computation of diluted net loss per share were as follows:
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Commitments and Contingencies (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Product Warranty Liability | Changes in the liability for deferred revenue associated with extended warranties and service contracts were as follows (in thousands):
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Segment Reporting (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Segment Reporting Information, by Segment | Summary information by segment (in thousands):
A summary of segment assets is as follows (in thousands):
Service and product had the following customers that represented more than 10% of revenue.
Service and product had the following receivable’s that represented more than 10% of accounts receivable.
|
Organization and Business - Going Concern (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
|
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||
Net loss available to common shareholders | $ (4,827) | $ (40,687) | $ (8,332) | $ (55,334) |
Share consolidation (reverse stock split) conversion ratio | 0.142857 | 0.142857 | ||
Income (Loss) from Continuing Operations, Net of Tax, Attributable to Parent | $ 4,760 | $ 40,687 | $ 8,249 | $ 55,334 |
Summary of Significant Accounting Policies - Other (Details) - 6 months ended Jun. 30, 2023 |
Total |
segment |
---|---|---|
Accounting Policies [Abstract] | ||
Number of operating Segments | 2 | 2 |
Summary of Significant Accounting Policies - Digital Assets (Details) - Digital Asset $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Indefinite-lived Intangible Assets [Roll Forward] | |
Beginning balance | $ 1,695 |
Addition of digital assets | 7,490 |
Indefinite-Lived Intangible Assets, Sold For Cash | (7,540) |
Digital assets issued for services | (669) |
Impairment loss | (350) |
Ending balance | $ 626 |
Summary of Significant Accounting Policies - Narrative (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Property, Plant and Equipment [Line Items] | |
Interest to pay dissolution expenses | $ 100 |
Impairment Of Intangible Asset, Indefinite Lived, Excluding Goodwill, Statement Of Income Or Comprehensive Income, Extensible Enumeration, Not Disclosed Flag | consolidated statements of operations |
Impairment Of Intangible Asset, Finite Lived, Statement Of Income Or Comprehensive Income, Extensible Enumeration, Not Disclosed Flag | consolidated statements of operations |
Mining Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets, mining equipment (in years) | 5 years |
Summary of Significant Accounting Policies - Intangible Assets (Details) |
6 Months Ended |
---|---|
Jun. 30, 2023 | |
Supplier agreements | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life, finite-lived intangible assets | 5 years |
Supplier agreements | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life, finite-lived intangible assets | 15 years |
Channel partner relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life, finite-lived intangible assets | 6 years |
Customer relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life, finite-lived intangible assets | 7 years |
Summary of Significant Accounting Policies - Leases (Details) |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Lessee, Lease, Description [Line Items] | ||
Operating Lease, Liability, Statement of Financial Position [Extensible Enumeration] | Other current liabilities, Other non-current liabilities, Property and equipment, net | Other current liabilities, Other non-current liabilities, Property and equipment, net |
Minimum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, term of contract | 12 months | |
Maximum | ||
Lessee, Lease, Description [Line Items] | ||
Lessee, operating lease, term of contract | 5 years |
Summary of Significant Accounting Policies - Recently Issued and Adopted Accounting Pronouncements (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Mar. 31, 2023 |
Dec. 31, 2022 |
Jun. 30, 2022 |
Mar. 31, 2022 |
Dec. 31, 2021 |
---|---|---|---|---|---|---|
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Shareholders' equity | $ (28,125) | $ (34,871) | ||||
Retained Earnings [Member] | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Shareholders' equity | $ 432,297 | $ 427,434 | 419,732 | $ 270,529 | $ 229,842 | $ 215,195 |
Cumulative Effect, Period of Adoption, Adjustment | Retained Earnings [Member] | ||||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||||
Shareholders' equity | $ 3,821 |
Fair Value Measurements - Fair Value of Warrant Liability (Details) - Warrant - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Jun. 30, 2023 |
Mar. 31, 2023 |
Jun. 30, 2023 |
|
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Warrant liability as of January 1, 2023 | $ 662 | $ 864 | $ 864 |
Warrant liability as of March 31, 2023 | 579 | 662 | 579 |
Issuance | 976 | ||
Warrant liability as of June 30, 2023 | 579 | 662 | $ 579 |
MEOA Warrant | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Change in fair value | (662) | $ (202) | |
LDA Warrant | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Change in fair value | $ (397) |
Notes Receivable - Rainmaker Note Receivable (Details) - USD ($) $ in Thousands |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
Sep. 14, 2020 |
|
Receivables [Abstract] | |||
Promissory note receivable | $ 0 | $ 3,800 | $ 3,100 |
Stated interest rate | 10.00% | ||
Note receivable due date | Sep. 14, 2023 | ||
Note receivable, allowance for credit losses | $ 3,821 | $ 0 | |
Note receivable, reversal of accrued interest | $ 100 |
Certain Balance Sheet Items - Other current assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid digital hosting services | $ 1,265 | $ 880 |
Prepaid services | 611 | 927 |
Prepaid insurance | 735 | 783 |
Other | 585 | 461 |
Other Assets, Current | $ 3,196 | $ 3,051 |
Certain Balance Sheet Items - Property and Equipment (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Subtotal | $ 28,302 | $ 33,841 |
Right of use asset | $ 393 | $ 418 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible Enumeration] | Property and equipment, net | Property and equipment, net |
Property and equipment, net | $ 28,695 | $ 34,259 |
Mining Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Mining equipment | 31,600 | 35,550 |
Accumulated depreciation | $ 3,298 | $ 1,709 |
Certain Balance Sheet Items - Narrative (Details) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023
USD ($)
|
Jun. 30, 2022
USD ($)
|
Jun. 30, 2023
USD ($)
miner
|
Jun. 30, 2022
USD ($)
|
|
Property, Plant and Equipment [Line Items] | ||||
Depreciation | $ 1,000 | $ 500 | $ 1,600 | $ 600 |
ROU asset amortization | $ 15 | $ 0 | $ 25 | 0 |
Number of miners sold | miner | 2,531 | |||
Proceeds from sale of miners | $ 3,699 | $ 0 | ||
Mining Equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Proceeds from sale of miners | $ 3,700 |
Certain Balance Sheet Items - Other long term assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid digital hosting services | $ 20,637 | $ 18,514 |
Prepaid insurance and services | 49 | 116 |
Other | 11 | 69 |
Other Assets | $ 20,697 | $ 18,699 |
Certain Balance Sheet Items - Other current liabilities (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Advance from target for SPAC | $ 898 | $ 449 |
Taxes payable for SPAC | 270 | 254 |
Deferred revenue | 74 | 160 |
Other | 108 | 111 |
Other current liabilities | $ 1,350 | $ 974 |
Intangible Assets - Amortization (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 400,000 | $ 7,000,000 | $ 800,000 | $ 13,200,000 |
Amortization expense, remainder of fiscal year | 800,000 | 800,000 | ||
Amortization expense 2024 | 1,600,000 | 1,600,000 | ||
Amortization expense 2025 | 1,600,000 | 1,600,000 | ||
Amortization expense 2026 | 1,600,000 | 1,600,000 | ||
Amortization expense 2027 | 200,000 | 200,000 | ||
Amortization expense 2028 | $ 100,000 | $ 100,000 |
Investments - SPAC (Details) - shares |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
MEOA | Common Class B | ||
Schedule of Equity Method Investments [Line Items] | ||
Investment owned, balance, shares (in shares) | 3,162,500 | 3,162,500 |
Debt - Fair Value Assumptions (Details) |
Jun. 30, 2023
$ / shares
|
Apr. 17, 2023
$ / shares
|
---|---|---|
Common share price | ||
Debt Instrument [Line Items] | ||
Share price | $ 1.94 | $ 2.98 |
Expected volatility | ||
Debt Instrument [Line Items] | ||
Warrants measurement input | 1.150 | 1.200 |
Risk-free interest rate | ||
Debt Instrument [Line Items] | ||
Warrants measurement input | 4.5 | 0.038 |
Preferred Shares - H Shares (Details) |
12 Months Ended | ||||
---|---|---|---|---|---|
Oct. 01, 2021
$ / shares
|
Dec. 31, 2024 |
Dec. 31, 2023 |
Jun. 30, 2023
shares
|
Dec. 31, 2022
shares
|
|
Class of Stock [Line Items] | |||||
Common shares, issued (in shares) | 11,423,310 | 9,804,609 | |||
Hertford | |||||
Class of Stock [Line Items] | |||||
Preferred stock shares converted (in shares) | 10,019 | ||||
Common shares, issued (in shares) | 1,431,283 | ||||
Series H Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Convertible preferred stock, terms of conversion | The Series H Preferred Shares are convertible provided (and only if and to the extent) that prior shareholder approval of the issuance of all Sphere 3D common shares issuable upon conversion of the Series H Preferred Shares has been obtained in accordance with the rules of the Nasdaq Stock Market, at any time from time to time, at the option of the holder thereof, into 142.857 Sphere 3D common shares for every Series H Preferred Share. Each holder of the Series H Preferred Shares, may, subject to prior shareholder approval, convert all or any part of the Series H Preferred Shares provided that after such conversion the common shares issuable, together with all the common shares held by the shareholder in the aggregate would not exceed 9.99% of the total number of outstanding common shares of the Company. | ||||
Preferred stock, redemption price (in USD per share) | $ / shares | $ 1,000 | ||||
Series H Preferred Stock | Forecast | |||||
Class of Stock [Line Items] | |||||
Preferred Stock, Convertible, Threshold of Shares Outstanding | 0.100 | 0.030 |
Share Capital Reverse Split (Details) |
3 Months Ended | 6 Months Ended |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2023 |
|
Equity [Abstract] | ||
Share consolidation (reverse stock split) conversion ratio | 0.142857 | 0.142857 |
Share Capital - Carbon Credits (Details) $ in Thousands |
1 Months Ended | |||
---|---|---|---|---|
Apr. 12, 2022
USD ($)
credit
shares
|
Mar. 31, 2022
shares
|
Feb. 28, 2022
shares
|
Jun. 30, 2023
credit
|
|
Class of Warrant or Right [Line Items] | ||||
Issuance of common shares (in shares) | shares | 121,428 | 14,286 | ||
Carbon offset credits | credit | 1,040,000 | |||
Carbon Credits Retired | credit | 0 | |||
Common Stock [Member] | ||||
Class of Warrant or Right [Line Items] | ||||
Issuance of common shares (in shares) | shares | 192,857 | |||
Stock Issued During Period, Value, New Issues | $ | $ 1,700 |
Share Capital - Gryphon (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Feb. 28, 2022 |
|
Equity [Abstract] | ||
Issuance of common shares (in shares) | 121,428 | 14,286 |
Fair value of shares issued | $ 1.2 |
Share Capital PGP (Details) - USD ($) $ in Millions |
1 Months Ended | |
---|---|---|
Mar. 31, 2022 |
Feb. 28, 2022 |
|
Equity [Abstract] | ||
Issuance of common shares (in shares) | 121,428 | 14,286 |
Warrant, outstanding (in shares) | 42,858 | |
Number of shares called by warrants (in shares) | 42,858 | |
Fair value of stock and warrants issued during period | $ 0.7 |
Share Capital (Details) - $ / shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Dec. 31, 2022 |
|
Equity [Abstract] | ||
Common Stock, Shares Authorized, Unlimited [Fixed List] | Unlimited | |
Common shares, no par value | $ 0 | $ 0 |
Equity Incentive Plan - Summary of Restricted Stock Activity (Details) - Restricted Stock Units (RSUs) |
6 Months Ended |
---|---|
Jun. 30, 2023
$ / shares
shares
| |
Stock Options | |
Outstanding - beginning of period (in shares) | shares | 125,182 |
Grants (in shares) | shares | 444,697 |
Vested (in shares) | shares | (101,873) |
Forfeited (in shares) | shares | (20,953) |
Outstanding - end of period (in shares) | shares | 447,053 |
Weighted Average Grant Date Fair Value | |
Weighted average grant date fair value, outstanding - beginning of period (in USD per share) | $ / shares | $ 8.89 |
Weighted average grant date fair value, granted (in USD per share) | $ / shares | 2.90 |
Weighted average grant date fair value, vested (in USD per share) | $ / shares | 5.37 |
Weighted average grant date fair value, forfeited (in USD per share) | $ / shares | 6.78 |
Weighted average grant date fair value, outstanding - end of period (in USD per share) | $ / shares | $ 3.83 |
Equity Incentive Plan-RSU details (Details) - Restricted Stock Units (RSUs) - USD ($) |
6 Months Ended | |
---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period, Grant Date Fair Value | $ 500,000 | $ 2,000,000 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Vested in Period, Fair Value | $ 200,000 | $ 1,500,000 |
Minimum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted Stock Units and Stock Options Vesting Period | 1 year | |
Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Restricted Stock Units and Stock Options Vesting Period | 3 years |
Equity Incentive Plan - Share-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 719 | $ 7,199 | $ 1,204 | $ 7,316 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 35 | 0 | 51 | 0 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 684 | $ 7,199 | $ 1,153 | $ 7,316 |
Equity Incentive Plan - Unrecognized Compensation Cost (Details) |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 1,247,000 |
Remaining Weighted-Average Recognition Period (years) | 1 year 1 month 6 days |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 449,000 |
Remaining Weighted-Average Recognition Period (years) | 1 year 4 months 24 days |
Commitments and Contingencies - Digital Mining Hosting Sub-License (Details) - Core Scientific - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Oct. 05, 2021 |
Jun. 30, 2023 |
Jun. 30, 2022 |
Jun. 30, 2023 |
Jun. 30, 2022 |
|
Other Commitments [Line Items] | |||||
Hosting service expense | $ 200 | $ 200 | $ 400 | $ 200 | |
Other commitments, description | The agreement allows for approximately 230 MW of net carbon neutral digital mining hosting capacity to be managed by Core Scientific as hosting partner. |
Commitments and Contingencies - Letters of Credit (Details) |
Jun. 30, 2023 |
---|---|
Commitments and Contingencies Disclosure [Abstract] | |
Number of letters of credit outstanding | 1 |
Commitments and Contingencies - Warranty and Extended Warranty (Details) $ in Thousands |
6 Months Ended |
---|---|
Jun. 30, 2023
USD ($)
| |
Product Warranty Liability [Line Items] | |
Current liability, included in other current liabilities | $ 52 |
Non-current liability, included in other non-current liabilities | 41 |
Deferred revenue | |
Product Warranty Liability [Line Items] | |
Beginning balance, liability | 139 |
Revenue recognized during the period | (53) |
Change in liability for warranties issued during the period | 7 |
Ending balance, liability | $ 93 |
Commitments and Contingencies (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Commitments and Contingencies Disclosure [Abstract] | ||
Deferred underwriting fee | $ 4,554 | $ 4,554 |
Segment Reporting - Summary of Segment Assets (Details) - USD ($) $ in Thousands |
Jun. 30, 2023 |
Dec. 31, 2022 |
---|---|---|
Segment Reporting Information [Line Items] | ||
Total Assets | $ 71,278 | $ 83,016 |
Corporate, Non-Segment | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 12,410 | 19,250 |
Digital Mining | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total Assets | 58,252 | 63,077 |
Service and Product | Operating Segments | ||
Segment Reporting Information [Line Items] | ||
Total Assets | $ 616 | $ 689 |
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