UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 14, 2019
SPHERE 3D CORP.
(Exact name of registrant as specified in its charter)
| Ontario, Canada | 001-36532 | 98-1220792 |
| (State or other jurisdiction | (Commission File Number) | (IRS Employer Identification No.) |
| of incorporation) |
| 895 Don Mills Road, | |
| Bldg. 2, Suite 900 | M3C 1W3 |
| Toronto, Ontario | |
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code (858) 571-5555
Not Applicable
(Former name or former
address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a -12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b -2 of this chapter).
Emerging growth company [X]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
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Item 2.02. Results of Operations and Financial Condition.
On August 14, 2019, we issued a press release announcing our financial results for our second fiscal quarter ended June 30, 2019. The information contained in the press release is incorporated herein by reference and furnished as Exhibit 99.1.
The information in this Item 2.02 and Exhibit 99.1 is being furnished and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section.
Item 9.01. Financial Statements and Exhibits
(d) Exhibits
| 99.1 | Press release dated August 14, 2019 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: August 14, 2019
| SPHERE 3D CORP. |
| By: | /s/ Kurt L. Kalbfleisch | |
| Kurt L. Kalbfleisch | ||
| Chief Financial Officer |
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EXHIBIT INDEX
| Exhibit Number | Description | |
| 99.1 | Press Release Issued August 14, 2019 |
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Exhibit 99.1
Sphere 3D Reports Second Quarter Fiscal Year 2019 Financial Results
SAN DIEGO, Calif. – August 14, 2019 – Sphere 3D Corp. (NASDAQ: ANY), a company delivering containerization, virtualization, and data management solutions, today reported financial results for its second quarter ended June 30, 2019.
“The second quarter revenue was negatively impacted by our cash constraints and our move to new hardware suppliers for our HVE line of products. Despite the drop in revenue, we were able to reduce our net loss, quarter over quarter, through a reduction in our operating expenses in Q2,” said Peter Tassiopoulos, chief executive officer of Sphere3D, adding, “For the first 6 months of 2019, when compared to the same period in 2018, we were able to reduce our net loss by over 60% and will continue to look for opportunities to improve operating results.”
On November 13, 2018, the Company closed the divestiture of its Overland subsidiary and related business. The financial results of Overland for the second quarter and six months ended 2018 have been reflected in the Company’s consolidated statements of operations as discontinued operations. Results below exclude discontinued operations. Our results for the second quarter and six months ended June 30, 2019 were as follows:
Second Quarter 2019 Financial Results:
| • |
Revenue for the second quarter of 2019 was $1.0 million, compared to $2.7 million for the second quarter 2018. |
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| • |
Gross margin for the second quarter of 2019 was 25.4%, compared to 17.5% for the second quarter of 2018. |
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Operating expenses for the second quarter of 2019 were $1.8 million, compared to $3.3 million for the second quarter of 2018. |
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Share-based compensation expense for the second quarter of 2019 was $0.1 million, compared to $0.4 million for the second quarter of 2018. Depreciation and amortization was $0.3 million in both the second quarter of 2019 and 2018. |
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| • |
Net loss from continuing operations for the second quarter of 2019 was $1.7 million, or a net loss of $0.72 per share, compared to a net loss from continuing operations of $4.0 million, or a net loss of $2.36 per share, for the second quarter of 2018. |
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| • |
Net loss from discontinued operations for the second quarter of 2018 was $2.0 million, or a net loss of $1.16 per share. |
Six Months Ended June 30, 2019 Financial Results:
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Revenue for the first six months of 2019 was $3.1 million, compared to $5.1 million for the first six months of 2018. |
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Gross margin for the first six months of 2019 was 30.4%, compared to 18.1% for the first six months of 2018. |
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Operating expenses for the first six months of 2019 were $4.2 million, compared to $8.2 million for the first six months of 2018. |
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Share-based compensation expense for the first six months of 2019 was $0.2 million, compared to $1.3 million for the first six months of 2018. Depreciation and amortization was $0.5 million in the first six months of 2019, compared to $1.1 million for the first six months of 2018. |
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Net loss from continuing operations for the first six months of 2019 was $3.5 million, or a net loss of $1.55 per share, compared to a net loss from continuing operations of $9.2 million, or a net loss of $6.86 per share, in the first six months of 2018. |
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Net loss from discontinued operations for the first six months of 2018 was $3.7 million, or a net loss of $2.75 per share. |
Investor Conference Call:
Sphere 3D will not be
hosting a second quarter fiscal year 2019 earnings conference call.
About Sphere 3D:
Sphere 3D Corp. (NASDAQ: ANY)
delivers containerization, virtualization, and data management solutions via
hybrid cloud, cloud and on-premise implementations through its global reseller
network and professional services organization. Sphere 3D has a portfolio of
brands, including HVE ConneXions, UCX ConneXions, and SnapServer® dedicated to
helping customers achieve their IT goals. For more information, visit www.sphere3d.com. Follow us on Twitter @Sphere3D and @HVEconneXions
Safe Harbor Statement:
This press release contains
forward-looking statements that involve risks, uncertainties, and assumptions
that are difficult to predict. Actual results and the timing of events could
differ materially from those anticipated in such forward-looking statements as a
result of risks and uncertainties including, without limitation, our inability
to obtain additional debt or equity financing; any increase in our cash needs;
the Company’s ability to maintain listing with the NASDAQ Capital Market; market
adoption and performance of our products; the level of success of our
collaborations and business partnerships; possible actions by customers,
partners, suppliers, competitors or regulatory authorities; and other risks
detailed from time to time in our periodic reports contained in our Annual
Information Form and other filings with Canadian securities regulators
(www.sedar.com) and in prior periodic reports filed with the United States
Securities and Exchange Commission (www.sec.gov). Sphere 3D undertakes no
obligation to update any forward-looking statement, whether written or oral,
that may be made from time to time, whether as a result of new information,
future developments or otherwise, except as required by law.
Investor Contact:
Kurt
Kalbfleisch
+1-858-495-4211
Investor.relations@sphere3d-overland.com
SPHERE 3D CORP.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(In thousands, except share and per share
data)
| Three Months Ended | Six Months Ended | |||||||||||
| June 30, | June 30, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Revenue | $ | 963 | $ | 2,698 | $ | 3,093 | $ | 5,071 | ||||
| Cost of revenue | 718 | 2,225 | 2,153 | 4,155 | ||||||||
| Gross profit | 245 | 473 | 940 | 916 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 491 | 740 | 944 | 1,521 | ||||||||
| Research and development | 516 | 899 | 1,213 | 2,010 | ||||||||
| General and administrative | 761 | 1,691 | 2,013 | 4,691 | ||||||||
| 1,768 | 3,330 | 4,170 | 8,222 | |||||||||
| Loss from operations | (1,523 | ) | (2,857 | ) | (3,230 | ) | (7,306 | ) | ||||
| Interest expense - related party | (144 | ) | (1,212 | ) | (286 | ) | (1,770 | ) | ||||
| Interest expense | (12 | ) | - | (15 | ) | - | ||||||
| Other income (expense), net | 14 | 41 | 22 | (85 | ) | |||||||
| Net loss from continuing operations | (1,665 | ) | (4,028 | ) | (3,509 | ) | (9,161 | ) | ||||
| Net loss from discontinued operations | - | (1,974 | ) | - | (3,664 | ) | ||||||
| Net loss | $ | (1,665 | ) | $ | (6,002 | ) | $ | (3,509 | ) | $ | (12,825 | ) |
| Net loss per share: | ||||||||||||
| Continuing operations | $ | (0.72 | ) | $ | (2.36 | ) | $ | (1.55 | ) | $ | (6.86 | ) |
| Discontinued operations | - | (1.16 | ) | - | (2.75 | ) | ||||||
| Net loss per share basic and diluted | $ | (0.72 | ) | $ | (3.52 | ) | $ | (1.55 | ) | $ | (9.61 | ) |
| Shares used in computing net loss per share: | ||||||||||||
| Basic and diluted | 2,300,469 | 1,706,289 | 2,268,706 | 1,335,104 | ||||||||
SPHERE 3D CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
| June 30, | December 31, | |||||
| 2019 | 2018 | |||||
| (Unaudited) | (Unaudited) | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 151 | $ | 341 | ||
| Accounts receivable, net | 500 | 1,142 | ||||
| Inventories | 1,170 | 1,230 | ||||
| Other current assets | 703 | 784 | ||||
| Total current assets | 2,524 | 3,497 | ||||
| Investment in affiliate | 2,100 | 2,100 | ||||
| Property and equipment, net | 5 | 6 | ||||
| Intangible assets, net | 2,873 | 3,348 | ||||
| Goodwill | 1,385 | 1,385 | ||||
| Other assets | 1,025 | 950 | ||||
| Total assets | $ | 9,912 | $ | 11,286 | ||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||
| Current liabilities | $ | 10,493 | $ | 9,639 | ||
| Series A redeemable preferred shares | 6,832 | 6,571 | ||||
| Other long-term liabilities | 1,315 | 683 | ||||
| Total shareholders' deficit | (8,728 | ) | (5,607 | ) | ||
| Total liabilities and shareholders' deficit | $ | 9,912 | $ | 11,286 |