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): November 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 November 14, 2019, we issued a press release announcing our financial results for our third fiscal quarter ended September 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 November 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: November 15, 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 November 14, 2019 |
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Exhibit 99.1
Sphere 3D Reports Third Quarter Fiscal Year 2019 Financial Results
SAN DIEGO, Calif. – November 14, 2019 – Sphere 3D Corp. (NASDAQ: ANY), a company delivering containerization, virtualization, and data management solutions, today reported financial results for its third quarter ended September 30, 2019.
On November 13, 2018, the Company closed the divestiture of its Overland subsidiary and related business. The financial results of Overland for the third quarter and nine 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 third quarter and nine months ended September 30, 2019 were as follows:
Third Quarter 2019 Financial Results:
| • |
Revenue for the third quarter of 2019 was $1.4 million, compared to $1.3 million for the third quarter of 2018. |
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| • |
Gross margin for the third quarter of 2019 was 35.5%, compared to 14.7% for the third quarter of 2018. |
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| • |
Operating expenses for the third quarter of 2019 were $1.8 million, compared to $2.8 million for the third quarter of 2018. |
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| • |
Share-based compensation expense for the third quarter of 2019 was $0.2 million, compared to $0.3 million for the third quarter of 2018. Depreciation and amortization was $0.3 million in both the third quarter of 2019 and 2018. |
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| • |
Other income for the third quarter of 2019 was $2.3 million. The majority of which related to agreements entered into with certain executives of the Company and the Company’s Board of Directors to extinguish certain accrued liabilities. The Company wrote off $1.7 million of outstanding liabilities and recorded a gain on forgiveness of liabilities. |
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| • |
Net Income from continuing operations for the third quarter of 2019 was $0.9 million, or a net income of $0.33 per share, compared to a net loss from continuing operations of $3.1 million, or a net loss of $1.61 per share, for the third quarter of 2018. |
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| • |
Net loss from discontinued operations for the third quarter of 2018 was $1.8 million, or a net loss of $0.92 per share. |
Nine Months Ended September 30, 2019 Financial Results:
| • |
Revenue for the first nine months of 2019 was $4.5 million, compared to $6.4 million for the first nine months of 2018. |
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| • |
Gross margin for the first nine months of 2019 was 31.9%, compared to 17.4% for the first nine months of 2018. |
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| • |
Operating expenses for the first nine months of 2019 were $6.0 million, compared to $11.1 million for the first nine months of 2018. |
| • |
Share-based compensation expense for the first nine months of 2019 was $0.5 million, compared to $1.5 million for the first nine months of 2018. Depreciation and amortization was $0.8 million in the first nine months of 2019, compared to $3.3 million for the first nine months of 2018. |
| • |
Other income for the first nine months of 2019 was $2.3 million. The majority of which related to agreements entered into with certain executives of the Company and the Company’s Board of Directors to extinguish certain accrued liabilities. The Company wrote off $1.7 million of outstanding liabilities and recorded a gain on forgiveness of liabilities. |
| • |
Net loss from continuing operations for the first nine months of 2019 was $2.6 million, or a net loss of $1.09 per share, compared to a net loss from continuing operations of $12.2 million, or a net loss of $8.00 per share, in the first nine months of 2018. |
| • |
Net loss from discontinued operations for the first nine months of 2018 was $5.4 million, or a net loss of $3.55 per share. |
Investor Conference Call:
Sphere 3D will not be
hosting a third 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.com
SPHERE 3D CORP.
CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS
(In thousands, except share and per share
data)
| Three Months Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| (Unaudited) | (Unaudited) | |||||||||||
| Revenue | $ | 1,368 | $ | 1,306 | $ | 4,461 | $ | 6,377 | ||||
| Cost of revenue | 883 | 1,114 | 3,036 | 5,269 | ||||||||
| Gross profit | 485 | 192 | 1,425 | 1,108 | ||||||||
| Operating expenses: | ||||||||||||
| Sales and marketing | 550 | 885 | 1,494 | 2,406 | ||||||||
| Research and development | 460 | 486 | 1,673 | 2,496 | ||||||||
| General and administrative | 801 | 1,465 | 2,814 | 6,156 | ||||||||
| 1,811 | 2,836 | 5,981 | 11,058 | |||||||||
| Loss from operations | (1,326 | ) | (2,644 | ) | (4,556 | ) | (9,950 | ) | ||||
| Interest expense - related party | (41 | ) | (494 | ) | (327 | ) | (2,264 | ) | ||||
| Interest expense | (9 | ) | - | (24 | ) | - | ||||||
| Other income (expense), net | 2,261 | 53 | 2,283 | (32 | ) | |||||||
| Net income (loss) from continuing operations | 885 | (3,085 | ) | (2,624 | ) | (12,246 | ) | |||||
| Net loss from discontinued operations | - | (1,767 | ) | - | (5,431 | ) | ||||||
| Net income (loss) | $ | 885 | $ | (4,852 | ) | $ | (2,624 | ) | $ | (17,677 | ) | |
| Net income (loss) per share: | ||||||||||||
| Continuing operations | $ | 0.33 | $ | (1.61 | ) | $ | (1.09 | ) | $ | (8.00 | ) | |
| Discontinued operations | . | (0.92 | ) | - | (3.55 | ) | ||||||
| Net income (loss) per share basic | $ | 0.33 | $ | (2.53 | ) | $ | (1.09 | ) | $ | (11.55 | ) | |
| Net income (loss) per share basic diluted | $ | 0.10 | $ | (2.53 | ) | $ | (1.09 | ) | $ | (11.55 | ) | |
| Shares used in computing net income (loss) per share: | ||||||||||||
| Basic | 2,668,311 | 1,916,523 | 2,403,373 | 1,531,067 | ||||||||
| Diluted | 8,909,761 | 1,916,523 | 2,403,373 | 1,531,067 | ||||||||
SPHERE 3D CORP.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands)
| September 30, | December 31, | |||||
| 2019 | 2018 | |||||
| (Unaudited) | (Unaudited) | |||||
| ASSETS | ||||||
| Cash and cash equivalents | $ | 129 | $ | 341 | ||
| Accounts receivable, net | 777 | 1,142 | ||||
| Inventories | 825 | 1,230 | ||||
| Other current assets | 389 | 784 | ||||
| Total current assets | 2,120 | 3,497 | ||||
| Investment in affiliate | 2,100 | 2,100 | ||||
| Property and equipment, net | 3 | 6 | ||||
| Intangible assets, net | 2,613 | 3,348 | ||||
| Goodwill | 1,385 | 1,385 | ||||
| Other assets | 936 | 950 | ||||
| Total assets | $ | 9,157 | $ | 11,286 | ||
| LIABILITIES AND SHAREHOLDERS' DEFICIT | ||||||
| Current liabilities | $ | 8,185 | $ | 9,639 | ||
| Redeemable preferred shares | 1,019 | 6,571 | ||||
| Other long-term liabilities | 713 | 683 | ||||
| Total shareholders' deficit | (760 | ) | (5,607 | ) | ||
| Total liabilities and shareholders' deficit | $ | 9,157 | $ | 11,286 |