Document Entity Information Doc
Document Entity Information Document | 9 Months Ended |
Sep. 30, 2022 | |
Document Information [Abstract] | |
Entity Registrant Name | Sphere 3D Corp. |
Entity Central Index Key | 0001591956 |
Current Fiscal Year End Date | --12-31 |
Document Type | 6-K |
Document Period End Date | Sep. 30, 2022 |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents | $ 4,149 | $ 54,355 |
Digital assets | 1,462 | 0 |
Restricted cash | 206 | 0 |
Accounts receivable, net | 218 | 181 |
Notes receivable | 5,510 | 1,859 |
Other current assets | 17,766 | 22,027 |
Total current assets | 29,311 | 78,422 |
Investments | 7,520 | 19,949 |
Mining equipment, net | 36,194 | 0 |
Intangible assets, net | 44,947 | 63,017 |
Notes receivable, long-term | 11,988 | |
Other assets | 92,567 | 102,548 |
Total assets | 210,539 | 275,924 |
Accounts payable | 954 | 1,252 |
Accrued liabilities | 2,776 | 3,250 |
Accrued payroll and employee compensation | 158 | 199 |
Deferred revenue | 157 | 210 |
Other current liabilities | 50 | 297 |
Total current liabilities | 4,095 | 5,208 |
Deferred revenue, long-term | 63 | 58 |
Other non-current liabilities | 1,028 | 1,032 |
Total liabilities | 5,186 | 6,298 |
Commitments and contingencies (Note 12) | ||
Preferred shares, no par value, unlimited shares authorized, 96,000 shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 42,350 | 42,350 |
Common shares, no par value; unlimited shares authorized, 67,106,104 and 63,566,403 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 455,851 | 444,265 |
Accumulated other comprehensive loss | (1,796) | (1,794) |
Accumulated deficit | (291,052) | (215,195) |
Total shareholders’ equity | 205,353 | 269,626 |
Total liabilities and shareholders’ equity | $ 210,539 | $ 275,924 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares $ / shares in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Preferred shares , no par value | $ 0 | $ 0 |
Preferred shares, shares issued (in shares) | 96,000 | 96,000 |
Preferred shares, outstanding (in shares) | 96,000 | 96,000 |
Common shares, no par value | $ 0 | $ 0 |
Common shares, issued (in shares) | 67,106,104 | 63,566,403 |
Common shares, outstanding (in shares) | 67,106,104 | 63,566,403 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue | $ 1,356 | $ 1,041 | $ 4,649 | $ 2,875 |
Sales and marketing | 236 | 287 | 731 | 998 |
Research and development | 139 | 297 | 392 | 803 |
General and administrative | 2,930 | 2,018 | 19,687 | 6,320 |
Depreciation and amortization | 7,408 | 524 | 21,257 | 835 |
Impairment of digital assets | 138 | 0 | 908 | 0 |
Total operating expenses | 11,700 | 3,586 | 45,498 | 10,237 |
Loss from operations | (10,344) | (2,545) | (40,849) | (7,362) |
Other income (expense): | ||||
Provision for losses on deposit for mining equipment | (10,000) | 0 | (10,000) | 0 |
Forgiveness of note receivable | 0 | 0 | (13,145) | 0 |
Impairment of investments | 0 | 0 | (12,429) | 0 |
Interest expense, related party | 0 | 0 | 0 | (496) |
Interest expense | 0 | (1) | 0 | (20) |
Interest income and other (expense) income, net | (58) | 146 | 687 | 225 |
Loss before income taxes | (20,402) | (2,400) | (75,736) | (7,653) |
Provision for income taxes | 121 | 0 | 121 | 0 |
Net loss | (20,523) | (2,400) | (75,857) | (7,653) |
Dividends on preferred shares | 0 | 168 | 0 | 530 |
Net loss available to common shareholders | $ (20,523) | $ (2,568) | $ (75,857) | $ (8,183) |
Net loss per share: | ||||
Net loss per share, basic (in USD per share) | $ (0.31) | $ (0.07) | $ (1.15) | $ (0.41) |
Net loss per share, diluted (in USD per share) | $ (0.31) | $ (0.07) | $ (1.15) | $ (0.41) |
Weighted Average Number of Shares Outstanding, Diluted [Abstract] | ||||
Basic (in shares) | 67,024,070 | 34,327,302 | 65,682,868 | 20,004,425 |
Diluted (in shares) | 67,024,070 | 34,327,302 | 65,682,868 | 20,004,425 |
Digital mining revenue | ||||
Revenue | $ 787 | $ 0 | $ 2,745 | $ 0 |
Cost of revenue | 553 | 0 | 1,527 | 0 |
Service and product revenue | ||||
Revenue | 569 | 1,041 | 1,904 | 2,875 |
Cost of revenue | $ 296 | $ 460 | $ 996 | $ 1,281 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Statement of Comprehensive Income [Abstract] | ||||
Net loss | $ (20,523) | $ (2,400) | $ (75,857) | $ (7,653) |
Other Comprehensive Income (Loss) | ||||
Foreign currency translation adjustment | (3) | (8) | (2) | 4 |
Total other comprehensive (loss) income | (3) | (8) | (2) | 4 |
Comprehensive loss | $ (20,526) | $ (2,408) | $ (75,859) | $ (7,649) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) $ in Thousands | Total | Preferred Shares | Common Shares | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Preferred shares, beginning balance (in shares) at Dec. 31, 2020 | 9,355,778 | ||||
Preferred shares, beginning balance at Dec. 31, 2020 | $ 11,769 | ||||
Common shares, beginning balance (in shares) at Dec. 31, 2020 | 7,867,186 | ||||
Beginning balance, shareholders' equity at Dec. 31, 2020 | $ 5,009 | $ 192,406 | $ (1,791) | $ (197,375) | |
Issuance of common shares for conversion of preferred shares (in shares) | (2,495,300) | ||||
Issuance of common shares for conversion of preferred shares | $ (2,482) | ||||
Issuance of common shares for conversion of preferred shares (in shares) | 2,532,798 | ||||
Issuance of common shares for conversion of preferred shares | 0 | $ 2,482 | |||
Issuance of common shares (in shares) | 235,000 | ||||
Issuance of common shares | 597 | $ 597 | |||
Issuance of common shares for the settlement of liabilities (in shares) | 351,880 | ||||
Issuance of common shares for the settlement of liabilities | 921 | $ 921 | |||
Exercise of warrants (in shares) | 743,820 | ||||
Exercise of warrants | 478 | $ 478 | |||
Other comprehensive income | 4 | 4 | |||
Net loss | (2,372) | (2,372) | |||
Preferred dividends | (193) | (193) | |||
Preferred shares, ending balance (in shares) at Mar. 31, 2021 | 6,860,478 | ||||
Preferred shares, ending balance at Mar. 31, 2021 | $ 9,287 | ||||
Common shares, ending balance (in shares) at Mar. 31, 2021 | 11,730,684 | ||||
Ending balance, shareholders' equity at Mar. 31, 2021 | 4,444 | $ 196,884 | (1,787) | (199,940) | |
Preferred shares, beginning balance (in shares) at Dec. 31, 2020 | 9,355,778 | ||||
Preferred shares, beginning balance at Dec. 31, 2020 | $ 11,769 | ||||
Common shares, beginning balance (in shares) at Dec. 31, 2020 | 7,867,186 | ||||
Beginning balance, shareholders' equity at Dec. 31, 2020 | 5,009 | $ 192,406 | (1,791) | (197,375) | |
Other comprehensive income | 4 | ||||
Net loss | (7,653) | ||||
Preferred shares, ending balance (in shares) at Sep. 30, 2021 | 1,000 | ||||
Preferred shares, ending balance at Sep. 30, 2021 | $ 957 | ||||
Common shares, ending balance (in shares) at Sep. 30, 2021 | 59,208,801 | ||||
Ending balance, shareholders' equity at Sep. 30, 2021 | 219,472 | $ 425,860 | (1,787) | (205,558) | |
Preferred shares, beginning balance (in shares) at Mar. 31, 2021 | 6,860,478 | ||||
Preferred shares, beginning balance at Mar. 31, 2021 | $ 9,287 | ||||
Common shares, beginning balance (in shares) at Mar. 31, 2021 | 11,730,684 | ||||
Beginning balance, shareholders' equity at Mar. 31, 2021 | 4,444 | $ 196,884 | (1,787) | (199,940) | |
Issuance of common shares for conversion of preferred shares (in shares) | (2,399) | ||||
Issuance of common shares for conversion of preferred shares | $ (2,160) | ||||
Issuance of common shares for conversion of preferred shares (in shares) | 2,108,620 | ||||
Issuance of common shares for conversion of preferred shares | 0 | $ 2,160 | |||
Issuance of common shares (in shares) | 6,695,000 | ||||
Issuance of common shares | 7,642 | $ 7,642 | |||
Issuance of common shares for conversion of convertible debt (in shares) | 468,225 | ||||
Issuance of common shares for conversion of convertible debt | 799 | $ 799 | |||
Issuance of common shares for the settlement of liabilities (in shares) | 770,000 | ||||
Issuance of common shares for the settlement of liabilities | 1,135 | $ 1,135 | |||
Exercise of warrants (in shares) | 747,000 | ||||
Exercise of warrants | 687 | $ 687 | |||
Issuance of common shares for vested restricted stock units (in shares) | 62,500 | ||||
Issuance of common shares for vested restricted stock units | 0 | $ 0 | |||
Share-based compensation | 247 | $ 247 | |||
Other comprehensive income | 8 | 8 | |||
Net loss | (2,881) | (2,881) | |||
Preferred dividends | (169) | (169) | |||
Preferred shares, ending balance (in shares) at Jun. 30, 2021 | 6,858,079 | ||||
Preferred shares, ending balance at Jun. 30, 2021 | $ 7,127 | ||||
Common shares, ending balance (in shares) at Jun. 30, 2021 | 22,582,029 | ||||
Ending balance, shareholders' equity at Jun. 30, 2021 | 11,912 | $ 209,554 | (1,779) | (202,990) | |
Preferred Shares, Shares Issued | 10,000 | ||||
Preferred shares issued, amount | 9,575 | $ 9,575 | |||
Issuance of common shares for conversion of preferred shares (in shares) | (6,867,079) | ||||
Issuance of common shares for conversion of preferred shares | $ (15,745) | ||||
Issuance of common shares for conversion of preferred shares (in shares) | 6,076,770 | ||||
Issuance of common shares for conversion of preferred shares | 0 | $ 15,745 | |||
Issuance of common shares (in shares) | 25,088,530 | ||||
Issuance of common shares | 186,778 | $ 186,778 | |||
Stock Issued During Period, Shares, Purchase of Assets | 4,500,000 | ||||
Stock Issued During Period, Value, Purchase of Assets | 11,408 | $ 11,408 | |||
Issuance of common shares for the settlement of liabilities (in shares) | 362,972 | ||||
Issuance of common shares for the settlement of liabilities | 1,648 | $ 1,648 | |||
Exercise of warrants (in shares) | 498,500 | ||||
Exercise of warrants | 423 | $ 423 | |||
Exercised (in shares) | 100,000 | ||||
Stock Issued During Period, Value, Stock Options Exercised | 252 | $ 252 | |||
Share-based compensation | 52 | $ 52 | |||
Other comprehensive income | (8) | (8) | |||
Net loss | (2,400) | (2,400) | |||
Preferred dividends | (168) | (168) | |||
Preferred shares, ending balance (in shares) at Sep. 30, 2021 | 1,000 | ||||
Preferred shares, ending balance at Sep. 30, 2021 | $ 957 | ||||
Common shares, ending balance (in shares) at Sep. 30, 2021 | 59,208,801 | ||||
Ending balance, shareholders' equity at Sep. 30, 2021 | $ 219,472 | $ 425,860 | (1,787) | (205,558) | |
Preferred shares, beginning balance (in shares) at Dec. 31, 2021 | 96,000 | 96,000 | |||
Preferred shares, beginning balance at Dec. 31, 2021 | $ 42,350 | ||||
Common shares, beginning balance (in shares) at Dec. 31, 2021 | 63,566,403 | 63,566,403 | |||
Beginning balance, shareholders' equity at Dec. 31, 2021 | $ 269,626 | $ 444,265 | (1,794) | (215,195) | |
Issuance of common shares for the settlement of liabilities (in shares) | 950,000 | ||||
Issuance of common shares for the settlement of liabilities | 1,957 | $ 1,957 | |||
Share-based compensation | 117 | $ 117 | |||
Other comprehensive income | 9 | 9 | |||
Net loss | (14,647) | (14,647) | |||
Preferred shares, ending balance (in shares) at Mar. 31, 2022 | 96,000 | ||||
Preferred shares, ending balance at Mar. 31, 2022 | $ 42,350 | ||||
Common shares, ending balance (in shares) at Mar. 31, 2022 | 64,516,403 | ||||
Ending balance, shareholders' equity at Mar. 31, 2022 | $ 257,062 | $ 446,339 | (1,785) | (229,842) | |
Preferred shares, beginning balance (in shares) at Dec. 31, 2021 | 96,000 | 96,000 | |||
Preferred shares, beginning balance at Dec. 31, 2021 | $ 42,350 | ||||
Common shares, beginning balance (in shares) at Dec. 31, 2021 | 63,566,403 | 63,566,403 | |||
Beginning balance, shareholders' equity at Dec. 31, 2021 | $ 269,626 | $ 444,265 | (1,794) | (215,195) | |
Exercised (in shares) | 0 | ||||
Other comprehensive income | $ (2) | ||||
Net loss | $ (75,857) | ||||
Preferred shares, ending balance (in shares) at Sep. 30, 2022 | 96,000 | 96,000 | |||
Preferred shares, ending balance at Sep. 30, 2022 | $ 42,350 | ||||
Common shares, ending balance (in shares) at Sep. 30, 2022 | 67,106,104 | 67,106,104 | |||
Ending balance, shareholders' equity at Sep. 30, 2022 | $ 205,353 | $ 455,851 | (1,796) | (291,052) | |
Preferred shares, beginning balance (in shares) at Mar. 31, 2022 | 96,000 | ||||
Preferred shares, beginning balance at Mar. 31, 2022 | $ 42,350 | ||||
Common shares, beginning balance (in shares) at Mar. 31, 2022 | 64,516,403 | ||||
Beginning balance, shareholders' equity at Mar. 31, 2022 | 257,062 | $ 446,339 | (1,785) | (229,842) | |
Issuance of common shares for the settlement of liabilities (in shares) | 1,350,000 | ||||
Issuance of common shares for the settlement of liabilities | 1,721 | $ 1,721 | |||
Issuance of common shares for vested restricted stock units (in shares) | 639,366 | ||||
Issuance of common shares for vested restricted stock units | 0 | $ 0 | |||
Share-based compensation | 7,199 | $ 7,199 | |||
Other comprehensive income | (8) | (8) | |||
Net loss | (40,687) | (40,687) | |||
Preferred shares, ending balance (in shares) at Jun. 30, 2022 | 96,000 | ||||
Preferred shares, ending balance at Jun. 30, 2022 | $ 42,350 | ||||
Common shares, ending balance (in shares) at Jun. 30, 2022 | 66,505,769 | ||||
Ending balance, shareholders' equity at Jun. 30, 2022 | 225,287 | $ 455,259 | (1,793) | (270,529) | |
Issuance of common shares for vested restricted stock units (in shares) | 600,335 | ||||
Issuance of common shares for vested restricted stock units | 0 | $ 0 | |||
Share-based compensation | 592 | $ 592 | |||
Other comprehensive income | (3) | (3) | |||
Net loss | $ (20,523) | (20,523) | |||
Preferred shares, ending balance (in shares) at Sep. 30, 2022 | 96,000 | 96,000 | |||
Preferred shares, ending balance at Sep. 30, 2022 | $ 42,350 | ||||
Common shares, ending balance (in shares) at Sep. 30, 2022 | 67,106,104 | 67,106,104 | |||
Ending balance, shareholders' equity at Sep. 30, 2022 | $ 205,353 | $ 455,851 | $ (1,796) | $ (291,052) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Operating activities: | ||
Net loss | $ (75,857) | $ (7,653) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Depreciation and amortization | 21,257 | 835 |
Forgiveness of note receivable | 13,145 | 0 |
Impairment of investments | 12,429 | 0 |
Provision for losses on deposit for mining equipment | 10,000 | 0 |
Share-based compensation | 7,908 | 299 |
Change in fair value of crypto asset payable | (1,535) | 0 |
Impairment of digital assets | 908 | 0 |
Digital assets issued for services | 385 | 0 |
Realized gain on sale of digital assets | (10) | 0 |
Gain on extinguishment of debt | 0 | (1,125) |
Forgiveness of liabilities | 0 | (139) |
Preferred shares penalty fee | 0 | 653 |
Amortization of debt issuance costs | 0 | 485 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (37) | 38 |
Digital assets | (2,745) | 0 |
Accounts payable and accrued liabilities | 1,987 | 1,918 |
Accrued payroll and employee compensation | (41) | 2 |
Deferred revenue | (48) | (477) |
Other assets and liabilities, net | (15,852) | 99 |
Net cash used in operating activities | (28,106) | (5,065) |
Investing activities: | ||
Payments for purchase of mining equipment | (17,323) | (85,000) |
Notes receivable | (4,265) | (10,035) |
Purchase of intangible assets | (306) | 0 |
Investment in special purpose acquisition company, net | 0 | (4,420) |
Net cash used in investing activities | (21,894) | (99,455) |
Financing activities: | ||
Proceeds from issuance of common shares and warrants, net | 0 | 194,572 |
Proceeds from Issuance of Preferred Shares, net | 0 | 9,575 |
Proceeds from exercise of warrants | 0 | 1,458 |
Payments for debt | 0 | (1,103) |
Proceeds from long-term debt | 0 | 447 |
Payments for line of credit, net | 0 | (402) |
Proceeds from Stock Options Exercised | 0 | 252 |
Payments for preferred share dividends | 0 | (218) |
Net cash provided by financing activities | 0 | 204,581 |
Effect of exchange rate changes on cash | 0 | (1) |
Net (decrease) increase in cash, cash equivalents and restricted cash | (50,000) | 100,060 |
Cash, cash equivalents and restricted cash, beginning of period | 54,355 | 461 |
Cash, cash equivalents and restricted cash, end of period | $ 4,355 | $ 100,521 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows Supplemental Disclosures of Cash Flow Information - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Supplemental Cash Flow Elements [Abstract] | ||
Cash paid for interest | $ 0 | $ 34 |
Cash Flow, Noncash Investing and Financing Activities Disclosure [Abstract] | ||
Reclassification from deposit for mining equipment to mining equipment | 37,304 | 0 |
Issuance of common shares and warrants for settlement of liabilities | 1,957 | 3,704 |
Issuance of common shares for purchase of intangible assets | 1,721 | 11,408 |
Issuance of common shares for conversion of convertible debt | 0 | 799 |
Issuance of common shares for exercise of warrants applied to settlement of liabilities | $ 0 | $ 92 |
Organization and Business
Organization and Business | 9 Months Ended |
Sep. 30, 2022 | |
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”). In October 2021, the Company sold its SnapServer ® product line and associated assets. The Company has commenced planning and has entered into a series of agreements that have enabled it to enter the digital asset mining industry, including entering into a machine purchase agreement with FuFu Technology Limited (“BitFuFu”), the Master Services Agreement between Sphere 3D and Gryphon Digital Mining, Inc. (“Gryphon”), and the Sub-License and Delegation Agreement with Gryphon. T he July 2021 agreement with BitFuFu, subsequently amended in September 2021, for the purchase of machines was assigned to Ethereal Tech PTE in October 2021. See Commitments and Contingencies in the Notes to the Condensed Consolidated Financial Statements for additional information. Liquidity and Going Concern Management has projected that cash on hand may not be sufficient to allow the Company to continue operations beyond the next 12 months if we are unable to raise additional funding for operations. In October 2022, we completed discussions with BitFuFu to modify our BitFuFu machine purchase agreement, and finalized the timing and volume of remaining deliveries with respect to our purchase order. No further payments on the contract are required by us. 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 be required to cancel our existing purchase obligations under our current mining purchase agreements, or 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) changes in the historical timing of collecting accounts receivable; (v) fluctuations in the value of cryptocurrency; and (vi) 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. Given the Company’s existing purchase obligations, if such agreements are not cancelled by the Company, management has projected that cash on hand will not be sufficient to allow the Company to meet its outstanding purchase obligations beyond the next 12 months if the Company is unable to raise additional debt or equity funding for operations. Management is in discussions with one of our hosting providers to renegotiate current agreements. On a short-term basis, the Company plans to raise debt or equity funding to meet its payment obligations under its current contracts and for additional working capital. These factors, among others, raise substantial doubt that the Company will be able to continue as a going concern. The accompanying condensed 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. Terminated Merger Agreement On June 3, 2021, the Company entered into an Agreement and Plan of Merger, which was subsequently amended on December 29, 2021 (the “Merger Agreement”), which the Company agreed to acquire all of the issued and outstanding capital stock of Gryphon Digital Mining, Inc. (“Gryphon”) through a merger transaction (the “Merger”). On February 15, 2022, and subsequently on March 7, 2022, primarily as a result of comments we received from the SEC relating to an amendment to the registration statement on Form F-4 we filed with the SEC on January 5, 2022 in connection with our proposed merger with Gryphon, we retained two independent investment banks to review the terms of the proposed Gryphon merger transaction. The nature of the review was to provide an independent analysis as to whether the consideration to be paid by us in the proposed merger was fair to our stockholders from a financial point of view and to assess the inputs to the financial models that were used to test such fairness. On April 4, 2022, the Merger Agreement was terminated. The Company and Gryphon will continue its relationship through the Gryphon Master Services Agreement entered into in 2021. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2022 | |
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 20-F for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 30, 2022. 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 of which are wholly owned. 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. Significant areas requiring the use of management estimates relate to the determination of provisions for impairment assessments of digital assets, definite-lived intangible assets; deferred revenue; allowance for doubtful receivables; warranty provisions; equity treatment of preferred shares and litigation claims. 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 losses in the three and nine months ended September 30, 2022 and 2021. 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 carrying amounts approximate fair value due to the short maturities of these instruments. Restricted Cash Restricted cash is cash held in a separate bank account with restrictions on withdrawal. The Company’s restricted cash is pledged as collateral for a standby letter of credit to be used for the bonding purpose necessary for the Company to receive mining machines. Accounts Receivable Accounts receivable is recorded at the invoiced amount and is non-interest bearing. We estimate our allowance for doubtful accounts based on an assessment of the collectability of specific accounts and the overall condition of the accounts receivable portfolio. When evaluating the adequacy of the allowance for doubtful accounts, we analyze specific trade and other receivables, historical bad debts, customer credits, customer concentrations, customer credit-worthiness, current economic trends and changes in customers’ payment terms and/or patterns. We review the allowance for doubtful accounts on a quarterly basis and record adjustments as considered necessary. Customer accounts are written-off against the allowance for doubtful accounts when an account is considered uncollectable. Digital Assets The Company accounts for digital assets as indefinite-lived intangible assets. The digital assets are recorded at cost less impairment. Fair value of the digital asset award received is determined using the market rates of the related digital asset at the transaction date. There is currently no specific definitive guidance under GAAP or a lternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is promulgated by the Financial Accounting Standards Board (“FASB”) , the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. 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 quoted prices 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 investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the 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): Balance at January 1, 2022 $ — Addition of digital assets 2,745 Digital assets issued for services (385) Realized gain on sale of digital assets 10 Impairment loss (908) Balance at September 30, 2022 $ 1,462 Investments The Company holds investments in equity securities of public and nonpublic companies for business and strategic purposes. The nonpublic equity securities do not have a readily determinable fair value and are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company reviews its investments on a regular basis to determine if the investments are impaired. For purposes of this assessment, the Company considers the investee’s cash position, earnings and revenue outlook, liquidity and management ownership, among other factors, in its review. If management’s assessment indicates that an impairment exists, the Company estimates the fair value of the equity investment and recognizes in current earnings an impairment loss that is equal to the difference between the fair value of the equity investment and its carrying amount. The Company recorded an impairment expense of $12.4 million to its investments during the nine month period ended September 30, 2022. Mining Equipment Mining Equipment 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 mining equipment when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. 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 15 months 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. Impairment of Intangible Assets Intangible assets are tested for impairment on an annual basis at December 31, or more frequently if there are indicators of impairment. 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. 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 cryptocurrency 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 at the point in time that the Company is awarded a unit of digital currency through its participation in the applicable network and network participants benefit from the Company’s verification service. The transaction price is the fair value of the digital asset mined, being the fair value per the prevailing market rate for that digital asset on the transaction date, and this is allocated to the number of digital assets mined. The transaction consideration the Company receives is noncash consideration, in the form of digital currency, which the Company measures at fair value on the date received which is not materially different than the fair value at contract inception or time the Company has earned the award from the mining pools. Fair value of the digital currency award received is determined using the spot price of the related digital currency 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. There is currently no definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. Expenses associated with running the digital asset mining operations, such as equipment depreciation, 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. The Company contracts with third party service providers to provide service relating to on-site warranties and service contracts. Extended warranty and service contract revenue and amounts paid in advance to outside service organizations are deferred and recognized as service revenue and cost of service, respectively, 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. Advanced payments for long-term maintenance and warranty contracts do not give rise to a significant financing component. Rather, such payments are required by the Company primarily for reasons other than the provision of finance to the entity. 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 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 under the fair value method. Share-based compensation award types include stock options, restricted stock awards, and restricted stock units. The Company uses the Black-Scholes option pricing model to estimate the fair value of option awards on the measurement date, which generally is the date of grant. The fair value of restricted stock awards and restricted stock units is estimated based on the market value of the Company’s common shares on the date of grant. The cost of employee services received in exchange for an award of an equity instrument estimated fair value is recognized as expense on a straight-line basis over the requisite service period of the award. Share-based compensation expense for an award with performance conditions is recognized when the achievement of such performance conditions are determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Forfeitures are recognized in share-based compensation expense as they occur. The Company has not recognized, and does not expect to recognize in the near future, any tax benefit related to share-based compensation cost as a result of the full valuation allowance of our net deferred tax assets and its net operating loss carryforward. 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 August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06 , Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) . The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance requires that the if-converted method is used in computing diluted EPS for all convertible instruments. The update is effective for annual reporting periods, including interim periods, beginning after December 15, 2021. The adoption of the new standard did not have a material effect on our financial position, results of operations or cash flows. Accounting pronouncements pending adoption On October 28, 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 new standard is effective for the Company for its fiscal year beginning January 1, 2023 and interim periods within its fiscal year beginning January 1, 2023. Early adoption is permitted. The Company is evaluating the impact of adopting this standard. |
Notes Receivable
Notes Receivable | 9 Months Ended |
Sep. 30, 2022 | |
Receivables [Abstract] | |
Notes Receivable | Notes Receivable SPAC Sponsor Notes to MEOA In August 2022, the Company’s subsidiary, SPAC Sponsor, entered into a promissory note with MEOA for a loan in the amount of $1,265,000. The entire principal amount of this note will be used solely for purposes of making a payment pursuant to the Investment Management Trust Agreement dated August 25, 2021 by and between MEOA and Continental Stock Transfer & Trust Company, a New York limited liability trust company, for an extension of consummation of an initial business combination. Such note is payable upon consummation of MEOA’s initial business combination, without interest, or, at the SPAC Sponsor’s discretion, would be convertible into warrants of MEOA at a price of $1.00 per warrant. In February, March 2022 and September 2022, the Company’s subsidiary, SPAC Sponsor, in connection with the MEOA Commitment Agreement, entered into promissory notes with MEOA for a loan in the aggregate amount of $500,000. Such note is payable upon consummation of MEOA’s initial business combination, without interest, or, at the SPAC Sponsor’s discretion, would be convertible into warrants of MEOA at a price of $1.00 per warrant. If MEOA does not complete a business combination in the required timeframe such note would be forgiven. Gryphon Promissory Note In July 2021, the Company entered into a Promissory Note and Security Agreement with Gryphon, which was amended on August 30, 2021, September 29, 2021, and further amended on December 29, 2021 (the “Gryphon Note” as amended). The Gryphon Note, pursuant to which the Company agreed to loan in the aggregate to Gryphon $12.5 million, has a payment schedule whereby the principal and accrued interest shall be due and payable commencing on completion of the Merger Agreement, to be forgiven if the Merger Agreement is terminated. In January 2022, the Company advanced to Gryphon $2.5 million per the terms of Gryphon Note, as amended. The Gryphon Note bore interest at the rate of 9.5% per annum. On April 4, 2022, the Merger Agreement was terminated and the Gryphon Note was forgiven and $13.1 million, including interest, was written off to other expense during the second quarter of 2022. As of September 30, 2022 and December 31, 2021, the outstanding Gryphon Note balance, including accrued interest, was nil and $10.3 million, respectively. 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. As of September 30, 2022 and December 31, 2021, the outstanding Rainmaker Note balance, including accrued interest, was $3.7 million and $3.5 million, respectively. |
Certain Balance Sheet Items
Certain Balance Sheet Items | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Certain Balance Sheet Items | The following table summarizes other current assets (in thousands): September 30, December 31, Prepaid digital hosting services $ 15,866 $ 20,043 Prepaid services 607 1,477 Prepaid insurance 653 406 Other 640 101 $ 17,766 $ 22,027 The following table summarizes mining equipment, net (in thousands): September 30, December 31, Mining equipment $ 37,304 $ — Accumulated depreciation (1,110) — $ 36,194 $ — Depreciation expense for mining equipment was $0.5 million and $1.1 million during the three and nine months ended September 30, 2022, respectively. The following table summarizes other assets (in thousands): September 30, December 31, Deposit for mining equipment $ 72,299 $ 102,238 Prepaid digital hosting services 20,050 — Prepaid insurance and services 150 251 Other 68 59 $ 92,567 $ 102,548 |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets The following table summarizes intangible assets, net (in thousands): September 30, December 31, Supplier agreements $ 68,147 $ 68,147 Developed technology 10,344 10,344 Channel partner relationships 730 730 Customer relationships 380 380 Capitalized development costs 103 103 79,704 79,704 Accumulated amortization: Supplier agreements (25,335) (5,289) Developed technology (10,344) (10,344) Channel partner relationships (689) (598) Customer relationships (363) (353) Capitalized development costs (103) (103) (36,834) (16,687) Total finite-lived intangible assets, net 42,870 63,017 Carbon credits held for future use 2,077 — Total intangible assets, net $ 44,947 $ 63,017 Amortization expense for intangible assets was $7.0 million and $0.5 million during the three months ended September 30, 2022 and 2021, respectively. Amortization expense of intangible assets was $20.1 million and $0.8 million during the nine months ended September 30, 2022 and 2021, respectively. Estimated amortization expense for intangible assets is expected to be approximately $7.0 million for the remainder of 2022 and $8.6 million, $8.6 million, $8.6 million, $8.6 million, and $0.8 million in fiscal 2023, 2024, 2025, 2026 and 2027, respectively. Hertford Asset Acquisition |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Filecoiner Common Stock In October 2021, the Company purchased 1,500,000 shares of common stock of Filecoiner, a private corporation, at a price equal to $4.00 per share and a cost basis of $6.0 million. During the nine month period ended September 30, 2022, the Company recognized an impairment for the common stock of Filecoiner held and recorded an impairment expense of $6.0 million. Filecoiner Preferred Stock In October 2021, the Company received 8,000 shares of Series B preferred stock of Filecoiner (“Filecoiner Series B Preferred Stock”) for consideration for the sale of its SnapServer ® product line to Filecoiner. The preferred shares have a liquidation preference of $1,000 per share, do not accrue dividends nor have voting rights. Filecoiner will use 1.5% of its annual gross revenue to redeem any outstanding shares of Filecoiner Series B Preferred Stock. This amount will be paid to the holder of the Filecoiner Series B Preferred Stock within 15 days of the completion of Filecoiner's audited financial statements. During any 12-calendar month period, 25% of the shares of Series B Preferred Stock shall be convertible at the option of the holder thereof at any time into a number of shares of common stock determined by dividing (i) the original issue price by (ii) the conversion price then in effect. The initial conversion price for the Series B Preferred Stock shall be equal to $8.00 per share. The conversion price from time to time in effect is subject to adjustment as hereinafter provided in the Filecoiner acquisition agreement. The fair value of the Filecoiner Series B Preferred Stock was estimated using a Monte Carlo simulation with the following inputs: discount rate of 40%, risk-free rate of 1.05%, cost of debt of 7.48%, together with a capital option pricing model using the following inputs: volatility of 146% and risk-free rate of 1.05%. As of December 31, 2021, the fair value of the Filecoiner Series B Preferred Stock held by the Company was $6.4 million. During the nine month period ended September 30, 2022, the Company recognized an impairment for the preferred stock of Filecoiner held and recorded an impairment expense of $6.4 million. 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. In April 2021, SPAC Sponsor paid $25,000 of deferred offering costs on behalf of MEOA in exchange for 2,875,000 shares of MEOA’s Class B common stock (the “Founder Shares”) and is recorded on a cost basis. In August 2021, SPAC Sponsor participated in the private sale of an aggregate of 5,395,000 Warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per Private Placement Warrant. The SPAC Sponsor paid $5.4 million to MEOA, which included $1.0 million from an investor participating in SPAC Sponsor and is included in other non-current liabilities. The Private Placement Warrants are not transferable, assignable or saleable until 30 days after MEOA completes a business combination. MEOA’s IPO was completed on August 30, 2021. The Private Placement Warrants held by the Company are recorded on a cost basis. MEOA has 12 months from the closing of its IPO (or 21 months from the closing of its IPO if MEOA extends the period of time to consummate the initial Business Combination) (the “Combination Period”) to complete the initial Business Combination. If MEOA anticipates that it may not be able to consummate the initial Business Combination within 12 months, MEOA may extend the period of time to consummate a Business Combination by up to three additional three-month periods (up to a maximum of 21 months from the closing of the IPO). In order to extend the time available for MEOA to consummate its initial Business Combination, the SPAC Sponsor or its affiliates or designees must deposit into the Trust Account, for each additional three-month period, $1,265,000, on or prior to the date of the deadline with respect to such three-month extension period. The SPAC Sponsor and its affiliates or designees are not obligated to fund the Trust Account to extend the time for MEOA to complete its initial Business Combination. If MEOA is unable to complete the initial Business Combination within the Combination Period, MEOA will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible, but not more than ten business days thereafter, redeem the public shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest earned on the funds held in the Trust Account and not previously released to MEOA to pay its franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding public shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law; and (iii) as promptly as reasonably possible following such redemption, subject to the approval of MEOA’s remaining stockholders and the board of directors, dissolve and liquidate, subject in each case to MEOA’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the warrants, which will expire worthless if MEOA fails to complete the initial Business Combination within the Combination Period. In August 2022, MEOA extended the Combination Period by executing the first three-month extension period. The SPAC Sponsor advanced the required fee of $1,265,000 to MEOA for the extension in the form of a note receivable held by the SPAC Sponsor. On August 30, 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. Silicon Valley Technology Partners In November 2018, in connection with the divestiture of Overland Storage, Inc. (“Overland”), the Company received 1,879,699 Silicon Valley Technology Partners (“SVTP”) Preferred Shares. As of both September 30, 2022 and December 31, 2021, the SVTP Preferred Shares have a fair value of $2.1 million. The fair value of this investment was estimated using discounted cash flows. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2022 | |
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, investments, accounts payable, and accrued liabilities. 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. Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis As discussed in Note 2, Summary of Significant Accounting Policies |
Preferred Shares (Notes)
Preferred Shares (Notes) | 9 Months Ended |
Sep. 30, 2022 | |
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 1,000 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. In connection with the Hertford Agreement the Company entered into in July 2021, on October 1, 2021, the Company issued 96,000 Series H Preferred Shares with a fair value of $42.4 million to Hertford. The issuance of the Series H Preferred Shares was triggered by the Company’s $85.0 million deposit made to BitFuFu for digital mining hardware and other equipment. The Company has committed to additional issuances of Series H Preferred Shares to Hertford upon execution of new digital mining hardware equipment contracts as defined in the Hertford Agreement. Series B Preferred Shares For the three and nine months ended September 30, 2022, there were no preferred dividends. For the three and nine months ended September 30, 2021, there were related party preferred dividends of $58,000 and $329,000, respectively. |
Share Capital
Share Capital | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Share Capital | Share Capital In April 2022, the Company issued 1,350,000 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 over 14 months. In March 2022, in connection with the Merger Agreement, the Company issued into escrow 850,000 common shares with a fair value of $1.2 million. On April 4, 2022, the Merger Agreement with Gryphon was terminated by the Company and the common shares were released to Gryphon as stated by the escrow agreement. In December 2021, the Company entered into a consulting agreement with PGP Capital Advisors. (“PGP”) which was amended on February 7, 2022, to provide financial advisory services (as amended, the “PGP Consulting Agreement”). As compensation for PGP’s services to be provided pursuant to the PGP Consulting Agreement, on February 7, 2022, the Company issued to PGP (i) 100,000 common shares, (ii) 100,000 warrants to purchase up to 100,000 common shares at an exercise price of $4.00 per share, (iii) 100,000 warrants to purchase up to 100,000 common shares at an exercise price of $5.00 per share, and (iv) 100,000 warrants to purchase up to 100,000 common shares at an exercise price of $6.00 per share. The warrants are immediately exercisable and expire five years from the issuance date. The common shares and warrants issued to PCP had, in the aggregate, a fair value of $0.7 million. The Company has an unlimited authorized number of common shares at no par value. At September 30, 2022, the Company had the following outstanding warrants to purchase common shares: Date issued Contractual life (years) Exercise price Number outstanding Expiration April 2018 5 $5.60 111,563 April 17, 2023 March 2020 3 $0.60 31,000 March 23, 2023 July 2021 3 $4.00 2,000,000 December 22, 2024 August 2021 3 $6.50 2,595,488 August 25, 2024 August 2021 3 $7.50 2,595,488 August 25, 2024 September 2021 5 $9.50 11,299,999 September 8, 2026 October 2021 3 $6.00 850,000 October 1, 2024 February 2022 5 $4.00 100,000 February 7, 2027 February 2022 5 $5.00 100,000 February 7, 2027 February 2022 5 $6.00 100,000 February 7, 2027 19,783,538 |
Equity Incentive Plan
Equity Incentive Plan | 9 Months Ended |
Sep. 30, 2022 | |
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: Three Months Nine Months 2022 2021 2022 2021 Expected volatility n/a n/a 124 % n/a Expected term (in years) n/a n/a 4.2 n/a Risk-free interest rate n/a n/a 2.71-3.25% n/a Dividend yield n/a n/a — n/a The following table summarizes option activity: Shares Weighted- Weighted- Aggregate Intrinsic Value Options outstanding — January 1, 2022 675 $ 565.76 Granted 1,456,696 $ 1.37 Exercised — $ — Forfeited — $ — Options outstanding — September 30, 2022 1,457,371 $ 1.63 5.6 $ — Vested and expected to vest — September 30, 2022 1,457,371 $ 1.63 5.6 $ — Exercisable — September 30, 2022 215,675 $ 3.25 5.6 $ — Restricted Stock Restricted stock units (“RSUs”) are recorded at fair value on the date of grant. The majority of the RSUs granted in 2022 will vest in a period less than 12 months. As of September 30, 2022, there are 1,500,000 RSUs that are fully vested, but have not been released, and are only included in number of shares granted in the table below. The following table summarizes RSU activity: Number of Weighted Average Outstanding — January 1, 2022 60,000 $ 3.46 Granted 3,862,943 $ 2.10 Vested and released (1,521,667) $ 2.23 Forfeited — $ — Outstanding — September 30, 2022 2,401,276 $ 2.05 The Company granted restricted stock awards (“RSAs”) in lieu of cash payment for services performed. The estimated fair value of the RSAs was based on the market value of the Company’s common shares on the date of grant. There were no RSAs granted during the nine months ended September 30, 2022. The Company granted fully vested RSAs of 301,880 with a fair value of $1.4 million during the nine months ended September 30, 2021. Share-Based Compensation Expense The Company recorded the following compensation expense related to its share-based compensation awards (in thousands): Three Months Nine Months 2022 2021 2022 2021 Sales and marketing $ — $ — $ — $ 130 General and administrative 592 52 7,908 169 Total share-based compensation expense $ 592 $ 52 $ 7,908 $ 299 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): September 30, 2022 Unrecognized Expense Remaining Weighted-Average Recognition Period (years) RSUs $ 1,018 1.6 Stock options $ 995 1.6 |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2022 | |
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 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: Three Months Nine Months 2022 2021 2022 2021 Common share purchase warrants 19,783,538 19,512,039 19,783,538 19,512,039 Options and RSUs outstanding 3,858,647 71,728 3,858,647 71,728 Preferred shares issued and outstanding 96,000 1,000 96,000 1,000 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies NuMiner Machine Purchase Agreement In November 2021, the Company paid a $10.0 million refundable deposit to NuMiner Global, Inc. (“NuMiner”) and in February 2022, entered into an agreement with NuMiner to purchase 60,000 units of new NM440 Machines (the “NuMiner Agreement”) for the purpose of mining digital assets. In June 2022, the NuMiner Agreement was terminated and the Company requested the $10.0 million deposit be refunded. During the three and nine months ended September 30, 2022, the Company recorded a $10.0 million provision for losses on the deposit for mining equipment due to collectability issues with NuMiner. Master Services Agreements On June 3, 2022, the Company entered into a Master Services Agreement with Compute North LLC (the “Compute North MSA”) for, the colocation, management and other services of certain of the Company’s mining equipment for an initial term of five years. After the initial term, the agreement renews for successive one-month periods unless one party notifies the other in writing at least 30 days prior to the conclusion of the monthly period. For each order under the Compute North MSA, 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, estimated to be $0.6 million per month. As of September 30, 2022, the Company has two orders outstanding on the Compute North MSA and has made deposits, in the aggregate, of $1.2 million to Compute North for the last two months of monthly service fees for each of the outstanding orders. During the three and nine months ended September 30, 2022, the Company incurred no costs under the Compute North MSA pending the establishment of the Company’s mining equipment at the facility. On August 19, 2021, Gryphon entered into a Master Services Agreement with the Company (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”) to extend the initial term of the Gryphon MSA to four years, or to five years in the event the Company does 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 incurred costs under this agreement of $337,000 and $1.1 million during the three and nine months ended September 30, 2022, respectively. 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 if the Merger Agreement is terminated prior to consummation of the merger. The agreement allows for approximately 230 MW of net carbon neutral digital mining hosting capacity to be managed by Core Scientific as hosting partner. The agreement features the installation of digital asset miners at Core Scientific's net carbon neutral blockchain data centers over the course of 11 months. 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. As of September 30, 2022, the Company has paid $35.1 million to Gryphon for Order 2. The remaining commitment of $16.3 million is pending ongoing negotiations with Gryphon and Core Scientific as a result of the modified BitFuFu machine purchase agreement. The Company incurred costs under this agreement of $217,000 and $440,000 during the three and nine months ended September 30, 2022, respectively. 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. In addition, upon any termination of the Gryphon Merger Agreement by Sphere 3D, Gryphon shall have the right, in its sole discretion, to terminate this Core Scientific MSA in its entirety (including the Hosting Sub-Lease) upon not less than 180 calendar days’ written notice to Sphere 3D. BitFuFu Machine Purchase Agreement In July 2021, the Company entered into an agreement with FuFu Technology Limited (the “BitFuFu Agreement”), subsequently amended in September 2021, for the purchase of digital mining hardware and other equipment to the Company. In October 2021, the BitFuFu Agreement was assigned to Ethereal Tech PTE. The Company has committed to purchase 60,000 machines for an aggregate value of $305.7 million through December 2022. As of September 30, 2022, the Company has made payments of $107.0 million for the BitFuFu Agreement for purchase of machines which began delivery in January 2022 and continues through the remainder of 2022. The payments are not refundable, save as otherwise mutually agreed by the parties. Majestic Dragon Financial Services In July 2021, the Company retained Majestic Dragon Financial Services Ltd. (“Majestic Dragon”), to provide consulting and advisory services to the Company commencing on the closing of the Hertford Agreement, dated as of July 31, 2021, for a term ending on the date on which Majestic Dragon and its affiliates or any funds managed by Majestic Dragon cease to own, directly or indirectly, any equity interests of the Company (the “Majestic Dragon Advisory Agreement”). The Company will pay Majestic Dragon (i) 3.0% of the Hertford Agreement transaction, paid in common shares, which amount shall be paid concurrently with any payment made to Hertford for the placement of the assets to the Company from Hertford pursuant to the terms of the Hertford Agreement, and (ii) 100 Bitcoin per year for a period of two years, payable from the first coin mined in the corresponding year. In January 2022, the Company mined its first Bitcoin and recorded expense of $3.5 million for the 100 Bitcoin liability to Majestic Dragon. As of September 30, 2022, the Company has recorded a fair value adjustment reducing the liability by $1.5 million, which is included in general and administrative expense. As of September 30, 2022, the Company has a liability of $2.0 million which is payable in Bitcoin and included in accrued liabilities. Greenwich Lease On July 11, 2022, the Company entered into a lease agreement for administrative offices located in Greenwich, Connecticut (the “Greenwich Lease”) for approximately 4,200 square feet. The Greenwich Lease began July 11, 2022, has a term of 12 months, without a renewal option, and a monthly payment of approximately $19,000. The Company will also pay a pro rata share of utilities. The Company has elected the short-term lease exception for the accounting of this lease. Waxahachie Lease In January 2022, the Company entered into a lease agreement for administrative offices and research facilities located in Waxahachie, Texas (the “Waxahachie Lease”) for approximately 3,600 square feet. The Waxahachie Lease occupancy will begin upon completion of certain tenant improvements, which are included in the Waxahachie Lease for up to $147,000, and has a term of five years. Occupancy was established in the fourth quarter of 2022. The Company will also pay a pro rata share of operating costs, insurance costs, utilities and real property taxes. 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 September 30, 2022, the Company had one outstanding standby letter of credit to be used for the bond necessary for the Company to receive mining machines. Extended Warranty The Company had $17,000 and $56,000 in deferred costs included in other current and non-current assets related to deferred service revenue at September 30, 2022 and December 31, 2021, respectively. Changes in the liability for deferred revenue associated with extended warranties and service contracts were as follows (in thousands): Deferred Liability at January 1, 2022 $ 214 Revenue recognized during the period (156) Change in liability for warranties issued during the period 95 Liability at September 30, 2022 $ 153 Current liability 90 Non-current liability 63 Liability at September 30, 2022 $ 153 Litigation |
Segment Reporting
Segment Reporting | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting | Segment Information The Company has two operating segments, (1) Digital Mining and (2) Service and Product. The relevant guidance requires that 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 Service and Product segment generates revenue from long-term customer contracts for service contracts and extended service contract and the sale of products related to the Company’s data storage product line. Digital Mining Segment The Company generates its digital mining revenue from one mining pool operator. The Company’s revenue from digital mining is generated in the United States. For the three and nine months ended September 30, 2022 and 2021, the Company had one supplier of mining equipment. Service and Product Segment Service and product had the following customers that represented more than 10% of revenue. Three Months Nine Months 2022 2021 2022 2021 Customer A 23.6 % 12.8 % 21.1 % 14.2 % Customer B 12.6 % — % 12.9 % — % Customer C 13.3 % — % — % — % Customer D — % 10.2 % — % — % Customer E — % 10.2 % — % — % The Company’s revenue from service and product is generated primarily in the United States. Service and product had the following receivable’s that represented more than 10% of accounts receivable. September 30, December 31, Customer A 20.5 % 26.3 % Customer B 18.1 % 10.6 % Customer C 14.9 % — % Customer D 12.1 % 19.6 % Customer E 11.4 % — % Customer F — % 25.5 % |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events On October 19, 2022, the Company entered into an amendment to its BitFuFu Agreement. The amended agreement stated no additional payments are required to be made by the Company, and the purchase order was reduced from 60,000 machines to approximately 17,000 machines. On October 29, 2022, the Company and Majestic Dragon entered into a settlement and release agreement and as a result, the Company is no longer obligated to make the two 100 Bitcoin payments stated in the Majestic Dragon Advisory Agreement. The Company expects to reverse the $2.1 million Bitcoin liability in the fourth quarter of 2022. On October 31, 2022, the Company filed an arbitration request against Core Scientific regarding the Core Scientific MSA assigned to the Company on October 5, 2021. The Company has requested that certain advanced deposits paid be refunded back to the Company as a result of the modification to the Company’s BitFuFu machine purchase agreement. On October 31, 2022, the Company issued 1,500,000 common shares for fully vested RSUs held by a former executive of the Company. On November 7, 2022, the Company entered into an agreement with Hertford modifying the number of outstanding Series H Preferred Shares held by Hertford (the “Modified Hertford Agreement”). Pursuant to the Modified Hertford Agreement, the Company cancelled 36,000 Series H Preferred Shares, representing 37.5% of the outstanding Series H Preferred Shares, without payment of any cash consideration. Hertford will retain 60,000 Series H Preferred Shares. At the Company’s upcoming Annual General Meeting scheduled for December 20, 2022, the Company will seek shareholder approval for the conversion of the remaining 60,000 Series H Preferred Shares, subject to the terms and conditions contained in the Company’s Articles of Incorporation. The Modified Hertford Agreement also 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. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
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 20-F for the year ended December 31, 2021, filed with the Securities and Exchange Commission on March 30, 2022. 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 of which are wholly owned. 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. Significant areas requiring the use of management estimates relate to the determination of provisions for impairment assessments of digital assets, definite-lived intangible assets; deferred revenue; allowance for doubtful receivables; warranty provisions; equity treatment of preferred shares and litigation claims. 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. |
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 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 carrying amounts approximate fair value due to the short maturities of these instruments. |
Restricted Cash | Restricted Cash Restricted cash is cash held in a separate bank account with restrictions on withdrawal. The Company’s restricted cash is pledged as collateral for a standby letter of credit to be used for the bonding purpose necessary for the Company to receive mining machines. |
Accounts Receivable | Accounts Receivable Accounts receivable is recorded at the invoiced amount and is non-interest bearing. We estimate our allowance for doubtful accounts based on an assessment of the collectability of specific accounts and the overall condition of the accounts receivable portfolio. When evaluating the adequacy of the allowance for doubtful accounts, we analyze specific trade and other receivables, historical bad debts, customer credits, customer concentrations, customer credit-worthiness, current economic trends and changes in customers’ payment terms and/or patterns. We review the allowance for doubtful accounts on a quarterly basis and record adjustments as considered necessary. Customer accounts are written-off against the allowance for doubtful accounts when an account is considered uncollectable. |
Digital Assets | Digital Assets The Company accounts for digital assets as indefinite-lived intangible assets. The digital assets are recorded at cost less impairment. Fair value of the digital asset award received is determined using the market rates of the related digital asset at the transaction date. There is currently no specific definitive guidance under GAAP or a lternative accounting framework for the accounting for digital assets recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is promulgated by the Financial Accounting Standards Board (“FASB”) , the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. 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 quoted prices 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 investing activities in the accompanying consolidated statements of cash flows and any realized gains or losses from such sales are included in other income (expense) in the consolidated statements of operations. The Company accounts for its gains or losses in accordance with the first in first out (FIFO) method of accounting. |
Investments | InvestmentsThe Company holds investments in equity securities of public and nonpublic companies for business and strategic purposes. The nonpublic equity securities do not have a readily determinable fair value and are carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company reviews its investments on a regular basis to determine if the investments are impaired. For purposes of this assessment, the Company considers the investee’s cash position, earnings and revenue outlook, liquidity and management ownership, among other factors, in its review. If management’s assessment indicates that an impairment exists, the Company estimates the fair value of the equity investment and recognizes in current earnings an impairment loss that is equal to the difference between the fair value of the equity investment and its carrying amount. |
Mining Equipment | Mining Equipment Mining Equipment 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 mining equipment when events or changes in circumstances indicate the assets may not be recoverable. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs. |
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. |
Impairment of Intangible Assets | Impairment of Intangible Assets Intangible assets are tested for impairment on an annual basis at December 31, or more frequently if there are indicators of impairment. 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. |
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 cryptocurrency 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 at the point in time that the Company is awarded a unit of digital currency through its participation in the applicable network and network participants benefit from the Company’s verification service. The transaction price is the fair value of the digital asset mined, being the fair value per the prevailing market rate for that digital asset on the transaction date, and this is allocated to the number of digital assets mined. The transaction consideration the Company receives is noncash consideration, in the form of digital currency, which the Company measures at fair value on the date received which is not materially different than the fair value at contract inception or time the Company has earned the award from the mining pools. Fair value of the digital currency award received is determined using the spot price of the related digital currency 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. There is currently no definitive guidance under GAAP or alternative accounting framework for the accounting for digital currencies recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment. In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect on the Company’s consolidated financial position and results from operations. Expenses associated with running the digital asset mining operations, such as equipment depreciation, 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 | Extended Warranty Separately priced extended on-site warranties and service contracts are offered for sale to customers on all product lines. The Company contracts with third party service providers to provide service relating to on-site warranties and service contracts. Extended warranty and service contract revenue and amounts paid in advance to outside service organizations are deferred and recognized as service revenue and cost of service, respectively, 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. Advanced payments for long-term maintenance and warranty contracts do not give rise to a significant financing component. Rather, such payments are required by the Company primarily for reasons other than the provision of finance to the entity. |
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 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. |
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 under the fair value method. Share-based compensation award types include stock options, restricted stock awards, and restricted stock units. The Company uses the Black-Scholes option pricing model to estimate the fair value of option awards on the measurement date, which generally is the date of grant. The fair value of restricted stock awards and restricted stock units is estimated based on the market value of the Company’s common shares on the date of grant. The cost of employee services received in exchange for an award of an equity instrument estimated fair value is recognized as expense on a straight-line basis over the requisite service period of the award. Share-based compensation expense for an award with performance conditions is recognized when the achievement of such performance conditions are determined to be probable. If the outcome of such performance condition is not determined to be probable or is not met, no compensation expense is recognized and any previously recognized compensation expense is reversed. Forfeitures are recognized in share-based compensation expense as they occur. The Company has not recognized, and does not expect to recognize in the near future, any tax benefit related to share-based compensation cost as a result of the full valuation allowance of our net deferred tax assets and its net operating loss carryforward. |
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 August 2020, the FASB issued Accounting Standards Update (“ASU”) No. 2020-06 , Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”) . The new guidance eliminates the beneficial conversion and cash conversion accounting models for convertible instruments. It also amends the accounting for certain contracts in an entity’s own equity that are currently accounted for as derivatives because of specific settlement provisions. In addition, the new guidance requires that the if-converted method is used in computing diluted EPS for all convertible instruments. The update is effective for annual reporting periods, including interim periods, beginning after December 15, 2021. The adoption of the new standard did not have a material effect on our financial position, results of operations or cash flows. Accounting pronouncements pending adoption On October 28, 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 new standard is effective for the Company for its fiscal year beginning January 1, 2023 and interim periods within its fiscal year beginning January 1, 2023. Early adoption is permitted. The Company is evaluating the impact of adopting this standard. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Digital Assets | The following table presents the activities of the digital assets (in thousands): Balance at January 1, 2022 $ — Addition of digital assets 2,745 Digital assets issued for services (385) Realized gain on sale of digital assets 10 Impairment loss (908) Balance at September 30, 2022 $ 1,462 |
Certain Balance Sheet Items (Ta
Certain Balance Sheet Items (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Balance Sheet Related Disclosures [Abstract] | |
Schedule of Other Current Assets | The following table summarizes other current assets (in thousands): September 30, December 31, Prepaid digital hosting services $ 15,866 $ 20,043 Prepaid services 607 1,477 Prepaid insurance 653 406 Other 640 101 $ 17,766 $ 22,027 |
Schedule of Mining Equipment | The following table summarizes mining equipment, net (in thousands): September 30, December 31, Mining equipment $ 37,304 $ — Accumulated depreciation (1,110) — $ 36,194 $ — Depreciation expense for mining equipment was $0.5 million and $1.1 million during the three and nine months ended September 30, 2022, respectively. |
Schedule of Other Assets, Noncurrent | The following table summarizes other assets (in thousands): September 30, December 31, Deposit for mining equipment $ 72,299 $ 102,238 Prepaid digital hosting services 20,050 — Prepaid insurance and services 150 251 Other 68 59 $ 92,567 $ 102,548 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following table summarizes intangible assets, net (in thousands): September 30, December 31, Supplier agreements $ 68,147 $ 68,147 Developed technology 10,344 10,344 Channel partner relationships 730 730 Customer relationships 380 380 Capitalized development costs 103 103 79,704 79,704 Accumulated amortization: Supplier agreements (25,335) (5,289) Developed technology (10,344) (10,344) Channel partner relationships (689) (598) Customer relationships (363) (353) Capitalized development costs (103) (103) (36,834) (16,687) Total finite-lived intangible assets, net 42,870 63,017 Carbon credits held for future use 2,077 — Total intangible assets, net $ 44,947 $ 63,017 |
Share Capital (Tables)
Share Capital (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
Schedule of Warrants | At September 30, 2022, the Company had the following outstanding warrants to purchase common shares: Date issued Contractual life (years) Exercise price Number outstanding Expiration April 2018 5 $5.60 111,563 April 17, 2023 March 2020 3 $0.60 31,000 March 23, 2023 July 2021 3 $4.00 2,000,000 December 22, 2024 August 2021 3 $6.50 2,595,488 August 25, 2024 August 2021 3 $7.50 2,595,488 August 25, 2024 September 2021 5 $9.50 11,299,999 September 8, 2026 October 2021 3 $6.00 850,000 October 1, 2024 February 2022 5 $4.00 100,000 February 7, 2027 February 2022 5 $5.00 100,000 February 7, 2027 February 2022 5 $6.00 100,000 February 7, 2027 19,783,538 |
Equity Incentive Plan (Tables)
Equity Incentive Plan (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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: Three Months Nine Months 2022 2021 2022 2021 Expected volatility n/a n/a 124 % n/a Expected term (in years) n/a n/a 4.2 n/a Risk-free interest rate n/a n/a 2.71-3.25% n/a Dividend yield n/a n/a — n/a |
Share-based Payment Arrangement, Option, Activity | The following table summarizes option activity: Shares Weighted- Weighted- Aggregate Intrinsic Value Options outstanding — January 1, 2022 675 $ 565.76 Granted 1,456,696 $ 1.37 Exercised — $ — Forfeited — $ — Options outstanding — September 30, 2022 1,457,371 $ 1.63 5.6 $ — Vested and expected to vest — September 30, 2022 1,457,371 $ 1.63 5.6 $ — Exercisable — September 30, 2022 215,675 $ 3.25 5.6 $ — |
Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | The following table summarizes RSU activity: Number of Weighted Average Outstanding — January 1, 2022 60,000 $ 3.46 Granted 3,862,943 $ 2.10 Vested and released (1,521,667) $ 2.23 Forfeited — $ — Outstanding — September 30, 2022 2,401,276 $ 2.05 |
Share-based Payment Arrangement, Expensed and Capitalized, Amount | The Company recorded the following compensation expense related to its share-based compensation awards (in thousands): Three Months Nine Months 2022 2021 2022 2021 Sales and marketing $ — $ — $ — $ 130 General and administrative 592 52 7,908 169 Total share-based compensation expense $ 592 $ 52 $ 7,908 $ 299 |
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): September 30, 2022 Unrecognized Expense Remaining Weighted-Average Recognition Period (years) RSUs $ 1,018 1.6 Stock options $ 995 1.6 |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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: Three Months Nine Months 2022 2021 2022 2021 Common share purchase warrants 19,783,538 19,512,039 19,783,538 19,512,039 Options and RSUs outstanding 3,858,647 71,728 3,858,647 71,728 Preferred shares issued and outstanding 96,000 1,000 96,000 1,000 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
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): Deferred Liability at January 1, 2022 $ 214 Revenue recognized during the period (156) Change in liability for warranties issued during the period 95 Liability at September 30, 2022 $ 153 Current liability 90 Non-current liability 63 Liability at September 30, 2022 $ 153 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Digital Mining Segment The Company generates its digital mining revenue from one mining pool operator. The Company’s revenue from digital mining is generated in the United States. For the three and nine months ended September 30, 2022 and 2021, the Company had one supplier of mining equipment. Service and Product Segment Service and product had the following customers that represented more than 10% of revenue. Three Months Nine Months 2022 2021 2022 2021 Customer A 23.6 % 12.8 % 21.1 % 14.2 % Customer B 12.6 % — % 12.9 % — % Customer C 13.3 % — % — % — % Customer D — % 10.2 % — % — % Customer E — % 10.2 % — % — % The Company’s revenue from service and product is generated primarily in the United States. Service and product had the following receivable’s that represented more than 10% of accounts receivable. September 30, December 31, Customer A 20.5 % 26.3 % Customer B 18.1 % 10.6 % Customer C 14.9 % — % Customer D 12.1 % 19.6 % Customer E 11.4 % — % Customer F — % 25.5 % |
Organization and Business - Goi
Organization and Business - Going Concern (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Substantial doubt about Going Concern, Conditions or Events | Given the Company’s existing purchase obligations, if such agreements are not cancelled by the Company, management has projected that cash on hand will not be sufficient to allow the Company to meet its outstanding purchase obligations beyond the next 12 months if the Company is unable to raise additional debt or equity funding for operations. |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - other (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2022 | Sep. 30, 2022 segment | Sep. 30, 2021 USD ($) | |
Accounting Policies [Abstract] | ||||||
Impairment of investments | $ 0 | $ 0 | $ 12,429 | $ 0 | ||
Number of operating Segments | 2 | 2 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Digital Assets (Details) - Digital Asset $ in Thousands | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Indefinite-lived Intangible Assets [Roll Forward] | |
Beginning balance | $ 0 |
Addition of digital assets | 2,745 |
Digital assets issued for services | (385) |
Realized gain on sale of digital assets | 10 |
Impairment loss | (908) |
Ending balance | $ 1,462 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Narrative (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Mining Equipment | |
Property, Plant and Equipment [Line Items] | |
Useful lives of assets, mining equipment (in years) | 5 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Intangible Assets (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Supplier agreements | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Useful life, finite-lived intangible assets | 15 months |
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 |
Notes Receivable - SPAC Sponsor
Notes Receivable - SPAC Sponsor Loan to MEOA (Details) - MEOA Promissory Note - USD ($) | 1 Months Ended | |
Sep. 30, 2022 | Aug. 31, 2022 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Other commitments, description | Such note is payable upon consummation of MEOA’s initial business combination, without interest, or, at the SPAC Sponsor’s discretion, would be convertible into warrants of MEOA at a price of $1.00 per warrant. If MEOA does not complete a business combination in the required timeframe such note would be forgiven. | Such note is payable upon consummation of MEOA’s initial business combination, without interest, or, at the SPAC Sponsor’s discretion, would be convertible into warrants of MEOA at a price of $1.00 per warrant |
SPAC Sponsor | ||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||
Loans and leases receivable, gross | $ 500,000 | $ 1,265,000 |
Notes Receivable - Gryphon Note
Notes Receivable - Gryphon Note Receivable (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Apr. 04, 2022 | Jan. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | Sep. 29, 2021 | |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Stated interest rate | 10% | 10% | ||||||
Forgiveness of note receivable | $ 0 | $ 0 | $ (13,145) | $ 0 | ||||
Gryphon | ||||||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||||||
Loans and leases receivable, gross | $ 0 | $ 0 | $ 10,300 | $ 12,500 | ||||
Advancements on loans and leases receivable, gross | $ 2,500 | |||||||
Stated interest rate | 9.50% | 9.50% | ||||||
Forgiveness of note receivable | $ 13,100 |
Notes Receivable - Rainmaker No
Notes Receivable - Rainmaker Note Receivable (Details) - USD ($) $ in Millions | 9 Months Ended | ||
Sep. 30, 2022 | Dec. 31, 2021 | Sep. 14, 2020 | |
Receivables [Abstract] | |||
Promissory note receivable | $ 3.7 | $ 3.5 | $ 3.1 |
Stated interest rate | 10% | ||
Note receivable due date | Sep. 14, 2023 |
Certain Balance Sheet Items - O
Certain Balance Sheet Items - Other current assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid digital hosting services | $ 15,866 | $ 20,043 |
Prepaid services | 607 | 1,477 |
Prepaid insurance | 653 | 406 |
Other | 640 | 101 |
Other Assets, Current | $ 17,766 | $ 22,027 |
Certain Balance Sheet Items - M
Certain Balance Sheet Items - Mining Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2022 | Dec. 31, 2021 | |
Property, Plant and Equipment [Line Items] | |||
Mining equipment, net | $ 36,194 | $ 36,194 | $ 0 |
Mining Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Mining equipment | 37,304 | 37,304 | |
Accumulated depreciation | (1,110) | (1,110) | |
Mining equipment, net | 36,194 | 36,194 | |
Depreciation | $ 500 | $ 1,100 |
Certain Balance Sheet Items -_2
Certain Balance Sheet Items - Other long term assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Deposit for mining equipment | $ 72,299 | $ 102,238 |
Prepaid digital hosting services | 20,050 | 0 |
Prepaid insurance and services | 150 | 251 |
Other | 68 | 59 |
Other Assets | $ 92,567 | $ 102,548 |
Intangible Assets - Intangible
Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | $ 79,704 | $ 79,704 |
Finite-lived intangible assets, accumulated amortization | (36,834) | (16,687) |
Total finite-lived intangible assets, net | 42,870 | 63,017 |
Carbon credits held for future use | 2,077 | 0 |
Total intangible assets, net | 44,947 | 63,017 |
Supplier agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 68,147 | 68,147 |
Finite-lived intangible assets, accumulated amortization | (25,335) | (5,289) |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 10,344 | 10,344 |
Finite-lived intangible assets, accumulated amortization | (10,344) | (10,344) |
Channel partner relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 730 | 730 |
Finite-lived intangible assets, accumulated amortization | (689) | (598) |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 380 | 380 |
Finite-lived intangible assets, accumulated amortization | (363) | (353) |
Capitalized development costs | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 103 | 103 |
Finite-lived intangible assets, accumulated amortization | $ (103) | $ (103) |
Intangible Assets - Amortizatio
Intangible Assets - Amortization (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Amortization of intangible assets | $ 7,000,000 | $ 500,000 | $ 20,100,000 | $ 800,000 |
Amortization expense, remainder of fiscal year | 7,000,000 | 7,000,000 | ||
Amortization expense 2023 | 8,600,000 | 8,600,000 | ||
Amortization expense 2024 | 8,600,000 | 8,600,000 | ||
Amortization expense 2025 | 8,600,000 | 8,600,000 | ||
Amortization expense 2026 | 8,600,000 | 8,600,000 | ||
Amortization expense 2027 | $ 800,000 | $ 800,000 |
Intangible Assets - Hertford As
Intangible Assets - Hertford Asset Acquisition (Details) - USD ($) $ in Thousands | 3 Months Ended | ||||
Jul. 31, 2021 | Jul. 31, 2021 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Issuance of common shares | $ 53,800 | $ 186,778 | $ 7,642 | $ 597 | |
Hertford | |||||
Acquired Finite-Lived Intangible Assets [Line Items] | |||||
Intangible assets, explanation of significant additions | On July 31, 2021, the Company entered into an agreement (the “Hertford Agreement”) with Hertford Advisors Ltd. (“Hertford”), a privately held company that provides turnkey mining solutions, to provide an exclusive right to assume all of Hertford’s rights to a number of digital asset mining hardware agreements (the “Equipment Agreements”) | ||||
Purchase commitment, description | The Company has assumed and executed the first Equipment Agreement directly with the manufacturer, for the purchase of up to 60,000 new digital asset mining machines, with deliveries that commenced in January 2022 and continues through the remainder of 2022. |
Investments - Filecoiner Common
Investments - Filecoiner Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Oct. 14, 2021 | |
Schedule of Equity Method Investments [Line Items] | |||||
Impairment expense | $ 0 | $ 0 | $ 12,429 | $ 0 | |
Filecoiner | Common Shares | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Investment owned, balance, shares (in shares) | 1,500,000 | ||||
Investment, share price (in USD per share) | $ 4 | ||||
Investment owned, at cost | $ 6,000 | ||||
Impairment expense | $ 6,000 | $ 6,000 |
Investments - Filecoiner Prefer
Investments - Filecoiner Preferred Stock (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Nov. 14, 2021 | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Dec. 31, 2021 USD ($) | Oct. 31, 2021 | Oct. 14, 2021 $ / shares shares | |
Schedule of Equity Method Investments [Line Items] | ||||||||
Impairment expense | $ 0 | $ 0 | $ 12,429 | $ 0 | ||||
Filecoiner | Series B Preferred Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Investment owned, balance, shares (in shares) | shares | 8,000 | |||||||
Investment liquidation preference | $ / shares | $ 1,000 | |||||||
Investment redemption terms | Filecoiner will use 1.5% of its annual gross revenue to redeem any outstanding shares of Filecoiner Series B Preferred Stock. This amount will be paid to the holder of the Filecoiner Series B Preferred Stock within 15 days of the completion of Filecoiner's audited financial statements. During any 12-calendar month period, 25% of the shares of Series B Preferred Stock shall be convertible at the option of the holder thereof at any time into a number of shares of common stock determined by dividing (i) the original issue price by (ii) the conversion price then in effect. | |||||||
investment conversion price (in USD per share) | $ / shares | $ 8 | |||||||
Investment owned, restricted, cost | $ 6,400 | |||||||
Filecoiner | Preferred Shares | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Impairment expense | $ 6,400 | $ 6,400 | ||||||
Filecoiner | Measurement Input, Discount Rate | Series B Preferred Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Alternative investment, measurement input | 0.40 | |||||||
Filecoiner | Measurement Input, Risk Free Interest Rate | Series B Preferred Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Alternative investment, measurement input | 0.0105 | |||||||
Filecoiner | Measurement Input, Risk Free Interest Rate | Valuation Technique, Option Pricing Model | Series B Preferred Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Alternative investment, measurement input | 0.0105 | |||||||
Filecoiner | Measurement Input, Cost of Debt | Series B Preferred Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Alternative investment, measurement input | 0.0748 | |||||||
Filecoiner | Measurement Input, Price Volatility | Valuation Technique, Option Pricing Model | Series B Preferred Stock | ||||||||
Schedule of Equity Method Investments [Line Items] | ||||||||
Alternative investment, measurement input | 1.46 |
Investments - SPAC (Details)
Investments - SPAC (Details) - USD ($) | 1 Months Ended | ||
Aug. 31, 2022 | Aug. 31, 2021 | Sep. 30, 2022 | |
Schedule of Equity Method Investments [Line Items] | |||
Business combination, combination period description | MEOA has 12 months from the closing of its IPO (or 21 months from the closing of its IPO if MEOA extends the period of time to consummate the initial Business Combination) (the “Combination Period”) to complete the initial Business Combination | ||
Business combination, payment required to extend business combination period | $ 1,265,000 | $ 1,265,000 | |
Business combination, interest payment for dissolution of agreement | $ 100,000 | ||
Business combination extension period (in months) | 3 months | ||
Business combination, combination period, extension (in months) | 3 months | ||
MEOA | |||
Schedule of Equity Method Investments [Line Items] | |||
SPAC Sponsor contribution | $ 25,000 | ||
Investment owned, balance, shares (in shares) | 2,875,000 | ||
SPAC warrants | 5,395,000 | ||
Investment owned, restricted, cost | $ 5,400,000 | ||
SPAC Warrants, Price Per Share | $ 1 | ||
SPAC Sponsor liability | $ 1,000,000 |
Investments - Silicon Valley Te
Investments - Silicon Valley Technology Partners (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 | Nov. 13, 2018 |
Schedule of Equity Method Investments [Line Items] | |||
SVTP Preerred Shares-other investment | 1,879,699 | ||
Preferred Stock, Value, Outstanding | $ 42,350 | $ 42,350 | |
Preferred Shares | Overland Storage, Inc. | |||
Schedule of Equity Method Investments [Line Items] | |||
Preferred Stock, Value, Outstanding | $ 2,100 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2022 | Sep. 30, 2022 | |
Bitcoin | ||
Indefinite-lived Intangible Assets [Line Items] | ||
Impairment losses | $ 100 | $ 900 |
Preferred Shares - H Shares (De
Preferred Shares - H Shares (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 01, 2021 | Sep. 30, 2022 | Dec. 31, 2021 |
Class of Stock [Line Items] | |||
Preferred shares, shares issued (in shares) | 96,000 | 96,000 | |
Deposit for mining equipment | $ 72,299 | $ 102,238 | |
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 1,000 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) | $ 1,000 | ||
Preferred shares, shares issued (in shares) | 96,000 | ||
Preferred stock | $ 42,400 | ||
Deposit for mining equipment | $ 85,000 |
Preferred Shares - Series B (De
Preferred Shares - Series B (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Series B Preferred Stock | ||||
Related Party Transaction [Line Items] | ||||
Dividends | $ 0 | $ 58,000 | $ 0 | $ 329,000 |
Share Capital - Carbon Credits
Share Capital - Carbon Credits (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | |||||
Apr. 12, 2022 USD ($) credit shares | Feb. 07, 2022 shares | Jul. 31, 2021 USD ($) | Mar. 31, 2022 shares | Sep. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) | Mar. 31, 2021 USD ($) | |
Class of Warrant or Right [Line Items] | |||||||
Issuance of common shares (in shares) | shares | 100,000 | 850,000 | |||||
Issuance of common shares | $ | $ 53,800 | $ 186,778 | $ 7,642 | $ 597 | |||
Carbon offset credits | credit | 1,040,000 | ||||||
Common Shares | |||||||
Class of Warrant or Right [Line Items] | |||||||
Issuance of common shares (in shares) | shares | 1,350,000 | ||||||
Issuance of common shares | $ | $ 1,700 |
Share Capital - Gryphon (Detail
Share Capital - Gryphon (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Feb. 07, 2022 | Mar. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | |
Equity [Abstract] | ||||
Issuance of common shares (in shares) | 100,000 | 850,000 | ||
Fair value of shares issued | $ 1,200 | $ 1,957 | $ 3,704 |
Share Capital - PGP Share Capit
Share Capital - PGP Share Capital (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Feb. 07, 2022 | Mar. 31, 2022 | Jun. 30, 2022 | Mar. 31, 2022 | Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2022 | |
Class of Warrant or Right [Line Items] | ||||||||
Issuance of common shares for the settlement of liabilities | $ 700 | $ 1,721 | $ 1,957 | $ 1,648 | $ 1,135 | $ 921 | ||
Issuance of common shares (in shares) | 100,000 | 850,000 | ||||||
Contractual life (years) | 5 years | |||||||
February 7, 2022 A | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant, outstanding (in shares) | 100,000 | 100,000 | ||||||
Number of shares called by warrants (in shares) | 100,000 | |||||||
Warrants exercise price (in USD per share) | $ 4 | $ 4 | ||||||
Contractual life (years) | 5 years | |||||||
February 7 2022 B | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant, outstanding (in shares) | 100,000 | 100,000 | ||||||
Number of shares called by warrants (in shares) | 100,000 | |||||||
Warrants exercise price (in USD per share) | $ 5 | $ 5 | ||||||
Contractual life (years) | 5 years | |||||||
February 7 2022 C | ||||||||
Class of Warrant or Right [Line Items] | ||||||||
Warrant, outstanding (in shares) | 100,000 | 100,000 | ||||||
Number of shares called by warrants (in shares) | 100,000 | |||||||
Warrants exercise price (in USD per share) | $ 6 | $ 6 | ||||||
Contractual life (years) | 5 years |
Share Capital - Warrants Outsta
Share Capital - Warrants Outstanding (Details) - $ / shares | 9 Months Ended | |
Feb. 07, 2022 | Sep. 30, 2022 | |
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 5 years | |
April 17, 2023 | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 5 years | |
Exercise price | $ 5.60 | |
Number outstanding, warrants, (in shares) | 111,563 | |
Expiration | Apr. 17, 2023 | |
March 23, 2023 | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 3 years | |
Exercise price | $ 0.60 | |
Number outstanding, warrants, (in shares) | 31,000 | |
Expiration | Mar. 23, 2023 | |
July 2, 2021 | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 3 years | |
Exercise price | $ 4 | |
Number outstanding, warrants, (in shares) | 2,000,000 | |
Expiration | Dec. 22, 2024 | |
August 25, 2021 A | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 3 years | |
Exercise price | $ 6.50 | |
Number outstanding, warrants, (in shares) | 2,595,488 | |
Expiration | Aug. 25, 2024 | |
August 25, 2021 B | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 3 years | |
Exercise price | $ 7.50 | |
Number outstanding, warrants, (in shares) | 2,595,488 | |
Expiration | Aug. 25, 2024 | |
September 8, 2021 | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 5 years | |
Exercise price | $ 9.50 | |
Number outstanding, warrants, (in shares) | 11,299,999 | |
Expiration | Sep. 08, 2026 | |
October 1, 2021 | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 3 years | |
Exercise price | $ 6 | |
Number outstanding, warrants, (in shares) | 850,000 | |
Expiration | Oct. 01, 2024 | |
February 7, 2022 A | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 5 years | |
Exercise price | $ 4 | $ 4 |
Number outstanding, warrants, (in shares) | 100,000 | 100,000 |
Expiration | Feb. 07, 2027 | |
February 7 2022 B | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 5 years | |
Exercise price | $ 5 | $ 5 |
Number outstanding, warrants, (in shares) | 100,000 | 100,000 |
Expiration | Feb. 07, 2027 | |
February 7 2022 C | ||
Class of Warrant or Right [Line Items] | ||
Contractual life (years) | 5 years | |
Exercise price | $ 6 | $ 6 |
Number outstanding, warrants, (in shares) | 100,000 | 100,000 |
Expiration | Feb. 07, 2027 | |
Warrant | ||
Class of Warrant or Right [Line Items] | ||
Number outstanding, warrants, (in shares) | 19,783,538 |
Equity Incentive Plan - Schedul
Equity Incentive Plan - Schedule of Stock Options Assumptions (Details) | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Dividend yield | 0% |
Maximum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 3.25% |
Minimum | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Risk-free interest rate | 2.71% |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Expected volatility | 124% |
Expected term (in years) | 4 years 2 months 12 days |
Equity Incentive Plan - Summary
Equity Incentive Plan - Summary of Option Activity (Details) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Stock Options | |
Beginning, options outstanding (in shares) | shares | 675 |
Granted (in shares) | shares | 1,456,696 |
Exercised (in shares) | shares | 0 |
Forfeited (in shares) | shares | 0 |
Ending, options outstanding (in shares) | shares | 1,457,371 |
Vested and expected to vest (in shares) | shares | 1,457,371 |
Exercisable (in shares) | shares | 215,675 |
Weighted- Average Exercise Price | |
Beginning, outstanding (in USD per share) | $ / shares | $ 565.76 |
Granted (in USD per share) | $ / shares | 1.37 |
Exercised (in USD per share) | $ / shares | 0 |
Forfeited (in USD per share) | $ / shares | 0 |
Ending, outstanding (in USD per share) | $ / shares | 1.63 |
Vested and expected to vest (in USD per share) | $ / shares | 1.63 |
Exercisable (in USD per share) | $ / shares | $ 3.25 |
Weighted Average Remaining Contractual Term and Aggregate Intrinsic Value | |
Outstanding (in years) | 5 years 7 months 6 days |
Vested and expected to vest (in years) | 5 years 7 months 6 days |
Exercisable (in years) | 5 years 7 months 6 days |
Equity Incentive Plan - Summa_2
Equity Incentive Plan - Summary of Restricted Stock Activity (Details) - Restricted Stock Units (RSUs) | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Stock Options | |
Outstanding - January 1, 2022 (in shares) | shares | 60,000 |
Grants (in shares) | shares | (3,862,943) |
Vested (in shares) | shares | 1,521,667 |
Forfeited (in shares) | shares | 0 |
Outstanding - June 30, 2022 (in shares) | shares | 2,401,276 |
Weighted Average Grant Date Fair Value | |
Weighted average grant date fair value, outstanding - January 1, 2022 (in USD per share) | $ / shares | $ 3.46 |
Weighted average grant date fair value, granted (in USD per share) | $ / shares | 2.10 |
Weighted average grant date fair value, vested (in USD per share) | $ / shares | 2.23 |
Weighted average grant date fair value, forfeited (in USD per share) | $ / shares | 0 |
Weighted average grant date fair value, outstanding - June 30, 2022 (in USD per share) | $ / shares | $ 2.05 |
Equity Incentive Plan - Narrati
Equity Incentive Plan - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Restricted Stock [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants (in shares) | 0 | 301,880 | 0 | 301,880 |
RSAs, Share-based third party liabilities paid | $ 1,400,000 | $ 1,400,000 | ||
Restricted Stock Units (RSUs) | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Grants (in shares) | 3,862,943 | |||
RSUs vested but not released in period (in shares) | 1,500,000 |
Equity Incentive Plan - Share-b
Equity Incentive Plan - Share-based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 592 | $ 52 | $ 7,908 | $ 299 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | 0 | 0 | 0 | 130 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total share-based compensation expense | $ 592 | $ 52 | $ 7,908 | $ 169 |
Equity Incentive Plan - Unrecog
Equity Incentive Plan - Unrecognized Compensation Cost (Details) | 9 Months Ended |
Sep. 30, 2022 USD ($) | |
Restricted Stock Units (RSUs) | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 1,018,000 |
Remaining Weighted-Average Recognition Period (years) | 1 year 7 months 6 days |
Stock Options | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Unrecognized Expense | $ 995,000 |
Remaining Weighted-Average Recognition Period (years) | 1 year 7 months 6 days |
Net Loss Per Share (Details)
Net Loss Per Share (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Common share purchase warrants | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 19,783,538 | 19,512,039 | 19,783,538 | 19,512,039 |
Options and RSUs outstanding | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 3,858,647 | 71,728 | 3,858,647 | 71,728 |
Preferred shares issued and outstanding | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive securities excluded from computation of earnings per share, amount | 96,000 | 1,000 | 96,000 | 1,000 |
Commitments and Contingencies -
Commitments and Contingencies - NuMiner Machine Purchase Agreement (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||
Nov. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Sep. 30, 2022 USD ($) | Sep. 30, 2021 USD ($) | Jun. 30, 2022 USD ($) | |
Long-term Purchase Commitment [Line Items] | ||||||
Provision for losses on deposit for mining equipment | $ 10,000 | $ 0 | $ 10,000 | $ 0 | ||
NuMiner | ||||||
Long-term Purchase Commitment [Line Items] | ||||||
Deposit Assets | $ 10,000 | $ 10,000 | ||||
Number of units purchased | 60,000 | |||||
Provision for losses on deposit for mining equipment | $ 10,000 |
Commitments and Contingencies_2
Commitments and Contingencies - Master Services Agreement (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Jun. 03, 2022 USD ($) | Dec. 29, 2021 | Sep. 30, 2022 USD ($) | Sep. 30, 2022 USD ($) | |
Gryphon | ||||
Other Commitments [Line Items] | ||||
Other commitments, description | 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 | |||
Opportunity to cure, maximum number of days | 180 days | |||
Other commitment expenses | $ 337 | $ 1,100 | ||
Gryphon | Minimum | ||||
Other Commitments [Line Items] | ||||
Term | 4 years | |||
Gryphon | Maximum | ||||
Other Commitments [Line Items] | ||||
Term | 5 years | |||
Compute North LLC | ||||
Other Commitments [Line Items] | ||||
Term | 5 years | |||
Other commitment expenses | $ 0 | |||
Number of orders outstanding | 2 | |||
Monthly service fee, as a percentage of anticipated monthly hashrate | $ 600 | $ 1,200 |
Commitments and Contingencies_3
Commitments and Contingencies - Digital Mining Hosting Sub-License (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Jul. 11, 2022 | Oct. 05, 2021 | Jan. 31, 2022 | Sep. 30, 2022 | Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |||||
Lessee, operating lease, 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. | In January 2022, the Company entered into a lease agreement for administrative offices and research facilities located in Waxahachie, Texas (the “Waxahachie Lease”) for approximately 3,600 square feet | |||
Operating lease, prepaid payment | $ 35,100 | ||||
Digital Monitoring future payments | $ 16,300 | $ 16,300 | |||
Operating lease, payments | $ 19 | ||||
Lessee, operating sublease, option to terminate | upon any termination of the Gryphon Merger Agreement by Sphere 3D, Gryphon shall have the right, in its sole discretion, to terminate this Core Scientific MSA in its entirety (including the Hosting Sub-Lease) upon not less than 180 calendar days’ written notice to Sphere 3D | ||||
Hosting service expense | $ 217 | $ 440 |
Commitments and Contingencies_4
Commitments and Contingencies - Bitfufu (Details) $ in Millions | 1 Months Ended | |
Jul. 31, 2021 | Sep. 30, 2022 USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | ||
Number of machines committed to purchase | 60,000 | |
Purchase obligation | $ 305.7 | |
Deposits for mining equipment | $ 107 |
Commitments and Contingencies_5
Commitments and Contingencies - Majestic Dragon (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Jul. 31, 2021 | Sep. 30, 2022 | Dec. 31, 2021 | |
Other Commitments [Line Items] | |||
Liability | $ 2,776 | $ 3,250 | |
Majestic Dragon Financial Services Ltd. | |||
Other Commitments [Line Items] | |||
Majestic Dragon agreement details | consulting and advisory services to the Company commencing on the closing of the Hertford Agreement, dated as of July 31, 2021, for a term ending on the date on which Majestic Dragon and its affiliates or any funds managed by Majestic Dragon cease to own, directly or indirectly, any equity interests of the Company (the “Majestic Dragon Advisory Agreement”) | ||
Advisory fee | 3% | ||
Majestic Dragon contingent consideration | 100 Bitcoin per year for a period of two years, payable from the first coin mined in the corresponding year | ||
Consulting and advisory expenses | 3,500 | ||
Adjustment reducing liability | 1,500 | ||
Liability | $ 2,000 |
Commitments and Contingencies_6
Commitments and Contingencies - Greenwich Lease (Details) $ in Thousands | Jul. 11, 2022 USD ($) ft² |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease, square footage | ft² | 4,200 |
Lessee, operating lease, term of contract | 12 months |
Operating lease, payments | $ | $ 19 |
Commitments and Contingencies_7
Commitments and Contingencies - Waxahachie Lease (Details) - USD ($) | 1 Months Ended | |
Oct. 05, 2021 | Jan. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Lessee, operating lease, 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. | In January 2022, the Company entered into a lease agreement for administrative offices and research facilities located in Waxahachie, Texas (the “Waxahachie Lease”) for approximately 3,600 square feet |
Incentive to lessee | $ 147,000 | |
Lessee, operating lease, remaining lease term (in years) | 5 years |
Commitments and Contingencies_8
Commitments and Contingencies - Letters of Credit (Details) | Sep. 30, 2022 |
Commitments and Contingencies Disclosure [Abstract] | |
Number of letters of credit outstanding | 1 |
Commitments and Contingencies_9
Commitments and Contingencies - Warranty and Extended Warranty (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2022 | Dec. 31, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Deferred Costs, Service Revenue | $ 17,000 | $ 56,000 |
Product Warranty Liability [Line Items] | ||
Current liability | 90,000 | |
Non-current liability | 63,000 | |
Deferred revenue | ||
Product Warranty Liability [Line Items] | ||
Beginning balance, liability | 214,000 | |
Revenue recognized during the period | (156,000) | |
Change in liability for warranties issued during the period | 95,000 | |
Ending balance, liability | $ 153,000 |
Segment Reporting - Service and
Segment Reporting - Service and Product Segment (Details) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2022 segment | Sep. 30, 2021 | Dec. 31, 2021 | |
Segment Reporting Information [Line Items] | ||||||
Number of operating Segments | 2 | 2 | ||||
Number of mining pool operators | 1 | 1 | 1 | |||
Number of suppliers | 1 | 1 | 1 | 1 | ||
Revenue from Contract with Customer Benchmark | Customer A | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 23.60% | 12.80% | 21.10% | 14.20% | ||
Revenue from Contract with Customer Benchmark | Customer B | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 12.60% | 0% | 12.90% | 0% | ||
Revenue from Contract with Customer Benchmark | Customer C | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 13.30% | 0% | 0% | 0% | ||
Revenue from Contract with Customer Benchmark | Customer D | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 0% | 10.20% | 0% | 0% | ||
Revenue from Contract with Customer Benchmark | Customer B | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 0% | 10.20% | 0% | 0% | ||
Accounts Receivable | Customer A | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 20.50% | 26.30% | ||||
Accounts Receivable | Customer B | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 18.10% | 10.60% | ||||
Accounts Receivable | Customer C | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 14.90% | 0% | ||||
Accounts Receivable | Customer D | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 12.10% | 19.60% | ||||
Accounts Receivable | Customer B | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 11.40% | 0% | ||||
Accounts Receivable | Customer F | Customer Concentration Risk | ||||||
Segment Reporting Information [Line Items] | ||||||
Concentration risk, percentage | 0% | 25.50% |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 1 Months Ended | |||||||
Oct. 19, 2022 | Oct. 18, 2022 | Jul. 31, 2021 | Nov. 07, 2022 shares | Oct. 31, 2022 shares | Oct. 29, 2022 USD ($) | Sep. 30, 2022 shares | Dec. 31, 2021 shares | |
Subsequent Event [Line Items] | ||||||||
Number of machines committed to purchase | 60,000 | |||||||
Common shares, issued (in shares) | 67,106,104 | 63,566,403 | ||||||
Preferred shares, outstanding (in shares) | 96,000 | 96,000 | ||||||
Subsequent Event | ||||||||
Subsequent Event [Line Items] | ||||||||
Common shares, issued (in shares) | 1,500,000 | |||||||
Subsequent Event | Series H Preferred Stock | ||||||||
Subsequent Event [Line Items] | ||||||||
Preferred Stock, Shares Cancelled | 36,000 | |||||||
Preferred Stock, Shares Cancelled As A Percentage of Outstanding Shares | 0.375 | |||||||
Preferred shares, outstanding (in shares) | 60,000 | |||||||
Subsequent Event | BitFuFu Agreement | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of machines committed to purchase | 17,000 | 60,000 | ||||||
Subsequent Event | Majestic Dragon Financial Services Ltd. | ||||||||
Subsequent Event [Line Items] | ||||||||
Number of Bitcoin Payments Canceled | 2 | |||||||
Number of Bitcoin | 100 | |||||||
Accrued Liabilities | $ | $ 2.1 |