Sphere 3D Prepares to Dilute Shareholders up to 50.9% Amid Cash Crunch

Bitcoin miner Sphere 3D is facing a severe cash crunch and has quietly prepared to dilute its shareholders by up to 50.9% through an amended at-the-market stock-sale facility.

The company has up to $10.3 million in capacity for working capital, which would add approximately 4,382,978 new common shares to its basic share count at the assumed price of $2.35 per share. This would expand the company's basic share count by 50.9%, lifting it from 8,619,150 to 13,002,128.

The facility has already been used in part, with Sphere 3D selling 2,172,789 shares under a prior prospectus for $5.13 million of gross proceeds. However, the amended facility would allow the company to sell up to 50.9% more shares without additional approval from shareholders.

Sphere 3D's management has the flexibility to continue selling mined Bitcoin when needed for working capital or growth, with a policy option in place to treat Bitcoin as operating liquidity. This flexibility is particularly important given the company's recent financial struggles, including a $4.35 million working-capital deficiency and $1.17 million of net cash used in operating activities during the quarter ending March 31.