Sphere 3D (ANY) risk factors, FY2024 10-K

Risks Related to Our Business

1. 01Our total revenue is substantially dependent on the price of Bitcoin and volume of Bitcoin transactions. If such price or volume declines, our business, operating results, and financial condition would be adversely affected
2. 02Our operating results have and will significantly fluctuate due to the highly volatile nature of Bitcoin
3. 03Significant disruption in the cryptocurrency market, such as those experienced in the second half of 2022, may harm our reputation
4. 04The future development and growth of cryptocurrency is subject to a variety of factors that are difficult to predict and evaluate. If cryptocurrency does not grow as we expect, our business, operating results, and financial condition could be adversely affected
5. 05Changing environmental regulation and public energy policy may expose our business to new risks
6. 06Concerns about greenhouse gas emissions and global climate change may result in environmental taxes, charges, assessments, penalties or litigation, and could have a material adverse effect on our business, financial condition and results of operations
7. 07If we are unable to successfully enter into definitive hosting agreements with mining data centers on favorable terms or those counterparties fail to perform their obligations under such agreements, we may be forced to seek alternative mining data centers to host its mining equipment
8. 08We face risks of downtime at hosting sites due to excessive weather or heat, which could have an adverse effect on the mining of Bitcoin and impact our revenues
9. 09We may be affected by price fluctuations in the wholesale and retail power markets
10. 10As cryptocurrency may be determined to be investment securities, we may inadvertently violate the Investment Company Act of 1940 and incur large losses and third party liabilities as a result and potentially be required to register as an investment company or terminate operations
11. 11Regulatory changes or actions in one or more countries or jurisdictions may alter the nature of an investment in us or restrict the use of cryptocurrency in a manner that adversely affects our business, prospects or operations
12. 12Our business is dependent on a small number of Bitcoin mining equipment suppliers
13. 13Bitcoin mining machines rely on components and raw materials that may be subject to price fluctuations or shortages, including ASIC chips that have been subject to a significant shortage
14. 14Banks and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities or that accept cryptocurrency as payment, including financial institutions of investors in our common shares
15. 15The impact of geopolitical and economic events on the supply and demand for cryptocurrency is uncertain
16. 16We may not be able to compete with other companies, some of whom have greater resources and experience
17. 17The mining data centers at which we maintain our mining equipment may experience damages, including damages that are not covered by insurance
18. 18The dynamic nature of cryptocurrency exchanges which Bitcoin, and other cryptocurrency, are traded on may cause disruptions in the cryptocurrency markets, which may expose us to the effects of negative publicity resulting from fraudulent actors in the cryptocurrency space, and can adversely affect an investment in us
19. 19It may be illegal now, or in the future, to acquire, own, hold, sell, or use cryptocurrency, participate in blockchains or utilize similar cryptocurrency in one or more countries, the ruling of which would adversely affect us
20. 20Investors may not have the same protections that exist for traditional stock exchanges
21. 21Our operations, investment strategies and profitability may be adversely affected by competition from other methods of investing in cryptocurrency
22. 22Cryptocurrency may be subject to loss, theft, or restriction on access
23. 23Incorrect or fraudulent cryptocurrency transactions may be irreversible
24. 24Our interactions with a blockchain may expose us to specially designated nationals or blocked persons or cause us to violate provisions of law that did not contemplate distributed ledger technology
25. 25The price of cryptocurrency may be affected by the sale of cryptocurrency by other vehicles investing in cryptocurrency or tracking cryptocurrency markets
26. 26Bitcoin is subject to halving, and our Bitcoin mining operations may generate less revenue as a result
27. 27There are risks related to technological obsolescence, the vulnerability of the global supply chain to cryptocurrency hardware disruption, and difficulty in obtaining new hardware which may have a negative effect on our business
28. 28We may not adequately respond to price fluctuations and rapidly changing technology, which may negatively affect our business
29. 29The reward for mining cryptocurrency in the future may decrease, and the value of cryptocurrency may not adjust to compensate us for the reduction in the rewards we receive from our mining efforts
30. 30The value of cryptocurrency may be subject to pricing risk and has historically been subject to wide swings
31. 31We may not be able to realize the benefits of forks. Forks in a cryptocurrency network may occur in the future which may affect the value of cryptocurrency held by us
32. 32If a malicious actor or botnet obtains control in excess of 50% of the processing power active on any cryptocurrency network, it is possible that such actor or botnet could manipulate the blockchain in a manner that adversely affects an investment in us
33. 33Cryptocurrency, including those maintained by or for us, may be exposed to cybersecurity threats and hacks
34. 34Malicious cyber-attacks, attempted cybersecurity breaches, and other adverse events affecting our operational systems or infrastructure, or those of third parties, could disrupt our businesses and cause losses
35. 35We have a history of net losses. We may not achieve or maintain profitability
36. 36The failure to attract, hire, retain and motivate key personnel could have a significant adverse impact on our operations
37. 37Our financial results may fluctuate substantially for many reasons, and past results should not be relied on as indications of future performance
38. 38We have made a number of acquisitions in the past and we may make acquisitions in the future. Our ability to identify complementary assets, products or businesses for acquisition and successfully integrate them could affect our business, financial condition and operating results
39. 39We have implemented cost reduction efforts; however, these efforts may need to be modified, and if we need to implement additional cost reduction efforts it could materially harm our business

Risks Related to Our Public Company Status and Our Common Shares

1. 40Sales of common shares issuable upon exercise of outstanding warrants, the conversion of outstanding preferred shares, or the effectiveness of our registration statement may cause the market price of our common shares to decline
2. 41We may issue additional shares or other equity securities without your approval, which would dilute your ownership interest in us and may depress the market price of our common shares
3. 42The market price of our common shares is volatile and it may decline significantly
4. 43If our performance does not meet market expectations, the price of our common shares may decline. The market value of our common shares may vary significantly from the price of our common shares on the date of this Annual Report
5. 44Companies listed on Nasdaq are subject to delisting for, among other things, failure to maintain a minimum closing bid price of $1.00 per share for 30 consecutive business days pursuant to Nasdaq Listing Rule 5550(a)(2) and 5810(c)(3)(A) (the “Nasdaq Listing Rules”)
6. 45We may be subject to securities litigation, which is expensive and could divert management attention
7. 46We will continue to incur substantial costs and obligations as a result of being a public company
8. 47We must comply with the financial reporting requirements of a public company, as well as other requirements associated with being listed on Nasdaq
9. 48We may be treated as a Passive Foreign Investment Company
10. 49Certain of our directors, officers and management could be in a position of conflict of interest
11. 50Future sales of common shares by directors, officers and other shareholders could adversely affect the prevailing market price for common shares
12. 51We may issue an unlimited number of common shares. Future sales of common shares will dilute your shares