<SEC-DOCUMENT>0001062993-19-004501.txt : 20191115
<SEC-HEADER>0001062993-19-004501.hdr.sgml : 20191115
<ACCEPTANCE-DATETIME>20191115060259
ACCESSION NUMBER:		0001062993-19-004501
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		3
CONFORMED PERIOD OF REPORT:	20191114
ITEM INFORMATION:		Results of Operations and Financial Condition
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20191115
DATE AS OF CHANGE:		20191115

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Sphere 3D Corp
		CENTRAL INDEX KEY:			0001591956
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROCESSING & DATA PREPARATION [7374]
		IRS NUMBER:				000000000
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-36532
		FILM NUMBER:		191222359

	BUSINESS ADDRESS:	
		STREET 1:		895 DON MILLS ROAD
		STREET 2:		BLDG. 2, SUITE 900
		CITY:			TORONTO
		STATE:			A6
		ZIP:			M3C 1W3
		BUSINESS PHONE:		416-749-5999

	MAIL ADDRESS:	
		STREET 1:		895 DON MILLS ROAD
		STREET 2:		BLDG. 2, SUITE 900
		CITY:			TORONTO
		STATE:			A6
		ZIP:			M3C 1W3
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>form8k.htm
<DESCRIPTION>FORM 8-K
<TEXT>
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   <TITLE>Sphere 3D Corp. - Form 8-K - Filed by newsfilecorp.com</TITLE>
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<P align=center><B><FONT size=5>UNITED STATES </FONT></B><BR><B><FONT
size=5>SECURITIES AND EXCHANGE COMMISSION</FONT></B><BR>Washington, D.C.
20549</P>
<P align=center><B><FONT size=5>FORM 8-K</FONT></B></P>
<P align=center><B>CURRENT REPORT</B></P>
<P align=center><B>Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934</B></P>
<P align=center>Date of Report (Date of earliest event reported): <B><U>November
14, 2019 </U></B></P>
<P align=center><B><U><FONT size=5>SPHERE 3D CORP.</FONT></U></B><B>
</B><BR>(Exact name of registrant as specified in its charter) </P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center><B><U>Ontario, Canada </U></B></TD>
    <TD align=center width="33%"><B><U>001-36532 </U></B></TD>
    <TD align=center width="33%"><B><U>98-1220792 </U></B></TD></TR>
  <TR vAlign=top>
    <TD align=center>(State or other jurisdiction </TD>
    <TD align=center width="33%">(Commission File Number) </TD>
    <TD align=center width="33%">(IRS Employer Identification No.) </TD></TR>
  <TR vAlign=top>
    <TD align=center>of incorporation) </TD>
    <TD align=left width="33%">&nbsp; </TD>
    <TD align=left width="33%">&nbsp; </TD></TR></TABLE><BR>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center><B>895 Don Mills Road, </B></TD>
    <TD align=center width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center><B>Bldg. 2, Suite 900 </B></TD>
    <TD align=center width="50%"><B><U>M3C 1W3 </U></B></TD></TR>
  <TR vAlign=top>
    <TD align=center><B><U>Toronto, Ontario </U></B></TD>
    <TD align=center width="50%">&nbsp; </TD></TR>
  <TR vAlign=top>
    <TD align=center>(Address of principal executive offices) </TD>
    <TD align=center width="50%">(Zip Code) </TD></TR></TABLE>
<P align=center>Registrant&#146;s telephone number, including area code <B><U>(858)
571-5555</U></B><B> </B></P>
<P align=center><B><U>Not Applicable </U></B><BR>(Former name or former
address, if changed since last report) <BR></P>
<P align=justify>Check the appropriate box below if the Form 8-K filing is
intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):</P>
<P align=justify>[&nbsp;&nbsp; ] Written communications pursuant to Rule 425
under the Securities Act (17 CFR 230.425)</P>
<P align=justify>[&nbsp;&nbsp; ] Soliciting material pursuant to Rule 14a-12
under the Exchange Act (17 CFR 240.14a -12)</P>
<P align=justify>[&nbsp;&nbsp; ] Pre-commencement communications pursuant to
Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d -2(b))</P>
<P align=justify>[&nbsp; &nbsp;] Pre-commencement communications pursuant to
Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e -4(c))</P>
<P align=justify>Indicate by check mark whether the registrant is an emerging
growth company as defined in Rule 405 of the Securities Act of 1933 (&#167;230.405 of
this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (&#167;240.12b -2
of this chapter). </P>
<P align=right>Emerging growth company [X]</P>
<P align=justify>If an emerging growth company, indicate by check mark if the
registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to
Section 13(a) of the Exchange Act. [&nbsp;&nbsp; ] </P>
<P align=center>1</P>
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<P align=justify><B>Item 2.02. Results of Operations and Financial Condition.
</B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
On November 14, 2019, we issued a press release announcing our financial results
for our third fiscal quarter ended September 30, 2019. The information contained
in the press release is incorporated herein by reference and furnished as
Exhibit 99.1. </P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
The information in this Item 2.02 and Exhibit 99.1 is being furnished and shall
not be deemed &#147;filed&#148; for the purposes of Section 18 of the Securities Exchange
Act of 1934, as amended, or otherwise subject to the liabilities of that
Section. </P>
<P align=justify><B>Item 9.01. Financial Statements and Exhibits</B></P>
<P
align=justify>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;
(d) Exhibits</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=center bgColor=#eeeeee><a href="exhibit99-1.htm">99.1 </a></TD>
    <TD align=left width="90%" bgColor=#eeeeee ><a href="exhibit99-1.htm">Press release
      dated November 14, 2019 </a></TD>
  </TR></TABLE>
<P align=center>2</P>
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<P align=center><B>SIGNATURES</B></P>
<P align=justify>Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized. </P>
<P align=justify>Date:&nbsp;&nbsp;&nbsp;&nbsp; November 15, 2019</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="50%"><B>SPHERE 3D CORP.</B> </TD></TR></TABLE>
<P><BR>&nbsp;</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >By: </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="45%"
    >/s/ Kurt L. Kalbfleisch </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%" >Kurt L. Kalbfleisch </TD></TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="5%" >&nbsp; </TD>
    <TD align=left width="45%" >Chief Financial Officer
  </TD></TR></TABLE>
<P align=center>3</P>
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<P align=center><B>EXHIBIT INDEX</B> </P>
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style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><B>Exhibit
      Number</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="88%"
    ><B>Description</B> </TD></TR>
  <TR>
    <TD align=center >&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="88%"  >&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=center bgColor=#eeeeee><a href="exhibit99-1.htm">99.1 </a></TD>
    <TD align=left width="2%"  bgColor=#eeeeee>&nbsp;</TD>
    <TD align=left width="88%" bgColor=#eeeeee ><a href="exhibit99-1.htm">Press Release
      Issued November 14, 2019 </a></TD>
  </TR></TABLE>
<P align=center>4</P>
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<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>2
<FILENAME>exhibit99-1.htm
<DESCRIPTION>EXHIBIT 99.1
<TEXT>
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   <TITLE>Sphere 3D Corp. - Exhibit 99.1 - Filed by newsfilecorp.com</TITLE>
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<p align="right">Exhibit 99.1</p>
<p><IMG src="s3dlogo.jpg" border=0>
  <BR>
</p>
<P align=center><B><FONT size=3>Sphere 3D Reports Third Quarter Fiscal Year 2019
Financial Results</FONT></B><I> </I></P>
<P align=justify><B>SAN DIEGO</B>, Calif. &#150; November 14, 2019 &#150; Sphere 3D Corp.
(NASDAQ: ANY), a company delivering containerization, virtualization, and data
management solutions, today reported financial results for its third quarter
ended September 30, 2019.</P>
<P align=justify>On November 13, 2018, the Company closed the divestiture of its
Overland subsidiary and related business. The financial results of Overland for
the third quarter and nine months ended 2018 have been reflected in the
Company&#146;s consolidated statements of operations as discontinued operations.
Results below exclude discontinued operations. Our results for the third quarter
and nine months ended September 30, 2019 were as follows:</P>
<P align=justify><B>Third Quarter 2019 Financial Results:</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Revenue for the third quarter of 2019 was $1.4 million,
      compared to $1.3 million for the third quarter of 2018. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Gross margin for the third quarter of 2019 was 35.5%,
      compared to 14.7% for the third quarter of 2018. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Operating expenses for the third quarter of 2019 were
      $1.8 million, compared to $2.8 million for the third quarter of 2018.
    </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Share-based compensation expense for the third quarter of
      2019 was $0.2 million, compared to $0.3 million for the third quarter of
      2018. Depreciation and amortization was $0.3 million in both the third
      quarter of 2019 and 2018. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Other income for the third quarter of 2019 was $2.3
      million. The majority of which related to agreements entered into with
      certain executives of the Company and the Company&#146;s Board of Directors to
      extinguish certain accrued liabilities. The Company wrote off $1.7 million
      of outstanding liabilities and recorded a gain on forgiveness of
      liabilities. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Net Income from continuing operations for the third
      quarter of 2019 was $0.9 million, or a net income of $0.33 per share,
      compared to a net loss from continuing operations of $3.1 million, or a
      net loss of $1.61 per share, for the third quarter of 2018. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left >&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Net loss from discontinued operations for the third
      quarter of 2018 was $1.8 million, or a net loss of $0.92 per share.
  </P></TD></TR></TABLE>
<P align=justify><B>Nine Months Ended September 30, 2019 Financial
Results:</B></P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Revenue for the first nine months of 2019 was $4.5
      million, compared to $6.4 million for the first nine months of 2018.
    </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Gross margin for the first nine months of 2019 was 31.9%,
      compared to 17.4% for the first nine months of 2018. </P></TD></TR>
  <TR>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="97%" >
      <P align=justify>&nbsp;</P></TD></TR>
  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%" >
      <P align=justify>Operating expenses for the first nine months of 2019 were
      $6.0 million, compared to $11.1 million for the first nine months of 2018.
      </P></TD></TR></TABLE><BR>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<TABLE
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cellSpacing=0 cellPadding=0 width="100%" border=0>

  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%">
      <P align=justify>Share-based compensation expense for the first nine
      months of 2019 was $0.5 million, compared to $1.5 million for the first
      nine months of 2018. Depreciation and amortization was $0.8 million in the
      first nine months of 2019, compared to $3.3 million for the first nine
      months of 2018. </P></TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="97%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%">
      <P align=justify>Other income for the first nine months of 2019 was $2.3
      million. The majority of which related to agreements entered into with
      certain executives of the Company and the Company&#146;s Board of Directors to
      extinguish certain accrued liabilities. The Company wrote off $1.7 million
      of outstanding liabilities and recorded a gain on forgiveness of
      liabilities. </P></TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="97%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%">
      <P align=justify>Net loss from continuing operations for the first nine
      months of 2019 was $2.6 million, or a net loss of $1.09 per share,
      compared to a net loss from continuing operations of $12.2 million, or a
      net loss of $8.00 per share, in the first nine months of 2018. </P></TD></TR>
  <TR>
    <TD align=left>&nbsp;</TD>
    <TD align=left width="97%">&nbsp;</TD></TR>
  <TR vAlign=top>
    <TD align=left>&#149; </TD>
    <TD align=left width="97%">
      <P align=justify>Net loss from discontinued operations for the first nine
      months of 2018 was $5.4 million, or a net loss of $3.55 per share.
  </P></TD></TR></TABLE>
<P align=justify><B>Investor Conference Call: <BR></B>Sphere 3D will not be
hosting a third quarter fiscal year 2019 earnings conference call.</P>
<P align=justify><B>About Sphere 3D:</B> <BR>Sphere 3D Corp. (NASDAQ: ANY)
delivers containerization, virtualization, and data management solutions via
hybrid cloud, cloud and on-premise implementations through its global reseller
network and professional services organization. Sphere 3D has a portfolio of
brands, including HVE ConneXions, UCX ConneXions, and SnapServer&#174; dedicated to
helping customers achieve their IT goals. For more information, visit
<U>www.sphere3d.com</U>. Follow us on Twitter <I><U>@Sphere3D</U></I><U>
and</U><I> </I><I><U>@HVEconneXions</U></I></P>
<P align=justify><B>Safe Harbor Statement:<BR></B>This press release contains
forward-looking statements that involve risks, uncertainties, and assumptions
that are difficult to predict. Actual results and the timing of events could
differ materially from those anticipated in such forward-looking statements as a
result of risks and uncertainties including, without limitation, our inability
to obtain additional debt or equity financing; any increase in our cash needs;
the Company&#146;s ability to maintain listing with the NASDAQ Capital Market; market
adoption and performance of our products; the level of success of our
collaborations and business partnerships; possible actions by customers,
partners, suppliers, competitors or regulatory authorities; and other risks
detailed from time to time in our periodic reports contained in our Annual
Information Form and other filings with Canadian securities regulators
(www.sedar.com) and in prior periodic reports filed with the United States
Securities and Exchange Commission (www.sec.gov). Sphere 3D undertakes no
obligation to update any forward-looking statement, whether written or oral,
that may be made from time to time, whether as a result of new information,
future developments or otherwise, except as required by law. </P>
<P align=justify><B>Investor Contact:</B><BR>Kurt
Kalbfleisch<BR>+1-858-495-4211<BR><U>Investor.relations@sphere3d.com</U><BR></P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
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<P align=center><B>SPHERE 3D CORP.</B><BR>
    <B>CONDENSED CONSOLIDATED STATEMENTS
      OF OPERATIONS</B><BR>
  <B><I>(In thousands, except share and per share
    data)</I></B><BR>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center><B>Three Months Ended</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center><B>Nine Months Ended</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>September 30,</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD colspan="4" align=center style="BORDER-BOTTOM: #000000 1px solid"><B>September 30,</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2019</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2018</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2019</B> </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=center
      width="12%"><B>2018</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center>(Unaudited) </TD>
    <TD align=center width="2%" >&nbsp;</TD>
    <TD align=center width="1%" >&nbsp;</TD>
    <TD colspan="4" align=center>(Unaudited) </TD>
    <TD align=center width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Revenue </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;1,368 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;1,306 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;4,461 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;6,377 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Cost of revenue </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">883 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">1,114 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">3,036 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">5,269 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Gross profit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>485 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>192 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,425 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,108 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="12%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Operating expenses: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp; &nbsp;Sales and
      marketing </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">550 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">885 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">1,494 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">2,406 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp; &nbsp; &nbsp;
      &nbsp;Research and development </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>460 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>486 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>1,673 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>2,496 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp; &nbsp;General and
      administrative </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">801 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">1,465 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">2,814 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">6,156 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>1,811 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>2,836 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>5,981 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>11,058 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Loss from operations </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(1,326</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,644</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(4,556</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(9,950</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp; &nbsp; &nbsp;
      &nbsp;Interest expense - related party </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(41</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(494</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(327</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="12%" bgColor=#e6efff>(2,264</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp; &nbsp;Interest expense </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(9</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(24</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp; &nbsp; &nbsp;
      &nbsp;Other income (expense), net </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>2,261 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>53 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>2,283 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(32</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Net income (loss) from continuing operations </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">885 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(3,085</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(2,624</TD>
    <TD align=left width="2%" >) </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="12%">(12,246</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Net loss from discontinued
      operations</TD>
    <TD width="1%" align=left  bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="12%" align=right  bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">-&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%" align=left  bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">&nbsp;</TD>
    <TD width="12%" align=right  bgColor=#e6efff style="BORDER-BOTTOM: #000000 1px solid">(1,767</TD>
    <TD align=left width="2%"  bgColor=#e6efff>)&nbsp;&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>- </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    bgColor=#e6efff>(5,431</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Net income (loss)</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    >&nbsp;885 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(4,852</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(2,624</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(17,677</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR>
    <TD align=left bgColor=#e6efff >&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Net income (loss) per share: </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="12%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Continuing operations</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%"
    bgColor=#e6efff>0.33&nbsp;&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;(1.61</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;(1.09</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="12%" bgColor=#e6efff>&nbsp;(8.00</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp; &nbsp;Discontinued
      operations</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%"
    >.</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(0.92</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="12%">- </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="12%">(3.55</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp; &nbsp; &nbsp;
      &nbsp;Net income (loss) per share basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;0.33 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(2.53</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(1.09</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>&nbsp;(11.55</TD>
    <TD align=left width="2%"  bgColor=#e6efff>) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp; &nbsp;Net income (loss)
      per share basic diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;0.10 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(2.53</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(1.09</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">&nbsp;(11.55</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Shares used in computing net
      income (loss) per share: </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="12%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp; &nbsp;Basic </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">2,668,311 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">1,916,523 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">2,403,373 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="12%">1,531,067 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp; &nbsp; &nbsp;
      &nbsp;Diluted </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>8,909,761 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>1,916,523 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>2,403,373 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="12%"
    bgColor=#e6efff>1,531,067 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<P>
<HR style="PAGE-BREAK-AFTER: always" align=center width="100%" color=black
noShade SIZE=5>
</P>
<!--$$/page=-->
<A name=page_2></A>
<P align=center><B>SPHERE 3D CORP.</B><BR>
    <B>CONDENSED CONSOLIDATED BALANCE
      SHEETS</B><BR>
  <B><I>(In thousands)</I></B><BR>
</P>
<TABLE
style="BORDER-COLOR: black; FONT-SIZE: 10pt; BORDER-COLLAPSE: collapse; "
cellSpacing=0 cellPadding=0 width="100%" border=0>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="11%" align=center nowrap><B>September 30,</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="11%" align=center nowrap><B>December 31,</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD
      width="11%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2019</B> </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"
    >&nbsp;</TD>
    <TD
      width="11%" align=center nowrap style="BORDER-BOTTOM: #000000 1px solid"><B>2018</B> </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD width="11%" align=center nowrap>(Unaudited) </TD>
    <TD width="2%" align=center nowrap >&nbsp;</TD>
    <TD width="1%" align=center nowrap >&nbsp;</TD>
    <TD width="11%" align=center nowrap>(Unaudited) </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff ><B><U>ASSETS</U></B> </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="11%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="11%" bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Cash and cash equivalents </TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="11%">129 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >$</TD>
    <TD align=right width="11%">&nbsp;341 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Accounts receivable, net </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>777 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>1,142 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Inventories </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">825 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">1,230 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Other current assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%"
    bgColor=#e6efff>389 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%"
    bgColor=#e6efff>784 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current
      assets </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">2,120 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">3,497 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Investment in affiliate </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>2,100 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>2,100 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Property and equipment, net </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">3 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">6 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Intangible assets, net </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>2,613 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>3,348 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Goodwill </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">1,385 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">1,385 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Other assets </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%"
    bgColor=#e6efff>936 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
     bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right width="11%"
    bgColor=#e6efff>950 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >&nbsp; &nbsp; &nbsp;Total assets </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">9,157 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
    >$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right
      width="11%">&nbsp;11,286 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff >&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="11%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="11%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR>
    <TD >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
    <TD width="1%" >&nbsp;</TD>
    <TD width="11%">&nbsp;</TD>
    <TD width="2%" >&nbsp;</TD>
  </TR>
  <TR>
    <TD bgColor=#e6efff >&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="11%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD width="11%" bgColor=#e6efff>&nbsp;</TD>
    <TD width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left ><B><U>LIABILITIES AND SHAREHOLDERS'
      DEFICIT</U></B> </TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=left width="11%">&nbsp;</TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Current liabilities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="11%" bgColor=#e6efff>8,185 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>$</TD>
    <TD align=right width="11%" bgColor=#e6efff>&nbsp;9,639 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Redeemable preferred shares</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">1,019 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
    <TD align=left width="1%" >&nbsp;</TD>
    <TD align=right width="11%">6,571 </TD>
    <TD align=left width="2%" >&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >Other long-term liabilities </TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>713 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=left width="1%"  bgColor=#e6efff>&nbsp;</TD>
    <TD align=right width="11%" bgColor=#e6efff>683 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
  </TR>
  <TR vAlign=top>
    <TD align=left >Total shareholders' deficit </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="11%">(760</TD>
    <TD align=left width="2%" >) </TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=left width="1%"
    >&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 1px solid" align=right
    width="11%">(5,607</TD>
    <TD align=left width="2%" >) </TD>
  </TR>
  <TR vAlign=top>
    <TD align=left bgColor=#e6efff >&nbsp; &nbsp; &nbsp;Total
      liabilities and shareholders' deficit </TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="11%"
    bgColor=#e6efff>9,157 </TD>
    <TD align=left width="2%"  bgColor=#e6efff>&nbsp;</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=left width="1%"
     bgColor=#e6efff>$</TD>
    <TD style="BORDER-BOTTOM: #000000 3px double" align=right width="11%"
    bgColor=#e6efff>&nbsp;11,286 </TD>
    <TD align=left width="2%"
  bgColor=#e6efff>&nbsp;</TD>
  </TR>
</TABLE>
<BR>
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M8<GZ"NP@TJPMVW0VL:MZXR:MXJ9XIOX45#!I.\F06EK%9P+# H5%_6K%)2UQ
MMWU.U*VB"BBB@84444 %%%% !1110 4444 %%%% !1110 4444 %%%% !111
M0 4444 %%%% !1110 4444 %%%% !1110 4444 %%%% !1110 4444 %%%%
+!1110 4444 ?_]D!

end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
