Sphere 3D Completed Private Placement of $5 Million

Sphere 3D Corp. completed a private placement for gross proceeds of $5.07 million.

The company issued a total of 16,906,666 ‘Units,’ as further defined below, at a purchase price of U.S. $0.30 per Unit. Each Unit consists of one common share and one warrant from each of two series of warrants. The first series of warrants is exercisable to purchase 16,906,666 common shares in the aggregate and has an exercise price of $0.40 per share, a one-year term, and is exercisable in whole or in part at any time prior to expiration. The second series of warrants is exercisable for 16,906,666 common shares in the aggregate and has an exercise price of $0.55 per share, a five-year term, and is exercisable in whole or in part at any time prior to expiration. For purposes of clarification, assuming that both series of warrants are fully exercised, such exercise would provide an additional $16.06 million in gross proceeds to the company.

MF Ventures, LLC, which beneficially owns, directly or indirectly, securities of the company carrying more than 10% of the voting rights attached to the outstanding voting securities of the company (on a partially-diluted basis), participated in the private placements by acquiring 8,333,333 common hhares and warrants to purchase 16,666,666 shares. As a result, the participation of MF Ventures constitutes a ‘related party transaction’ within the meaning of Canadian Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions (“MI 61-101”).

The company intends to file a material change report in connection with such participation. However, such material change report was not filed at least 21 days before the closing of the private placements as the details of the participation of insiders of the company in the private placements had not been confirmed at that time. The company is relying on the exemptions from the ‘formal valuation’ and ‘minority approval’ requirements under MI 61-101 set forth in sections 5.5(a) and 5.7(1)(a) of MI 61-101, respectively, based on the fact that the subject matter of, or consideration for, the transactions contemplated herein insofar as they involve interested parties, as determined by the board of directors of the company and in accordance with MI 61-101, does not exceed 25% of the market capitalization of the company, as determined in accordance with MI 61-101.