SecProbe.io

CORRESP
1
filename1.htm

M.
ALI PANJWANI, ESQ.

Partner

DIRECT
TEL: 212-326-0820

FAX:
212-326-0806

ali.panjwani@pryorcashman.com

July
27, 2023

Via
Edgar

CONFIDENTIAL TREATMENT REQUEST UNDER
RULE 83

The entity requesting confidential treatment
is:

Sphere 3D Corp.

4 Greenwich Office Park, 1st
Floor

Greenwich, CT 06831

Attn: Patricia Trompeter, Chief Executive
Officer

Telephone: (203) 524-6524

CERTAIN
PORTIONS OF THIS LETTER HAVE BEEN OMITTED FROM THE VERSION FILED VIA EDGAR. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO
THE OMITTED PORTIONS. INFORMATION THAT WAS OMITTED IN THE EDGAR VERSION HAS BEEN NOTED IN THIS LETTER WITH A PLACEHOLDER IDENTIFIED BY
THE MARK “[***].” THE OMITTED PORTIONS ARE BRACKETED IN THIS LETTER FOR EASE OF IDENTIFICATION.

Ms.
Kate Tillan

Mr.
Rolf Sundwall

Securities
and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Washington,
D.C. 20549

 Re: Sphere
                                            3D Corp.

Form
10-K for the Fiscal Year Ended December 31, 2022

Filed
March 31, 2023

Form
10-Q for the Quarterly Period Ended March 31, 2023

Filed
May 11, 2023

File
No. 001-36532

Ladies
and Gentlemen:

On
behalf of our client, Sphere 3D Corp., a corporation organized under the laws of Ontario, Canada (the “Company”), and pursuant
to the applicable provisions of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the rules
promulgated thereunder, please find the responses of the Company to comments received from the Staff of the Securities Exchange Commission
(the “Staff”) in a letter dated June 23, 2023 (the “Comment Letter”) with respect to the above-referenced Annual
Report on Form 10-K (the “Form 10-K”) and Quarterly Report on Form 10-Q (the “Form 10-Q”) of the Company. The
discussion below is presented in the order of the numbered comments in the Comment Letter. Certain capitalized terms set forth in this
letter are used as defined in the Form 10-K and Form 10-Q, as applicable.

The
Company has asked us to convey the following responses to the Staff:

Form
10-K for the Fiscal Year Ended December 31, 2022

Item
9A. Controls and Procedures

Management's
Report on Internal Control Over Financial Reporting, page 42

 1. You
                                            do not identify the version of the Committee of Sponsoring Organizations of the Treadway
                                            Commission’s Internal Control - Integrated Framework that you used to perform your
                                            assessment as required by Item 308(a)(2) of Regulation S-K. Please revise future filings
                                            to identify the version of the COSO Integrated Framework you used in the assessment (i.e.,
                                            whether you used the 1992 Framework, or the Updated Framework issued in 2013).

 Response: The
                                            Company used the Updated Framework issued in 2013 in its assessment. The Company acknowledges
                                            the Staff’s comment and will revise future filings to identify the version of the COSO
                                            Integrated Framework it used in its assessment.

Securities and Exchange Commission

July 27, 2023

Page 2

Exhibits
31.1 and 31.2, page 61

 2. In
                                            your Form 10-K for the fiscal year ended December 31, 2022 and Form 10-Q for the quarterly
                                            period ended March 31, 2023, you revised the wording in paragraph 4(d) from that set forth
                                            in Item 601(b)(31)(i) of Regulation S-K. In future filings, please include the certifications
                                            exactly as set forth in that item.

 Response: The
                                            Company acknowledges the Staff’s comment and in future filings will include the wording
                                            in paragraph 4(d) exactly as set forth in Item 601(b)(31)(i) of Regulation S-K.

Note
1. Organization and Business

Liquidity
and Going Concern, page F-11

 3. You
                                            disclose that management has projected that cash on hand may not be sufficient to allow you
                                            to continue operations beyond the next 12 months. Please tell us how your disclosure considered
                                            ASC 205-40-50-13 which discusses whether there is substantial doubt about an entity's ability
                                            to continue as a going concern within one year after the date that the financial statements
                                            are issued.

 Response: The
                                            Company will revise future filings to clarify any ambiguity about the period of time during
                                            which its management has projected that cash on hand may not be sufficient to allow the Company
                                            to continue operations beyond the next 12 months, to make clear that the projection is from
                                            the date that the Company’s financial statements are issued, as noted in the additional
                                            underlined text below.

As further background, at the time
that the Form 10-K was filed, the Company had a significant number of miners that it planned to have installed over the two or three months
following the filing. The Company did not have final agreements with hosting providers at that time and would most likely have been required
to provide significant deposits on the new installations. These new installations would likely have been required because Core Scientific,
Inc. (“Core Scientific”) had ceased honoring its obligations to host additional miners of the Company and had declared bankruptcy,
which resulted in Core Scientific not installing the Company’s machines as initially planned. Because the price of Bitcoin fluctuated
during the prior 12 months, it was clear, based on the Company’s cash requirements, that the Company would need to raise capital
either through the sale of mining machines or the issuance of equity or debt. With no guarantee that a market to sell the machines would
exist, and no signed agreements for adequate debt or equity, there was a risk to the Company’s ability to continue as a going concern.
In addition, the Company has suffered recurring losses from operations over the previous years, the price of Bitcoin had fluctuated and
current cash on hand would not have been adequate to support the Company over the next twelve months from the date the financial statements
were issued.

Securities and Exchange Commission

July 27, 2023

Page 3

The Company will include disclosure similar to the following underlined language in future filings:

“The
Company has recurring losses from operations and incurred a net loss of approximately $192.8 million for the year ended December
31, 2022. The Company’s management has projected that cash on hand may not be sufficient to allow the Company to continue operations
beyond the next 12 months from the date the financial statements are issued based on our hashing rate at December 31, 2022, if
we are unable to raise additional funding for operations. The Company expects its working capital needs to increase in the future as
it continues to expand and enhance its operations. The Company’s ability to raise additional funds for working capital through
equity or debt financings or other sources may depend on the financial success of the Company’s then-current business and successful
implementation of its key strategic initiatives, financial, economic and market conditions and other factors, some of which are beyond
our control. No assurance can be given that the Company 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 the Company’s future financing and operating activities. The Company requires additional
capital and if it is unsuccessful in raising that capital, it may not be able to continue its business operations in the cryptocurrency
mining industry or it may be unable to advance our growth initiatives, either of which could adversely impact the Company’s 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) fluctuations in the value of cryptocurrency; and (v) 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.

Securities and Exchange Commission

July 27, 2023

Page 4

These
factors, among others, raise substantial doubt that the Company will be able to continue as a going concern beyond the next 12 months
from the date the financial statements are issued. The accompanying 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.”

Note
2. Significant Accounting Policies

Digital Assets, page F-13

 4. Please
                                            tell us how your classification of digital assets as current assets is consistent with the
                                            definition of current assets in ASC 210-10-20. For each digital asset type held on December
                                            31, 2022 and 2021, and at March 31, 2023, tell us the average length of time it has been
                                            held and how frequently it turns over, explaining how you calculated this turnover. Also,
                                            for each significant (as determined by the fair value) digital asset holding, please tell
                                            us the name of the digital asset and its cost, fair value, and the number of units held as
                                            of December 31, 2021 and 2022, and March 31, 2023. For any digital asset holdings that are
                                            not individually significant, tell us the aggregated cost bases and fair values of the digital
                                            asset holdings.

 Response: The Company acknowledges the Staff’s comment and advises that in accordance with ASC 210-10-20, Balance Sheet, current assets is defined as those assets that are reasonably expected to be realized in cash or sold or consumed during the normal operating cycle of the business. The Company expects to use the digital assets mined for operations and therefore to sell the Bitcoin during the operating cycle. The Bitcoin generated during 2022 was sold for operations by January 2023. The Bitcoin generated during the first quarter of 2023 was sold for operations by April 2023.

                                                                                Rule
                                            83 Confidential Treatment Request by Sphere 3D Corp. Request #1

    Year
    Ended
    Quarter Ended

    12/31/2021
    12/31/2022
    3/31/2023

    Each digital asset type
      None
      Bitcoin only
      Bitcoin only

    Number of units
    held
      0
      103.00
      22.00

    Average length of time held
      N/A
      145
                                            days
      16
                                            days

    Cost
      [*** ]
    $ [*** ]
    $ [*** ]

    Fair value
      [*** ]
    $ [*** ]
    $ [*** ]

    Turnover
      [*** ]
      [*** ]
      [*** ]

    Turnover calculation

    BTC earned for the period
      0.00
      131.01
      110.25

    BTC on hand at end of period
      0.00
      103.00
      22.00

    Turnover
      [*** ]
      [*** ]
      [*** ]

Sphere 3D Corp. respectfully
requests that the information contained in Request #1 be treated as confidential information and that the Staff provide timely notice
to Patricia Trompeter, Chief Executive Officer, Sphere 3D Corp., 4 Greenwich
Office Park, 1st Floor, Greenwich, CT 06831, telephone (203) 524-6524,
before it permits any disclosure of the bracketed information contained in Request #1.

Turnover
is calculated as the sum of beginning period Bitcoin balance, Bitcoin earned for the period less Bitcoin on hand at the end of the period
divided by the ending period Bitcoin balance.

Securities and Exchange Commission

July 27, 2023

Page 5

 5. Regarding
                                            your impairment testing for digital assets, please tell us the following information and
                                            reference for us the authoritative literature you relied upon to support your accounting:

 ● You
                                            disclose that you perform an impairment analysis 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. Tell us what events or changes in circumstances
                                            would cause you to perform an impairment analysis during the reporting period.

 ● Tell
                                            us whether or not you evaluate multiple units (or fractional units) of digital assets that
                                            have different carrying amounts for impairment as a group.

 ● Tell
                                            us the market(s) you used to determine the quoted price used to assess impairment.

 ● Tell
                                            us whether these market(s) are your principal market(s), and if not, explain why not, and
                                            how the markets are determined.

 Response: The
                                            Company’s Bitcoin held are indefinite lived intangible assets that it accounts for
                                            under Financial Accounting Standards Board (“FASB”) Accounting Standards
                                            Codification (“ASC”) 350 – Intangible Assets Goodwill and Other (“ASC
                                            350”) and as such, are subject to impairment testing on an annual basis or more frequently
                                            if events or changes in circumstances indicate it is more likely than not that the asset
                                            is impaired in accordance with ASC 350-30-35-18. The Company performs an impairment analysis
                                            daily to determine if the lowest intraday price of Bitcoin is lower