Sphere 3D Corp.ANY

Sphere 3D Corp. Fair Value Disclosure

10-KFiled Mar 27, 20263 min read
Fair Value Measurements
The authoritative guidance for fair value measurements establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. These tiers include: Level 1, defined as observable inputs such as quoted prices in active markets; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions.
Assets and Liabilities that are Measured at Fair Value on a Recurring Basis
Financial instruments include cash equivalents, investment in equity securities, accounts payable, accrued liabilities, and warrant liabilities. Fair value estimates of these instruments are made at a specific point in time, based on relevant market information. These estimates may be subjective in nature and involve uncertainties and matters of significant judgment and therefore cannot be determined with precision. The carrying amount of cash equivalents, accounts payable and accrued liabilities are generally considered to be representative of their respective fair values because of the short-term nature of those instruments.
The following tables provide a summary of assets and liabilities that are measured at fair value on a recurring basis (in thousands):
December 31, 2025
Fair ValueLevel 1Level 2Level 3
Assets:
Bitcoin$3,263 $3,263 $— $— 

December 31, 2024
Fair ValueLevel 1Level 2Level 3
Assets:
Investment in equity securities$7,530 $7,530 $— $— 
Bitcoin1,394 1,394 — — 
Total$8,924 $8,924 $— $— 
Liabilities:
Warrant liabilities$31 $— $— $31 

Investment in equity securities was in publicly held equity securities which had readily determinable fair values. During the years ended December 31, 2025 and 2024, the Company recognized an unrealized gain of nil and $4.9 million, respectively, within other income (expense) in its consolidated statements of operations related to the fair value change of the investment in equity securities.
The fair value of the warrant liabilities was measured using a Black Scholes valuation model with the following assumptions:
December 31,
2025		December 31,
2024
Common share price$3.08 $9.39 
Expected volatility75.0 %125.0 %
Risk-free interest rate3.7 %4.2 %
Expected term (in years)0.31.3
The following table presents the activities of warrant liabilities that are measured at fair value (in thousands):
Warrant liability as of January 1, 2024$205 
Change in fair value(174)
Warrant liability as of December 31, 202431 
Change in fair value(31)
Warrant liability as of December 31, 2025$— 
Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis
Non-financial assets such as property and equipment and intangible assets are recorded at fair value when an impairment is recognized or at the time acquired in an asset acquisition or business combination measured using significant unobservable inputs (Level 3). As discussed in Note 6, Certain Balance Sheet Items, during the year ended December 31, 2025 and 2024, impairment charges associated with property and equipment were recorded and reduced the carrying amount of such assets subject to the impairment to their estimated fair value.
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Historical Timeline

Fiscal YearFiled
2025Mar 27, 2026Showing above
2024Mar 28, 2025
2023Mar 13, 2024
2022Mar 31, 2023
2019May 14, 2020
2018Apr 1, 2019
2017Mar 21, 2018

About Fair Value Disclosures

Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.

Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.

Other Available Disclosures

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