Sphere 3D Corp.ANY
Sphere 3D Corp. Stock Compensation Disclosure
Equity Incentive Plan
In May 2025, the shareholders approved the adoption of the Company’s 2025 Performance Incentive Plan (“2025 Plan”). As of December 31, 2025, an aggregate of 576,644 common shares are authorized for issuance with respect to awards granted under the previous performance plan and the 2025 Plan. In addition, the share limit will automatically increase on the first trading day in January of each calendar year during the term of the 2025 Plan by an amount equal to the lesser of (i) 10% of the total number of common shares issued and outstanding on December 31 of the immediately preceding calendar year, or (ii) such number of common shares as may be established by the Board. The 2025 Plan authorizes the board of directors to grant stock and options awards to directors, employees and consultants. As of December 31, 2025, the Company had approximately 303,857 share-based awards available for future grants under the 2025 Plan.
Stock Options
The following table summarizes option activity:
| Shares Subject to Options | Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||||||||||||
| Outstanding — January 1, 2025 | 44,315 | $ | 51.14 | |||||||||||||||||||||||
| Granted | 14,950 | $ | 7.92 | |||||||||||||||||||||||
| Exercised | — | $ | — | |||||||||||||||||||||||
| Forfeited | (2,679) | $ | 126.00 | |||||||||||||||||||||||
| Outstanding — December 31, 2025 | 56,586 | $ | 36.18 | 3.6 | $ | — | ||||||||||||||||||||
| Vested and expected to vest — December 31, 2025 | 56,586 | $ | 36.18 | 3.6 | $ | — | ||||||||||||||||||||
| Exercisable — December 31, 2025 | 41,636 | $ | 46.33 | 3.0 | $ | — | ||||||||||||||||||||
The weighted average grant date fair values of options granted during the years ended December 31, 2025 and 2024 were $6.69 per share and $16.68 per share, respectively.
The fair value of option awards are estimated on the date of grant using the Black-Scholes option pricing model. Expected volatility was based on historical volatility of the Company’s common shares. The expected term of options granted was based on the simplified method. The risk-free interest rate was based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The dividend yield assumption was based on the expectation of no future dividend payments. Option awards can be granted for a maximum term of up to ten years. The assumptions used in the Black-Scholes model were as follows:
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Expected volatility | 148.0 | % | 124.3-126.1% | ||||||||
| Expected term (in years) | 3.5 | 3.5 | |||||||||
| Risk-free interest rate | 4.0 | % | 4.1-4.6% | ||||||||
| Dividend yield | — | — | |||||||||
Restricted Stock Units
The following table summarizes RSU activity:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding — January 1, 2025 | 76,081 | $ | 19.83 | ||||||||
| Granted | 353,738 | $ | 6.91 | ||||||||
| Vested and released | (128,013) | $ | 9.87 | ||||||||
| Forfeited | (122,641) | $ | 12.80 | ||||||||
| Outstanding — December 31, 2025 | 179,165 | $ | 6.23 | ||||||||
| Vested and unreleased — December 31, 2025 | 8,983 | $ | 9.30 | ||||||||
The estimated fair value of RSUs was based on the closing market value of the Company’s common shares on the date of grant. RSUs typically vest over a period of one year to three years from the original date of grant. The total grant date fair value of RSUs vested during the years ended December 31, 2025 and 2024 was approximately $1.2 million and $2.3 million, respectively. The fair value of RSUs vested during the years ended December 31, 2025 and 2024 was approximately $0.8 million and $1.6 million, respectively. The intrinsic value of RSUs vested during the years ended December 31, 2025 and 2024 was $0.1 million and nil, respectively.
Restricted Stock Units with a Performance Condition
In July 2025, the Company entered into a financial advisory agreement and issued to nonemployees RSU grants with a performance condition. On the grant date, 50% of the RSUs were vested and common shares issued, and the remaining will vest upon achievement of a specific performance condition and expire 12 months from the date of grant. See Note 13 Commitments and Contingencies for more information on the related financial advisory agreement.
The following table summarizes RSU with performance condition activity:
| Number of Shares | Weighted Average Grant Date Fair Value | ||||||||||
| Outstanding — January 1, 2025 | — | $ | — | ||||||||
| Granted | 74,074 | $ | 6.25 | ||||||||
| Vested | (37,038) | $ | 6.25 | ||||||||
| Forfeited | — | $ | — | ||||||||
| Outstanding — December 31, 2025 | 37,036 | $ | 6.25 | ||||||||
The fair value of RSUs with a performance condition vested during the year ended December 31, 2025 was $0.2 million.
Restricted Stock Awards
During the year ended December 31, 2025, no restricted stock awards (“RSA”) were granted. During the year ended December 31, 2024, fully vested RSAs were granted to certain employees and consultants in lieu of cash payment for services performed. The estimated fair value of the RSAs was based on the market value of the Company’s common shares on the date of grant. The fair value of RSAs vested during the year ended December 31, 2024 was approximately $0.3 million.
Share-Based Compensation Expense
The following compensation expense related to share-based compensation awards was recorded (in thousands):
| Year Ended December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Total share-based compensation expense - general and administrative | $ | 832 | $ | 2,838 | |||||||
Total unrecognized estimated compensation cost by type of award and the weighted-average remaining requisite service period over which such expense is expected to be recognized (in thousands, unless otherwise noted):
| December 31, 2025 | |||||||||||
| Unrecognized Expense | Remaining Weighted-Average Recognition Period (years) | ||||||||||
| RSUs | $ | 880 | 1.3 | ||||||||
| Stock options | $ | 42 | 0.4 | ||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 27, 2026 | Showing above |
| 2024 | Mar 28, 2025 | |
| 2023 | Mar 13, 2024 | |
| 2022 | Mar 31, 2023 | |
| 2019 | May 14, 2020 | |
| 2018 | Apr 1, 2019 | |
| 2017 | Mar 21, 2018 | |
About Stock Compensation Disclosures
Stock-based compensation disclosures detail the equity awards granted to employees and executives — including stock options, restricted stock units (RSUs), and performance shares — along with the valuation methods and assumptions used to expense them. This section reveals the true cost of talent retention and the alignment between management incentives and shareholder interests.
Key signals: total unrecognized compensation expense and its expected recognition period signal future earnings headwinds from already-granted awards. For stock options, examine Black-Scholes assumptions — expected volatility, risk-free rate, and expected term — as understating any of these reduces reported compensation expense. Compare stock compensation expense as a percentage of revenue against peers to assess dilution cost. Watch vesting schedules for acceleration clauses tied to change-of-control events. Performance-based awards with undemanding targets may indicate weak governance. Add back stock compensation to operating cash flow to calculate a more conservative free cash flow figure.