Sphere 3D Corp (NASDAQ:ANY): What's Next?

Sphere 3D Corp (NASDAQ:ANY) has not made for a smooth ride for shareholders since we last took a look at the company. The company trades for a little over $0.12 a piece right now, having lost more than 60% of its market capitalization since year-open. During the last 30 days alone, it's down more than 33%.Action is not pretty and it's looking as though near-term things aren’t going to ease off. There's a special shareholder meeting set to take place on June 29, at which shareholders are going to vote on a number of things, most notably the a potential reverse split (or share consolidation, as management chose to go with in their filing wording) and the increasing of the number of shares available for issue to management as incentive plans by around 10.3 million, or circa 10% of the issued and outstanding common shares on a non-dilutive basis.An extra 10 million shares injected into the current base isn’t great. Neither is a reverse split; we've said it before and we'll say it again – no one wants a reverse split. With these things noted, however, there's a degree of necessity surrounding the whole situation. Necessity, that is; not desperation, at least not yet.As we noted last time we covered this company, it's in a transition period. For way too long it fell foul of a problem that frequently plagues companies in this space – a great product, decent sales, but a complete mismanagement of costs and a resulting downward spiral towards insolvency.At the end of last year, a large stakeholder, Cyrus Capital Partners, which holds a 28.3% stake in Sphere, stepped in to try and stop this spiral. Subsequent to this intervention, we’ve seen a number of changes implemented and – we think – what might be the start of a slow but steady recovery. An equity issue at the end of March pulled in $4.5 million. The company picked up a fresh contract worth $3 million rooted in the technology we highlighted last time and the product we referenced above. An April announcement saw Cheemin Bo-Linn appointed as Chairperson of the Board’s Audit Committee, and it was announced that she will also serve as a member of both the Compensation and the Nominating and Governance Committees. These are all areas that need strong guidance and this appointment is well placed to offer such.Importantly, mid-month May, we got some degree of insight into how the company has responded to the necessity for shakeup. As we have said, revenue isn’t an issue. The company generates pretty much double in dollar sales than its entire market cap, and the former is growing (while the latter shrinks). This time around, the number hit $21.7 million, versus a first quarter 2016 performance of $19.6 million revenues. It's costs that are the issue here, and how they translate to bottom line performance.And in this instance, things are moving in the right direction.During the first quarter of this year, Sphere recorded a net loss of $7.8 million. This compares to a net loss during the same period in 2016 of $8.1 million. It's also pretty much on par with the fourth quarter figure of $7.5 million.So that's a steady but sure step in the right direction. Don't get us wrong – we're not saying that this is a sure thing. There remain concerns very near term as to the implications of both sides of the special shareholder meeting outcome. A reverse split is going to weigh on sentiment, while a non-approval could lead to delisting. Added management incentive issue is going to dilute shareholders, while no extra incentive means (likely) larger cash compensation and cost pressures.With this said, however, if the company can get its ducks in a row, and there's a good chance it can, then it shouldn’t fall much further before bottoming and starting to recover.That is if another company doesn’t swoop in and acquire it before it can drag itself out of the ditch; something that we don't imagine shareholders would mind too much.For those interested, the exhibit filing (what matters) for the shareholder meeting is here.We will be updating our subscribers as soon as we know more. For the latest updates on ANY, sign up below!Disclosure: We have no position in ANY and have not been compensated for this article.