Replies to post #2192 on Sphere 3D Corp. (ANY)

[JB3729]

In response to your question -

Question is when do revenues commence and ramp up?

“This acquisition will quickly add breadth to our overall product portfolio, and fast tracks our transition to commercial operations with accretive revenue from day one.” said Sphere 3D’s CEO Peter Tassiopoulos

Sphere's cost of operations are ~ $500,000 a qtr. Sphere may be profitable in this current qtr.

From Cormark Securities -

With respect to Corel, we expect Sphere to start adding new subscribers in H2/14 under a conservative assumption that it will continue to build at a slow but steady pace to reach 10% penetration of the potential (Corel Office and PDF) opportunity three years out (2016) and a sustained 15% in five years (2018). We believe the broadening of Sphere’s relationship with Corel to address additional software applications would provide incremental upside to our estimates and valuation.

With respect to Overland, while Sphere has not disclosed the royalty rate that it generates for the license to its Glassware, we have conservatively assumed a rate of 7.5% on the revenue generated by Overland. We assume Overland has either begun or will be imminently selling the joint solutions (with Sphere Glassware) in Q1/C14 given Overland has publicly disclosed a target of $10-13 MM in revenue for its fiscal 2015 (June 2015) in connection with Sphere. As such, we have conservatively incorporated in our forecast the related royalties for Sphere based on Overland’s expected revenue target ($10-13 MM) while we expect this amount to triple in three years to reflect the contribution from Overland’s most recent acquisition, Tandberg Data, and then subsequently grow in line with the market at around 20% annually.

Lastly, we expect Sphere to start selling its own integrated Glassware solutions beginning in H2/14 where we expect the Company to eventually sell approximately 150 units annually at an average price of around $35K. All in, we are expecting Sphere to generate approximately $34 MM in 2016 and over $50 MM in 2018. But as you can likely figure out – given the technology – these initial commercial ramps do not even scratch the surface on the potential opportunity for Sphere.