Cyrus Group of Funds Acquires Additional Common Shares of Sphere 3D Corporation

TORONTO, ONTARIO--(Marketwired - Dec. 17, 2015) - Cyrus Capital Partners, L.P. ("CCP") today announced that on December 15, 2015, as a result of an agreement to amend the debenture ("Debenture Amendment") issued by Sphere 3D Corporation ("Sphere 3D") to FBC Holdings Sàrl ("FBC"), CCP may acquire, on the conversion of the debenture ("Debenture"), indirect control and/or beneficial ownership over an additional 4,049,020 common shares of Sphere 3D ("Common Shares"), bringing the total number of Common Shares over which CCP may, upon conversion of the Debenture, acquire indirect control and/or beneficial ownership to 6,500,000 Common Shares.

CCP, through Cyrus Opportunities Master Fund II, Ltd., CRS Master Fund LP, Crescent 1 LP, Cyrus Select Opportunities Master Fund Ltd. (collectively, the "Funds") and FBC currently has indirect control over 6,097,087 Common Shares. CPP also has indirect control over 435,975 warrants exercisable into Common Shares ("Warrants") held by FBC. If FBC were to convert the Debenture and the Warrants on the date hereof, FBC and the Funds, would hold and CCP would indirectly control, on a partially diluted basis, an aggregate of 13,033,062 Common Shares, or approximately 25.6% of the issued and outstanding Common Shares. This is calculated on the basis that there would be 50,827,693 Common Shares of Sphere 3D issued and outstanding (comprised of the currently issued 41,011,718 Common Shares, plus the 2,880,000 Common Shares being issued under Sphere 3D's current equity offering, and including the 6,500,000 Common Shares issuable on the conversion of the Debenture and the 435,975 Common Shares issuable on the conversion of the Warrants).

FBC and Sphere 3D have executed the Debenture Amendment, an agreement to amend the Debenture. The Debenture Amendment lowers the conversion price of the Debenture from U.S.$7.50 and U.S.$8.50 per Common Share to U.S.$3.00 per Common Share.

The Debenture Amendment provides, on the condition that Sphere 3D provides to FBC subscription agreements evidencing the raise by Sphere 3D of at least U.S.$2,7500,000 in immediately available funds through the issuance of Common Shares and/or Warrants:

1. for the consent of FBC ("Consent") to Sphere 3D drawing the additional U.S.$5,000,000 available under the separate credit facility between Sphere 3D and FBC dated December 31, 2014, and amended on July 10,2015; and
2. for the reduction, as consideration for the Consent, of the prior conversion price applicable under the Debenture of U.S.$7.50 per Common Share as to U.S.$10,000,000 principal amount of the Debenture and U.S.$8.50 per Common Share as to U.S.$9,500,000 principal amount of the Debenture.

CPP, FBC and each of the Funds are joint actors in connection with the disclosure required by this press release.

For purposes of calculating the percentages of Common Shares owned by FBC and the Funds and indirectly controlled by CCP, CCP has assumed that there were 50,827,693 Common Shares outstanding at December 15, 2015, as explained in greater detail above.

Other Information

CCP acquired indirect control over, and FBC and the Funds acquired ownership of, the Common Shares that are the subject of this press release for investment purposes.

In connection with the investment by FBC and the Funds in the Common Shares, CCP may engage in communications with members of management and the board of directors of Sphere 3D, other current or prospective shareholders, industry analysts, existing or potential strategic partners or competitors, investment and financing professionals, sources of credit and other investors with respect to Sphere 3D. CCP intends to review FBC's and the Funds' investment in Sphere 3D on a continuing basis. Depending on various factors including, without limitation, Sphere 3D's financial position, the price levels of the Common Shares, conditions in the securities markets and general economic and industry conditions, CCP's, FBC's or the Funds' business or financial condition and other factors and conditions CCP deems appropriate, FBC and/or the Funds may in the future take such actions with respect to their investment in Sphere 3D as CCP deems appropriate including, without limitation, seeking additional board representation, making proposals to Sphere 3D concerning changes to the capitalization, ownership structure or operations of Sphere 3D, acquiring additional Common Shares, and/or selling or otherwise disposing of some or all of their Common Shares. In addition, CCP may formulate other purposes, plans or proposals regarding Sphere 3D or any of its securities to the extent deemed advisable in light of general investment and trading policies, market conditions or other factors or may change its intention with respect to any and all matters referred to in this press release.

Except as specifically indicated in this press release, neither the issuance of this press release in connection with the matters disclosed herein nor the anticipated filing by CCP of the corresponding "early warning" report required to be filed in accordance with applicable Canadian securities laws is an admission that an entity named or otherwise referred to in this press release owns or controls any described securities or is a joint actor with another entity named or otherwise referred to in this press release.

CCP's address and other contact information is set forth below. For further information, including to obtain a copy, once filed, of the "early warning" report required to be filed in accordance with applicable Canadian securities laws, contact CCP at the address specified below.