After increasing revenue, troubled data technology company Overland Storage Inc. (Nasdaq: OVRL) has found a buyer.

Sphere 3D Corp. is buying the company for $81 million, and has agreed to loan Overland $5 million in the form of a note. After the deal closes, Overland will be a wholly-owned subsidiary of Sphere.

Overland, headquartered in San Diego, California, develops data-protection services that are used by businesses for backup and recovery. Ontario, Canada-based Sphere develops technology to access software from smartphones, tablets or desktops.

The two companies have been working together on a data-storage platform and to develop virtual-desktop infrastructure. 

The purchase price works out to $4.43 per share. Overland's stock closed at $2.90 on May 14, before the deal was announced. The transaction is subject to a no-shop restriction, and if Overland terminates the deal, it is required to pay Sphere a $3.5 million fee.

The proposal comes after Overland completed the $49 million acquisition of Tandberg Data, a data storage company, in January.

Overland's revenue was $20.2 million the quarter ended March 31, up from $11.6 million for the same quarter of 2013. Product revenue for the quarter was $15.8 million, compared with $6.9 million for the same quarter in 2013.

As of March 31, the company's assets stood at $13.2 million, and liabilities at $10.9 million, attributed partially to the $7.7 million increase in accounts receivable and $5.7 million increase in inventory related to the Tandberg acquisition.

The company has been incurring losses since 2006, and as of March 31, had an accumulated deficit of $147.9 million. Recurring losses and negative cash flows raised substantial doubt about Overland's ability to continue as a going concern, or without the threat of liquidation, Overland's accountant, Moss Adams LLP, said in a Sept. 18 filing with the U.S. Securities and Exchange Commission. 

In the Sept. 18 filing, the company said it expected to have enough cash to operate for the next 12 months, but that it could have problems repaying convertible notes that it sold in February 2013, when they come due in February 2017. Overland also noted that in order to return to profitability, the company would need to improve profit margins and could need to implement cost-reduction efforts.

For more on Overland, see "Despite Acquisition and Private Placement, Overland is Still Troubled." For the previous edition of Turnaround Tuesday, see "NXT Energy Pursues Clients Abroad to Boost Revenue.

For more struggling companies, see Mergers & Acquisitions Distressed Company Watch List. 

Subscribe Now

Complete access to real-time information and analysis of news and trends in the industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.