SharonAI Holdings Inc. (NASDAQ: SHAZ) logs $430M Q2 net loss amid big AI bets
SharonAI Holdings Inc. reported Q2 2026 revenue of $1,931,381, up approximately 412% from $376,984 a year earlier as GPU infrastructure services ramped. Six‑month revenue reached $2,225,396.
The company posted a Q2 net loss of $430,368,696 and a six‑month net loss of $450,380,518, driven largely by a $400,440,855 fair value loss on December 2025 convertible notes, a $6,138,775 warrant liability remeasurement and interest expense. Basic and diluted EPS were $(22.84) for the quarter.
Liquidity expanded sharply: cash and cash equivalents rose to $1,861,347,822 and total assets to $2,321,338,209, funded by $2,044,174,430 of net cash from financing, including $350 million and $700 million Convertible Senior Notes and about $900 million of equity and pre‑funded warrant proceeds. The company is committing substantial capital to long‑term AI infrastructure, including a $1.26 billion ESDS services arrangement with expected $720.0 million of equipment capex, a $950 million customer contract tied to about $400 million of hardware, a six‑year NVIDIA collaboration with approximately $4 billion of planned hardware procurement, and subsequent cloud agreements valued at $1.32 billion and $373 million.
Positive
- Revenue growth: Q2 2026 revenue rose to $1,931,381 from $376,984 in Q2 2025, an increase of approximately 412%, reflecting new customers and expansion of GPU infrastructure services.
- Strengthened liquidity: Cash and cash equivalents increased to $1,861,347,822 at June 30, 2026, supported by $2,044,174,430 of net cash from financing activities, including major equity and convertible note issuances.
- Large AI and cloud contracts: Disclosed multi‑year agreements include a $1.26 billion ESDS services arrangement, a $950 million customer contract, and subsequent cloud deals of $1.32 billion and $373 million, positioning future revenue pipelines.
- Strategic NVIDIA collaboration: A six‑year AI infrastructure compute collaboration with NVIDIA includes plans to deploy up to 40,000 Grace Blackwell GB300 GPUs and approximately $4 billion of related hardware procurement.
Negative
- Large net losses: Q2 2026 net loss was $430,368,696 and six‑month loss was $450,380,518, driven by a $400,440,855 fair value loss on convertible notes, warrant remeasurement and interest expense.
- High leverage: Convertible notes totaled $1,006,535,059 at June 30, 2026, including $350 million 6.00% notes due 2031 and $700 million 4.75% notes due 2032, increasing fixed obligations.
- Significant future commitments: The company disclosed substantial hardware and data center commitments, including $720.0 million of expected ESDS‑related capex, about $400 million of additional hardware, approximately $4 billion for NVIDIA infrastructure, and a $623 million NEXTDC capacity agreement.
- Substantial dilution: Class A Ordinary Common Stock outstanding rose to 35,667,164 shares at June 30, 2026 from 11,832,164 at December 31, 2025, reflecting note conversions and equity/pre‑funded warrant issuances.
Filing Explained
At June 30, 35,667,164 shares were outstanding; 6,374,823 pre-funded warrants and $1,006,535,059 of convertible notes remained additional equity or debt exposure.
The Form 10-Q is an unaudited quarterly report for the quarter ended
Class A shares outstanding increased from 11,832,164 at
The company also issued 8,430,784 shares when approximately
At
Key Figures
Key Terms
reverse recapitalization financial
GPU-as-a-Service (GPUaaS) technical
pre-funded warrants financial
Convertible Senior Notes financial
Equipment-as-a-Service (EaaS) financial
AI Factory technical
Earnings Snapshot
AI-generated analysis. How Rhea-AI works. Not financial advice.
FAQ
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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(Mark One)
For
the quarterly period ended
or
For the transition period from ________________ to ________________
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
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has been subject to such filing requirements for the past 90 days.
Indicate
by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
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| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
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As
of August 5, 2026, the issuer had a total of
SHARONAI HOLDINGS INC.
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2026
TABLE OF CONTENTS
| Item | Number | ||
| Part I – Financial Information | |||
| Item 1. | Financial Statements | 3 | |
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 24 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risks | 36 | |
| Item 4. | Controls and Procedures | 36 | |
| Part II – Other Information | |||
| Item 1. | Legal Proceedings | 38 | |
| Item 1A. | Risk Factors | 38 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 40 | |
| Item 3. | Defaults Upon Senior Securities | 40 | |
| Item 4. | Mine Safety Disclosures | 40 | |
| Item 5. | Other Information | 41 | |
| Item 6. | Exhibits | 41 | |
| Signatures | 42 |
| - 2 - |
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
SHARONAI HOLDINGS INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Trade and other receivables | ||||||||
| Convertible note proceeds receivable | - | |||||||
| Assets held for sale | ||||||||
| Other current assets | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Right of use assets, net | ||||||||
| Equipment, software and lease prepayments | - | |||||||
| Certificates of deposits | ||||||||
| Other long-term assets | ||||||||
| Goodwill | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | $ | $ | ||||||
| Customer deposits | - | |||||||
| Warrant liability | ||||||||
| Note payable | ||||||||
| Convertible notes, current portion | ||||||||
| Finance lease liabilities, current portion | ||||||||
| Other current liabilities | - | |||||||
| Total current liabilities | ||||||||
| Convertible notes, non-current | - | |||||||
| Finance lease liabilities, non-current | ||||||||
| TOTAL LIABILITIES | ||||||||
| Stockholders’ equity (deficit): | ||||||||
| Common Stock- Class A ($ | ||||||||
| Common Stock- Class B ($ | ||||||||
| Common Stock, value | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Noncontrolling interest | ( | ) | ( | ) | ||||
| TOTAL STOCKHOLDERS’ EQUITY (DEFICIT) | ( | ) | ||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | $ | $ | ||||||
See accompanying Notes to Consolidated Condensed Financial Statements.
| - 3 - |
SHARONAI HOLDINGS INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | $ | $ | $ | $ | ||||||||||||
| Cost of revenue | ||||||||||||||||
| Gross profit (loss) | ( | ) | ( | ) | ||||||||||||
| Share-based compensation | ||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||
| Other expenses | ||||||||||||||||
| Gain on disposal of property and equipment | - | ( | ) | - | ( | ) | ||||||||||
| Loss from operations | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non-operating income (expense), net: | ||||||||||||||||
| Change in fair value of digital assets | - | ( | ) | - | ( | ) | ||||||||||
| Change in fair value of warrant liabilities | ( | ) | - | ( | ) | - | ||||||||||
| Change in fair value of convertible notes | ( | ) | - | ( | ) | - | ||||||||||
| Change in fair value of share-based payment | - | - | ||||||||||||||
| Gain on investment in NUAI shares | - | - | ||||||||||||||
| Gain on sale of investment in TCDC | - | - | ||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Loss before income taxes | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Income tax (expense) benefit | ( | ) | ( | ) | ||||||||||||
| Net loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to SharonAI Holdings Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss per share, basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Weighted-average number of shares outstanding | ||||||||||||||||
See accompanying Notes to Consolidated Condensed Financial Statements.
| - 4 - |
SHARONAI HOLDINGS INC.
CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Net loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss attributable to SharonAI Holdings Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Foreign currency translation adjustments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss attributable to noncontrolling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other comprehensive loss attributable to SharonAI Holdings Inc. | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive loss attributable to SharonAI Holdings Inc. | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
See accompanying Notes to Consolidated Condensed Financial Statements.
| - 5 - |
SHARONAI HOLDINGS INC.
CONSOLIDATED CONDENSED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(Unaudited)
Three Months Ended June 30, 2026
| # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Common
Stock- Class A | Common
Stock- Class B | Options
Reserve | Additional
Paid-In Capital | Accumulated
deficit | Accumulated
Comprehensive Loss (AOCI) | Total
SharonAI Holdings Inc.’s Equity | Non
Controlling Interest | Total
Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
| # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
| Issuance of common stock | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of pre-funded warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Offering costs | - | - | - | - | - | - | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||
| Equity adjustment from Foreign Currency Translation (CTA) | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | - | - | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2025
| # | $ | # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred | Series B Preferred | Common Stock- Class A | Options Reserve | Additional Paid-In Capital | Accumulated deficit | Accumulated Comprehensive Loss (AOCI) | Total SharonAI Holdings Inc.’s Equity | Non Controlling Interest | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| # | $ | # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Equity adjustment from Foreign Currency Translation (CTA) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2026
| # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Common Stock- Class A | Common Stock- Class B | Options Reserve | Additional Paid-In Capital | Accumulated deficit | Accumulated Comprehensive Loss (AOCI) | Total SharonAI Holdings Inc.’s Equity | Non Controlling Interest | Total Stockholders’ Equity | ||||||||||||||||||||||||||||||||||||||||
| # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | - | ( | ) | ( | ) | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||
| Issuance of common stock | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Issuance of pre-funded warrants | - | - | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||
| Offering costs | - | - | - | - | - | - | ( | ) | - | - | ( | ) | - | ( | ) | |||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | - | |||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Equity adjustment from Foreign Currency Translation (CTA) | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||
| Balance at June 30, 2026 | - | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2025
| # | $ | # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Series A Preferred | Series B Preferred | Common Stock- Class A | Options Reserve | Additional Paid-In Capital | Accumulated deficit | Accumulated Comprehensive Loss (AOCI) | Total SharonAI Holdings Inc.’s Equity | Non Controlling Interest | Total Stockholders’ Equity | |||||||||||||||||||||||||||||||||||||||||||||||
| # | $ | # | $ | # | $ | # | $ | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share based compensation | - | - | - | - | - | - | ( | ) | - | - | - | - | ||||||||||||||||||||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | - | - | ( | ) | - | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Equity adjustment from Foreign Currency Translation (CTA) | - | - | - | - | - | - | - | - | - | - | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||||||||||||||||||||||||||||||||
| Balance at June 30, 2025 | - | ( | ) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
See accompanying Notes to Consolidated Condensed Financial Statements.
| - 6 - |
SHARONAI HOLDINGS INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
| 2026 | 2025 | |||||||
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
| Net loss for the period, including noncontrolling interest | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Share based compensation | ||||||||
| Change in fair value of digital assets | - | |||||||
| Intangible assets (FIL) revenue | - | ( | ) | |||||
| Intangible assets (FIL) cost of revenue | - | |||||||
| Accelerated amortization of Intangible assets | - | |||||||
| Deferred tax liability | - | |||||||
| Unrealized (gains) losses on foreign currency exchange | ( | ) | ||||||
| Change in fair value of warrant liability | - | |||||||
| Change in fair value of convertible notes | - | |||||||
| Gain on investment in NUAI shares | ( | ) | - | |||||
| Gain on sale of investment in TCDC | ( | ) | - | |||||
| Gain on sale of property and equipment | - | ( | ) | |||||
| Bad debt expense | - | |||||||
| Changes in assets and liabilities: | ||||||||
| Trade and other receivables | ( | ) | ||||||
| Customer deposits | - | |||||||
| Other current assets | ( | ) | ( | ) | ||||
| Other long-term assets | ( | ) | ||||||
| Trade and other payables | ( | ) | ||||||
| Income tax payable | - | |||||||
| Net cash provided by (used in) operating activities | ( | ) | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
| Advance payments for property and equipment | ( | ) | - | |||||
| Purchase of certificates of deposit | ( | ) | - | |||||
| Payment for the purchase of property and equipment | ( | ) | ( | ) | ||||
| Investment in a joint venture | ( | ) | - | |||||
| Cash proceeds from sale of TCDC investment | - | |||||||
| Proceeds from sale of NUAI Shares | - | |||||||
| Proceeds from convertible note receivable | - | |||||||
| Proceeds from sales of digital assets | - | |||||||
| Net cash provided by (used in) investing activities | ( | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Proceeds from issuance of common stock | - | |||||||
| Cash received from convertible note issuance | - | |||||||
| Issuance costs related to capital raise | ( | ) | - | |||||
| Proceeds from exercise of warrants | - | |||||||
| Proceeds from issuance of pre-funded warrants | - | |||||||
| Payment for lease liabilities | ( | ) | ( | ) | ||||
| Repayment of note payable | ( | ) | - | |||||
| Net cash provided by (used in) financing activities | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net cash increase/(decreases) in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
Refer to Note 19 for the supplemental cash flows information.
See accompanying Notes to Consolidated Condensed Financial Statements.
| - 7 - |
SHARONAI HOLDINGS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Description of Business
Unless otherwise stated in this Notes to Consolidated Condensed Financial Statements, references to “we,” “us,” “our,” “Company” or “our Company” are to SharonAI Holdings Inc. and its subsidiaries.
The consolidated condensed financial statements cover SharonAI Holdings Inc. (“the Company” or “SAI”) and its controlled entities (“the Group”).
SharonAI Inc. (“SA Inc.”) is a digital infrastructure provider, incorporated in the state of Delaware in the United States of America on February 15, 2024.
On April 29, 2024, SA Inc. and Alternative Asset Management Pty Ltd (“AAM”), who had identical ownership interest as SA Inc., completed a share exchange. AAM did not have business operations but owned digital infrastructure assets, including GPU servers and related equipment that had historically supported cryptocurrency mining activities and were subsequently utilized in the Company’s AI and high-performance computing (“HPC”) infrastructure business. Pursuant to the transaction there was no change in relative voting interest amongst the existing shareholders of both entities. See Note 2- principles of consolidation for additional reporting considerations for the share exchange.
On June 30, 2024, SA Inc. acquired the majority equity interest of Distributed Storage Solutions Limited (“DSS”). DSS is a cloud storage provider providing robust data storage infrastructure in the Filecoin network with additional focus on high performance computing (“HPC”) and artificial intelligence (“AI”), which was determined to be a business combination.
In
January of 2025,
On January 28, 2025, the Company entered into a Business Combination Agreement (“BCA”) with Roth CH Acquisition Co. (“Roth”) and subsequently on October 21, 2025 filed an S-4 registration statement in participation with Roth with the Securities and Exchange Commission (“SEC”).
On June 9, 2025, the Company made a strategic decision to cease its participation in the operations associated with the Filecoin ecosystem in order to focus its resources and efforts on the continued growth of its high-performance GPU-as-a-Service (GPUaaS) business. This decision aligns with the Company’s long-term strategy to concentrate on providing scalable, on-demand computing infrastructure for AI, research, and other data-intensive applications.
As of June 30, 2025, all activities related to the Company’s prior Filecoin-related operations had been fully wound down. This transition reflects a broader shift toward infrastructure services with more predictable and scalable revenue opportunities and supports the Company’s goal of building a focused, capital-efficient technology services platform.
On
December 17, 2025, the Company completed its previously announced business combination pursuant to the Business Combination Agreement
dated January 28, 2025, as amended, with Roth and Roth CH Holdings Inc. In connection with the closing, Roth domesticated from the Cayman
Islands to the State of Delaware by merging into Roth CH Holdings Inc., which subsequently changed its name to SharonAI Holdings Inc.
Immediately following the domestication, SharonAI Inc. merged with a subsidiary of SharonAI Holdings Inc., with SharonAI Inc. surviving
the merger as a wholly owned subsidiary of SharonAI Holdings Inc. As a result of the transaction, former equity holders of SharonAI Inc.
received an aggregate of
| - 8 - |
For accounting purposes, the transaction was treated as a reverse recapitalization, with SharonAI Inc. determined to be the accounting acquirer and Roth treated as the acquired entity. See Note 2 - principles of consolidation to the consolidated condensed financial statements for additional information regarding the accounting treatment of the business combination.
Following the closing of the business combination, the Class A Ordinary Common Stock and warrants of SharonAI Holdings Inc. began trading on the OTC Market under the ticker symbols “SHAZ” and “SHAZW,” respectively.
In February 2026, SharonAI Holdings Inc. completed its initial public offering and listed its Class A Ordinary Common Stock on the Nasdaq Stock Market.
Note 2. Summary of Significant Accounting Policies
Basis of presentation
The accompanying unaudited consolidated condensed financial statements have been prepared in accordance with U.S. GAAP for interim financial information and the applicable rules and regulations of the SEC. Accordingly, they do not include all of the information and disclosures required for complete annual financial statements. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included. These unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.
Principles of consolidation
On December 17, 2025, the Company completed a business combination with Roth pursuant to the Business Combination Agreement. Following the transaction, SharonAI Inc. became a wholly owned subsidiary of SharonAI Holdings Inc. For accounting purposes, the transaction was treated as a reverse recapitalization in accordance with Accounting Standards Codification (ASC) 805-40, Business Combinations- Reverse Acquisitions. Under this method of accounting, SharonAI Inc. was determined to be the accounting acquirer and Roth was treated as the acquired entity for financial reporting purposes. Accordingly, the transaction was accounted for as a capital transaction, with no recognition of goodwill or other intangible assets. The net assets of Roth were recorded at historical cost, and the consolidated financial statements reflect the historical financial position and results of operations of SharonAI Inc. prior to the transaction.
On
December 23, 2025, we (i) effected a
| - 9 - |
For all other business combinations, the Group’s consolidated financial statements include the financial position and performance of controlled entities from the date on which control is obtained until the date that control is lost. For all periods presented, the consolidated financial statements include the Group.
All inter-company transactions are eliminated in consolidation.
Reclassifications
Certain reclassifications have been made to the prior period consolidated financial statements to conform to the current year presentation. These reclassifications had no impact on the previously reported net loss and accumulated deficit
Use of estimates
The preparation of consolidated condensed financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and related disclosures of contingent assets and liabilities. Actual results could differ from those estimates.
Foreign currency translation
The financial statements of the Group’s subsidiaries with functional currencies other than the U.S. dollar are translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical exchange rates for stockholders’ equity and weighted average exchange rates for operating results. Translation gains and losses are included in accumulated other comprehensive (loss) income in stockholders’ equity.
Financial instruments
Financial instruments are recognized initially on the date that the Group becomes party to the contractual provisions of the instrument. The carrying amounts cash and cash equivalents and certificates of deposit approximate fair value due to the short-term nature of these instruments.
The Company has elected the fair value option for its December 2025 convertible notes in accordance with ASC 825. These instruments are initially recorded at fair value and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in earnings, except for changes attributable to instrument-specific credit risk, which are recognized in other comprehensive income. Refer to Note 13- Convertible Notes and Note 18- Fair Value Measurements for additional information, including the fair value hierarchy classification.
Note 3. Revenue
Schedule of Revenue
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Revenue | ||||||||||||||||
| Digital asset mining revenue | $ | - | $ | $ | - | $ | ||||||||||
| Provision of GPU Infrastructure services | ||||||||||||||||
| Other | - | |||||||||||||||
| Total Revenue | $ | $ | $ | $ | ||||||||||||
The Company generates revenue primarily from the provision of GPU infrastructure services. Revenue is recognized in accordance with ASC 606, Revenue from Contracts with Customers, when control of the promised services is transferred to customers in an amount that reflects the consideration the Company expects to receive.
Revenue from GPU infrastructure services is generally recognized over time as customers simultaneously receive and consume the benefits of the Company’s computing infrastructure services. The Company measures progress using the passage of time or usage of the contracted services, as appropriate under the terms of each customer agreement.
For the comparative 2025 periods, revenue also included digital asset mining activities, which ceased during 2025 following the Company’s strategic transition to GPU infrastructure services.
| - 10 - |
Note 4. Income Tax
The
Company’s effective income tax rate was (
The
effective income tax rate for the three and six months ended June 30, 2026 differed from the
Note 5. Certificates of Deposit
At
June 30, 2026, the Company held certificates of deposit (CDs) totaling $
Note 6. Trade and Other Receivables
Schedule of Trade and Other Receivables
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Trade receivables | $ | $ | ||||||
| Goods and services tax (GST) receivable | ||||||||
| Total trade and other receivables | $ | $ | ||||||
| - 11 - |
Note 7. Convertible notes receivable
In
January 2026, in connection with the sale of the Company’s
The
Company recorded the note at fair value upon issuance, which approximated its principal amount, and subsequently accounts for the instrument
at amortized cost under ASC 310. Management evaluated the embedded conversion feature under ASC 815 and concluded that the estimated
fair value of the embedded derivative was not material to the consolidated condensed financial statements. For the three months ended
June 30, 2026, the Company recognized approximately $
On April 24, 2026, NUAI repaid the full outstanding principal balance and accrued interest in cash, and no conversion rights were exercised.
Note 8. Investment in NUAI shares
As part of the consideration received from the sale of Texas Critical Data Centers, LLC (“TCDC”), the Company received common shares of New Era Energy & Digital Inc. (“NUAI”), which were initially measured at fair value based on the quoted market price on the transaction date. Management concluded that no liquidity or marketability discount was necessary as the shares were traded in an active market with sufficient trading volume to support orderly disposition without materially impacting market price. The investment is subsequently remeasured using quoted market prices in an active market, with changes in fair value recognized in earnings.
On
May 14, 2026, the Company sold all of its NUAI common shares for $
Note 9. Property and Equipment and Right of Use Assets
Schedule of Property and Equipment
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Computer equipment | ||||||||
| At cost | $ | $ | ||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total computer equipment | ||||||||
| Electrical equipment | ||||||||
| At cost | - | |||||||
| Accumulated depreciation | ( | ) | - | |||||
| Total electrical equipment | - | |||||||
| Capitalized software | ||||||||
| At cost | - | |||||||
| Accumulated amortization | ( | ) | - | |||||
| Total capitalized software | - | |||||||
| Other equipment | ||||||||
| At cost | ||||||||
| Accumulated depreciation | ( | ) | ( | ) | ||||
| Total other equipment | ||||||||
| Total property and equipment, net | $ | $ | ||||||
| Right of use assets | ||||||||
| At cost | ||||||||
| Accumulated amortization | ( | ) | ( | ) | ||||
| Total right of use assets, net | ||||||||
| Total property and equipment, net including right of use assets | $ | $ | ||||||
Depreciation
and amortization expense related to property and equipment amounted to $
| - 12 - |
Note 10. Equipment, Software and Lease Prepayments
Equipment, software and lease prepayments represent advance payments for goods and services to be received in future periods. As of June 30, 2026, prepayments primarily relate to deposits and milestone payments for high-performance computing equipment with WWT Australia Pty Ltd, down payments under an Equipment-as-a-Service (EaaS)/Device-as-a-Service (DaaS) arrangement with Lenovo Global Financial Services (Australia & New Zealand) Pty Limited, and prepayments to Dicker Data Limited for VAST Data software.
As of June 30, 2026, equipment, software and lease prepayments consisted of:
Schedule Of Equipment Software Lease Payment
| ● | WWT
Australia Pty Ltd – $ | |
| ● | Lenovo
Global Financial Services (Australia & New Zealand) Pty Limited – $ | |
| ● | Dicker
Data Limited (VAST Data software) – $ |
Prepayments associated with hardware, software, and managed services arrangements will be recognized as property and equipment, capitalized software, or leases as the underlying assets are delivered and placed into service or as services are rendered.
Note 11. Other expenses
Other expenses consisted primarily of depreciation and amortization expense and foreign currency transaction gains and losses.
For the three months ended June 30, 2026, other expenses
totaled $
For the six months ended June 30, 2026, other expenses
totaled $
For the three months ended June 30, 2025, other expenses
totaled $
For the six months ended June 30, 2025, other expenses
totaled $
Note 12. Warrant Liability
The
Company accounts for the
| - 13 - |
Note 13. Convertible Notes
The following table summarizes the carrying amounts of the Company’s convertible notes as of June 30, 2026 and December 31, 2025.
Schedule of Convertible Notes
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Description | ||||||||
| December 2025 convertible notes- current | $ | |||||||
| May 2026 convertible notes- noncurrent | - | |||||||
| June 2026 convertible notes- noncurrent | - | |||||||
| Total | $ | $ | ||||||
December 2025 Convertible Notes
On
December 17, 2025, the Company issued $
On
December 19, 2025, SharonAI, Inc. and SharonAI Pty Ltd (collectively, the “Company”) issued unsecured redeemable convertible
notes with an aggregate principal amount of approximately $
The
Convertible Notes accrue interest at
The Company elected the fair value option under ASC 825 for the Convertible Notes. The notes are initially recorded at fair value and subsequently remeasured at each reporting date, with changes in fair value recognized in earnings, except for changes attributable to instrument-specific credit risk, which are recognized in other comprehensive income.
On
June 11, 2026, the Company issued
During
the six months ended June 30, 2026, the Company recognized $
May 2026 Convertible Notes
On
May 18, 2026, the Company issued $
These
notes are convertible into the Company’s Class A ordinary common stock at an initial conversion price of $
The Company evaluated the embedded features of the May 2026 Convertible Senior Notes under ASC 815 and concluded that the conversion feature qualifies for the equity scope exception and does not require bifurcation. Accordingly, these notes are accounted for as a single debt instrument. Debt issuance costs are recorded as a direct deduction from the carrying amount of the notes and are amortized to interest expense using the effective interest method over the contractual term of the notes.
| - 14 - |
June 2026 Convertible Notes
On
June 22, 2026, the Company issued $
The
notes are convertible into the Company’s Class A ordinary common stock at an initial conversion price of approximately $
Note 14. Leases
The
Company leases GPU and associated computer and networking equipment under non-cancelable finance lease agreements. Lease terms generally
range from
Lease cost
The components of lease cost were as follows:
Schedule of Lease Cost
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended |
|||||||||||||||
| June 30, | June 30, |
|||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Description | ||||||||||||||||
| Finance lease - interest | $ | $ | $ | $ | ||||||||||||
| Finance lease - amortization | $ | $ | $ | $ | ||||||||||||
| Total Lease Cost | $ | $ | $ | $ | ||||||||||||
Maturity analysis of lease liabilities
Future minimum lease payments at June 30, 2026 and December 31, 2025 are as follows:
Schedule of Future Minimum Lease Payments
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Description | ||||||||
| 2026 | ||||||||
| 2027 | ||||||||
| 2028 | ||||||||
| 2029 | ||||||||
| 2030 | ||||||||
| 2031 | - | |||||||
| Total | ||||||||
| Less: Imputed interest | ||||||||
| Present value of lease liabilities | $ | $ | ||||||
| - 15 - |
Other information
Schedule of Other Information of Lease
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| Weighted-average remaining lease term (years) | ||||||||
| Weighted-average discount rate | % | % | ||||||
| ROU assets obtained in exchange for ROU Liability | $ | $ | ||||||
| Operating cash impact of finance leases | $ | $ | ) | |||||
Note 15. Pre-funded Warrants
On
June 17, 2026, the Company entered into Securities Purchase Agreements with certain qualified institutional and accredited investors
in connection with a private placement of
Each
Pre-Funded Warrant was issued at a purchase price of $
The
exercise of the Pre-Funded Warrants is subject to certain beneficial ownership limitations. Prior to obtaining stockholder approval,
a holder generally may not exercise the warrants to the extent such exercise would result in beneficial ownership exceeding
Management evaluated the Pre-Funded Warrants under ASC 480, Distinguishing Liabilities from Equity, and ASC 815-40, Derivatives and Hedging- Contracts in Entity’s Own Equity, and concluded that the Pre-Funded Warrants qualify for equity classification. Accordingly, the proceeds allocated to the Pre-Funded Warrants, net of the related allocated issuance costs, were recorded within additional paid-in capital. Offering costs were allocated between the common shares issued and the Pre-Funded Warrants based on their relative fair values.
For earnings per share purposes, the Pre-Funded Warrants are included in the calculation of basic earnings per share because the exercise price is nominal and there are no substantive exercise contingencies.
| - 16 - |
Note 16. Share-Based Compensation
The
Group grants Options and Restricted Stock Units (RSUs) under the 2025 Omnibus Equity Incentive Plan (the “2025 Plan”)
and has historical grants registered under the 2024 Equity Incentive Plan (the “2024 Plan”) to Board Members, Advisory
Board Members, Employees and Contractors. The grants have a combination of performance-based and time-based hurdles and vesting
periods. On January 16, 2025, the Group granted
As of June 30, 2026,
Stock Option Activity
Schedule of Stock Option Activity
| Activity | Number of Options | Weighted-Average Exercise Price | Weighted-Average Remaining Contractual Term (Years) | Aggregate Intrinsic Value | ||||||||||||
| Outstanding at December 31, 2025 | - | |||||||||||||||
| Granted | - | |||||||||||||||
| Exercised | - | |||||||||||||||
| Forfeited | ( | ) | ||||||||||||||
| Outstanding at June 30, 2026 | $ | |||||||||||||||
| Exercisable at June 30, 2026 | $ | |||||||||||||||
Restricted Stock Units (RSUs)
Schedule of Performance-Based RSUs Activity
| Activity | Performance-Based RSUs | Weighted-Average Grant Date Aggregate Fair Value | ||||||
| Balance as of December 31, 2025 | ||||||||
| Granted | ||||||||
| Vested1 | ( | ) | ( | ) | ||||
| Vested in prior periods | ||||||||
| Forfeited | ( | ) | ( | ) | ||||
| Unvested at June 30, 2026 | ||||||||
| (1) |
At
June 30, 2026, compensation costs related to these unvested stock-based compensation awards not yet recognized in the consolidated condensed
statements of operations was $
| - 17 - |
Note 17. Employee Benefit Plan
The
Group’s employees that are located in Australia participate in a Superannuation defined contribution scheme. Superannuation is
Australia’s mandatory retirement savings system, requiring employers to contribute
Note 18. Fair Value Measurement
The Group measures the following assets and liabilities at fair value on a recurring basis:
The Group’s recurring fair value measurements include the following:
| ● | Convertible notes – measured at fair value under the fair value option | |
| ● | Warrant liability – measured at fair value |
Fair value hierarchy
ASC Topic 820, Fair Value Measurement and Disclosures (“ASC Topic 820”) requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC 820 established a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used to measure fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. ASC Topic 820 prioritizes the inputs into three levels that may be used to measure fair value:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices that are observable for the asset or liability such as quote prices for similar assets or liabilities in active markets; quoted prices for identical assets in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which significant inputs are observable or can be derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are significant to the measurement of the fair value of the assets or liabilities.
| - 18 - |
The table below shows the assigned level for each asset and liability held at fair value by the Group:
Schedule of Assigned Level for Each Asset and Liability Held at Fair Value
| Fair value hierarchy | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| As of June 30, 2026 | ||||||||||||||||
| Recurring fair value measurements | ||||||||||||||||
| Convertible notes | $ | - | - | $ | $ | |||||||||||
| Warrant liability | - | - | ||||||||||||||
| As of December 31, 2025 | ||||||||||||||||
| Recurring fair value measurements | ||||||||||||||||
| Convertible notes | - | - | ||||||||||||||
| Warrant liability | - | - | ||||||||||||||
The Group elected the fair value option for its December 2025 convertible notes. The fair value of the convertible notes was determined using valuation techniques appropriate for the remaining outstanding instruments at the measurement date. The valuation incorporated significant unobservable inputs, including assumptions related to the remaining conversion features, market conditions, and other factors specific to the instruments. Because these inputs required significant management judgment, the convertible notes were classified within Level 3 of the fair value hierarchy. The following table presents the rollforward of the Level 3 convertible notes, including fair value adjustments recognized in earnings, contractual interest expense, conversions into common shares, and foreign currency translation effects during the period.
Schedule of Convertible Notes Including Fair Value Adjustments
| Level 3 December 2025 Convertible Notes | For the Six Months Ended June 30, 2026 | |||
| Balance at January 1, 2026 | ||||
| Fair value adjustments recognized in earnings | ||||
| Contractual interest expense recognized before conversion | ||||
| Conversions into common shares | ( | ) | ||
| Effect of currency translation | ||||
| Balance at June 30, 2026 | ||||
At June 30, 2026, the Company had outstanding Convertible Senior Notes measured at amortized cost using the effective interest method. The estimated fair value of the notes approximated their carrying amount as of June 30, 2026. The estimated fair value is classified within Level 2 of the fair value hierarchy because it is based on observable market inputs for similar debt instruments.
The warrant liability is classified within Level 1, as it is measured using quoted market prices in an active market.
There were no transfers between Levels 1, 2, or 3 during the quarter ended June 30, 2026 or year ended December 31, 2025.
Note 19. Supplemental Disclosure of Cash Flow Information
Schedule of Supplemental Disclosure of Cash Flow Information
| 2026 | 2025 | |||||||
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Supplemental information: | ||||||||
| Cash paid for interest | $ | $ | ||||||
| Cash paid for taxes | ||||||||
| Non-cash investing and financing activities: | ||||||||
| ROU assets obtained in exchange for lease liability | - | |||||||
| Gain on sale of modular data centre (MDC) | - | |||||||
| Gain on sale of storage servers | - | |||||||
| Assets held for Sale- rerecognize MDC | - | |||||||
| Bad debt expense related to MDC sale | - | ( | ) | |||||
| Issuance of common stock for settlement of trade and other payables | - | |||||||
| Conversion of convertible notes through the issuance of common shares | - | |||||||
Note 20. Commitments
Hardware Procurement
In connection with the $
In
May 2026, the Company entered into a cloud computing infrastructure agreement with a global technology company with a major
Asia-Pacific presence, valued at approximately $
In June 2026, the
Company entered into a six-year AI infrastructure compute collaboration with NVIDIA (NASDAQ: NVDA).In
connection with this agreement, the Company has committed to procure additional high-performance computing hardware and related infrastructure
for approximately $
| - 19 - |
Data Center Services Commitment
At June 30, 2026, the Company has remaining contracted capacity of 132 MW, including a 15 MW commitment under a long-term data center services agreement entered into in March 2026 with GreenSquareDC Entity for a facility located in Australia. The 15 MW arrangement has an initial term of 120 months from the Ready-for-Service date (targeted September 26, 2026), with monthly recurring fees based on contracted kilowatt capacity.
In July 2026, the Company executed an amended
and restated service order with NEXTDC for 72 MW of data center capacity in Australia.
The Company has also secured additional data center capacity in New Zealand for 14MW to support the deployment of cloud computing infrastructure under a long-term customer service agreement with commencement expected in Q1 2027.
As of June 30, 2026, no liability has been recognized because services have not commenced.
Lenovo Managed Services Commitment
On December 12, 2025, the Company entered into a Statement of Work with Lenovo Global Financial Services (Australia & New Zealand) Pty Limited for managed infrastructure services. The arrangement has a term of 60 months from commencement and provides for monthly service fees based on contracted infrastructure and services.
As of June 30, 2026, the Company has made an upfront payment representing approximately 50% of the total contract value, which has been recorded as a prepayment. The remaining unpaid portion represents a future service commitment. No expense has been recognized as services have not yet commenced. The arrangement represents a contractual commitment subject to certain conditions precedent.
ASE Managed Services
In
connection with the termination of its data center services arrangement under the Distributed Storage Solutions (DSS) agreement, the
Company entered into a noncancelable commitment with Andrew Sjoquist Enterprises (ASE), a managed service provider, totaling
approximately AUD$
The commitment qualifies as an unconditional purchase obligation under ASC 440-10-50. As of June 30, 2026, no liability has been recognized, as the obligation represents future services to be received.
See additional capital asset purchase commitments entered into subsequent to period end in Note 26.
Note 21. Net Income (loss) per share
Basic net income (loss) per share is computed by dividing net income (loss) applicable to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share reflects the potential dilution of securities that could share in the earnings of an entity using the treasury method or the if-converted method, if applicable. The calculation of diluted net income (loss) per share gives effect to common share equivalents; however, potential common shares are excluded if their effect is anti-dilutive. Share-based options, warrants, and convertible notes are considered common share equivalents and are only included in the calculation of diluted earnings per common share when net income is reported and their effect is dilutive.
The following securities were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive:
| ● | Stock
options and RSUs: | |
| ● | Warrants:
| |
| ● | Convertible
notes: |
| - 20 - |
A reconciliation of the numerators and denominators is as follows:
Schedule of Reconciliation of Numerators and Denominators
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| For the Three Months Ended | For the Six Months Ended | |||||||||||||||
| June 30, | June 30, | |||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||
| Numerator: | ||||||||||||||||
| Net loss attributable to common shareholders | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Denominator: | ||||||||||||||||
| Basic and diluted weighted average number of common shares outstanding | ||||||||||||||||
| Basic and diluted net loss per common share outstanding | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Note 22. Segment Information
The
Company operates in
The Group’s method for measuring profitability on a reportable segment basis is operating profit or loss, which the CODM uses to assess performance for the Group and in deciding how to allocate resources. The CODM does not review disaggregated assets by segment. The Group adopted ASU 2023-07 in December 2024. The most significant provision was for the Group to disclose significant segment expenses that are regularly provided to the CODM. The Group’s CODM periodically reviews cost of revenues and selling, general and administrative expenses, excluding share-based compensation, by segment and treats them as significant segment expenses.
For the interim 2026 and 2025 periods presented, all revenue and expenses reflected in the loss from operations as presented in the consolidated condensed statement of operations represents the sole segment’s revenue and operating loss.
| - 21 - |
Note 23. Transactions with Related Parties
SharonAI
and SharonAI Pty Ltd have entered into an independent contractor agreement-corporate with James Manning and Manning Group Pty Ltd ATF
MG Office Trust (“Manning Consulting Agreement”). Pursuant to the Manning Consultant Agreement, Mr. Manning, SharonAI’s
Chief Executive Officer, director and greater than
SharonAI
Pty Ltd has entered into an independent contractor agreement with Nicholas Hughes Jones related entity Inbocalupo Consulting Pty Ltd
(“Inbocalupo Consulting Agreement”). Pursuant to the Inbocalupo Consultant Agreement and combined with Mr. Hughes-Jones
employment agreement, Mr. Hughes-Jones who until July 2025 was SharonAI’s Senior Vice President Business Development and is a currently
the Company’s Head of Business Development and a current greater than
SharonAI
Pty Ltd has entered into an independent contractor agreement with Broadfoot Group Pty Ltd (“Broadfoot Consulting Agreement”).
Pursuant to the Broadfoot Consultant Agreement, Mr. Broadfoot, SharonAI’s Chief Financial Officer, Treasurer, Corporate Secretary,
and Mrs. Broadfoot, as the key persons, provides certain services to SharonAI and SharonAI Pty Ltd relating to Chief Financial Officer
support and executive assistant services to the CFO. In consideration for these services, Broadfoot Group Pty Ltd is entitled to receive
an annual remuneration as adjusted on 1 January 2026 of AUD$
On
April 22, 2026, the Company issued
Convertible Note Financing Participation
In December 2025, the Company completed a convertible note financing as part of its capital raise program. Certain related parties participated in this financing.
| ● | Manning
Capital Pty Ltd, an entity affiliated with the Company’s Chief Executive Officer and greater than | |
| ● | Inbocalupo
Pty Ltd, an entity affiliated with the Company’s Head of Business Development and greater than | |
| ● | Strat
Capital Pty Ltd ATF Alpha Juliett Trust, an entity affiliated with Andrew Leece, the Company’s Chief Operating Officer, subscribed
for approximately AUD$ |
The notes were issued on the same terms and conditions as those offered to unrelated third-party investors.
| - 22 - |
First Equity Tax
The Company engaged First Equity Tax to provide audit and related compliance services required in connection with certain private local subsidiaries of the Company, SharonAI Pty Ltd and Distributed Storage Solutions Pty Ltd. First Equity Tax is considered a related party due to an indirect relationship with the Company’s Chief Executive Officer.
During
the three and six months ended June 30, 2026, the Company recognized expenses of $
Bare Media Holdings
The Company engaged Bare Media Holdings for a discrete investor communications project. Bare Media Holdings is considered a related party due to an indirect relationship with the Company’s Chief Executive Officer.
During
the three and six months ended June 30, 2026, the Company recognized expenses of $
Shift Advisory
The Company engaged Shift Advisory, an entity directly related to the Company’s Chief Revenue Officer, initially to provide outsourced Chief Revenue Officer services prior to the individual’s employment by the Company. Following the commencement of the individual’s employment, Shift Advisory continued to provide limited advisory services relating to the Company’s revenue processes and related operational matters.
During
the three and six months ended June 30, 2026, the Company recognized expenses of $
Expenses associated with these related-party arrangements were recorded within general and administrative expenses in the Company’s consolidated condensed statements of operations.
Note 24. Subsequent Events
Cloud Computing Service Agreement
Subsequent
to June 30, 2026, the Company entered into a cloud computing service agreement with a global artificial intelligence (“AI”)
laboratory with an aggregate contract value of approximately $
Under the agreement, the Company expects to deploy cloud computing solutions across data center infrastructure located in New Zealand. Revenue under the agreement is expected to commence during the first and second quarters of 2027 as the related infrastructure becomes operational and services are delivered.
The agreement supports the continued expansion of the Company’s AI Factory platform and is expected to utilize a portion of the Company’s contracted AI computing capacity. As of the date of the agreement, the Company had total AI Factory capacity of approximately 132MW, of which 116MW had been contracted to end customers, with deployment of more than 62,000 NVIDIA GPUs expected by mid-2027.
In
connection with the execution of this agreement, the Company has entered into purchase commitments with hardware and infrastructure vendors
totaling approximately $
Cloud Computing Service Agreement
Subsequent
to June 30, 2026, the Company entered into a five-year cloud computing service agreement with a global artificial intelligence (“AI”)
platform with an aggregate contract value of approximately $
In connection
with the deployment, the Company also entered into commitments to procure the required computing infrastructure, including equipment
with an aggregate purchase commitment of approximately $
The Company concluded that this represents a non-recognized subsequent event, and accordingly, no adjustment to the June 30, 2026 condensed consolidated financial statements has been made.
| - 23 - |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations analyzes the major elements of our balance sheets, statements of operations and cash flows. The following discussion and analysis of our financial condition and results of operations should be read together with the interim Consolidated Condensed financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q, as well as our audited consolidated financial statements and related notes as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025. All amounts are in U.S. dollars.
Cautionary Note Regarding Forward-Looking Statements
This Quarterly Report contains forward-looking statements about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. Forward-looking statements can be identified using forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should,” “could,” “anticipate,” “will,” “will be,” “will continue,” “will likely result,” “project,” “estimate,” “strategy,” “positioned” or their negatives or other variations of these words or other comparable words, or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the United States Securities and Exchange Commission (the “SEC”), press releases or oral statements made by or with the approval of one of our authorized executive officers. These forward-looking statements are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We intend such forward-looking statements to be covered by the safe-harbor provisions for forward-looking statements contained in those provisions, and we are including this statement for purposes of complying with those safe-harbor provisions.
Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made and are based on current expectations and assumptions that are subject to risks and uncertainties which may cause actual results to differ materially from the forward-looking statements. In particular, information included under “Risk Factors,” “Business,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and other sections of this report contain forward-looking statements. Where, in any forward-looking statement, an expectation or belief as to future results or events is expressed, such expectation or belief is based on the current plans and expectations of the Company’s management and expressed in good faith and believed to have a reasonable basis, but there can be no assurance that the expectation or belief will result or be achieved or accomplished. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including but not limited to: changes in economic conditions, legislative or regulatory changes, availability of capital, competition, and generally accepted accounting principles. Whether any such forward-looking statements are in fact achieved will depend on future events, some of which are beyond our control. Except as may be required by applicable law, the Company undertakes no obligation to update or revise any forward-looking statements to reflect new information, events or circumstances occurring after the date of this report. Comparisons of results for current and any prior periods are not intended to express any future trends or indications of future performance, unless expressed as such, and should only be viewed as historical data.
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Business Overview
We are an Australian neocloud operator, purpose-built to power the next generation of AI and HPC. Our infrastructure is architected from the ground up to meet the specific, intensive and complex demands of modern AI training and inference workloads, machine learning, and Generative AI.
We provide enterprise, government and research organizations with sovereign, low-latency access to advanced accelerated computing hardware, including NVIDIA Corporation’s (“NVIDIA”) B200, B300 and GB300 GPUs. Through strategic partnerships with global technology leaders NVIDIA, NEXTDC Limited (“NEXTDC”), Cisco Systems Inc. (“Cisco”), World Wide Technology (“WWT”), Lenovo Group Limited (“Lenovo”), VAST Data Inc. (“VAST”) and Megaport Limited (“Megaport”), the Company delivers an integrated AI ecosystem of solutions to customers without the complexity of them needing to manage their own physical infrastructure.
Key Corporate Milestones
We accomplished the following key milestones in the fiscal quarter ended June 30, 2026 and the second quarter of 2026:
On April 26, 2026, the Company entered into a Securities Purchase Agreement with certain qualified institutional buyers for the private placement of $350.0 million aggregate principal amount of 6.00% Convertible Senior Notes due 2031. This transaction closed on May 20, 2026.
In May 2026, the Company entered into multiple long-term agreements with third-party data center infrastructure providers for approximately 29.6 MW of additional capacity to support future operations. The arrangements are expected to commence beginning in late 2026.
On May 13, 2026, the Company entered into an additional customer contract with a global technology company with major Asia-pacific presence with an aggregate total contract value of approximately $950 million.
On June 12, 2026, we entered into an agreement with Nvidia to deploy 72MW AI factory and up to 40,000 Grace Blackwell GB300 GPUs in Australia. Under the terms of the agreement, NVIDIA and Sharon AI are collaborating to enable 72 megawatts (MW) of new data center capacity in Australia. The companies will deploy NVIDIA’s DSX AI factory design, scaling up to 40,000 Grace Blackwell GB300 GPUs to serve growing demand from AI startups, enterprises, and university researchers. The collaboration is structured so that Sharon AI can commit to large-scale NVIDIA infrastructure while aligning economics through a revenue-sharing and credit-support model. Sharon AI will sell NVIDIA-powered cloud services, and NVIDIA will earn both standard product revenue and a share of the cloud revenue on the supported capacity. This structure accelerates adoption of NVIDIA platforms among customers that historically lacked access to capital-intensive AI infrastructure, while giving Sharon AI a capital-efficient path to scale and providing NVIDIA with a recurring, usage-linked earnings stream.
On June 16, 2026, we expanded our partnership with VAST Data to Power AI Factories Across Australia and Asia-Pacific, where we will deploy 600PB of the VAST AI Operating System across its AI cloud infrastructure. This deployment represents one of the largest and most advanced sovereign AI data foundations in the Asia-Pacific region. It positions Sharon AI at the forefront of Australia’s push to build independent, high-performance AI capability – keeping the nation’s most sensitive workloads, intellectual property, and strategic data firmly onshore while delivering the raw power needed for next-generation training, inference, and agentic AI systems. Using a proven benchmark of approximately 6PB of optimized AI storage per 1,000 GPUs for demanding large-scale workloads, the new 600PB VAST deployment provides the scalable data backbone equivalent to supporting the data needs of ~100,000 GPUs. This is a transformative leap that cements Sharon AI’s AI Cloud platform as one of the most substantial sovereign AI clouds in Australia and Asia-Pacific.
On June 17, 2026, we entered into securities purchase agreements with certain qualified institutional and accredited buyers relating to the private offering of approximately 6,719,896 shares of the Company’s Class A Ordinary Common Stock at a purchase price of $68.73 per share and pre-funded warrants at a price per pre-funded warrant of $68.2799 to purchase up to an aggregate of 6,374,823 shares of Class A Ordinary Common Stock for aggregate gross proceeds of approximately $900 million. The offering closed on June 22, 2026, and the net proceeds are expected to be used to support our previously announced six-year strategic compute collaboration with NVIDIA, where we intend to deploy one of Australia’s largest AI Factories including up to 40,000 Grace Blackwell GB300 GPUs as well as broader expansion plans.
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On June 17, 2026, we entered into a securities purchase agreement with certain qualified institutional buyers relating to a private offering of $700 million aggregate principal amount of the Convertible Notes. The Convertible Notes are senior, unsecured obligations that mature on June 15, 2032, bear interest at a rate of 4.75% per year payable quarterly in arrears, and are convertible into shares of Class A Ordinary Common Stock at an initial conversion price of approximately $99.66 per share. The offering closed on June 22, 2026, and the net proceeds are expected to be used for GPU and network procurement, along with working capital to support revenue-generating AI cloud deployments.
On July 16, 2026, we announced the signing of a cloud computing service agreement with a global Artificial Intelligence (“AI”) Lab valued at $1.32 Billion over five years. Under the terms of the contract, we expect to deploy cloud computing solutions across data center infrastructure in New Zealand with revenue from the contract expected to commence across the first and second quarter of 2027.
The Company announced on July 22, 2026, that effective as of August 24, 2026, Mr. Tim Broadfoot will resign as the Company’s Chief Financial Officer and Mr. Anuj Goel will serve as the Company’s Chief Financial Officer.
Key Factors Affecting Operating Results
The Company’s operating results for the quarter were primarily influenced by continued strategic activity following corporate transactions completed in 2025. During the period, the Company completed the sale of its investment in TCDC, which favorably impacted financial performance for the quarter. Concurrently, the Company continued to make significant investments in the development and deployment of proprietary operating software and cloud computing platforms. These investments are expected to support the acquisition of higher quality customers, deliver operational efficiencies, and position the business for long-term revenue growth and profitability. The Company views these developments as critical to its forward strategy, despite their limited impact on short-term results.
The second quarter of 2026 showed a net loss of $430,369 thousand.
Industry Trends
During the prior year, the Company has strategically shifted its focus from providing storage services to developing and delivering GPU Cloud services, aligning with the growing demand for HPC and AI-driven workloads. This transition reflects a response to changing market dynamics and the increasing need for scalable, on-demand GPU infrastructure to support machine learning, AI training, and other compute-intensive applications.
The market for GPU Cloud services has shown strong theoretical demand, with significant interest from AI developers, research institutions, and enterprises seeking cost-effective, scalable compute resources. The Company anticipates that once its GPU deployments are fully operational and its orchestration layers are in place to facilitate seamless customer interaction and resource management, it will be well-positioned to capture an increase in revenue from this expanding industry.
However, the Company operates in a highly dynamic and competitive landscape, with several key challenges that could impact its ability to scale efficiently. Access to essential GPU hardware remains constrained, with supply chain limitations, geopolitical restrictions, and high demand from hyperscalers and AI-focused enterprises driving longer lead times and increased acquisition costs. The evolving nature of AI and high-performance computing technologies also presents a risk of obsolescence, requiring continuous adaptation and investment in next-generation infrastructure.
Additionally, rising operational costs, particularly for power, colocation services, and network infrastructure, are increasing the cost base for GPU Cloud services. These inputs are critical to the Company’s ability to deliver competitive pricing and maintain sustainable margins in a market where efficiency and performance optimization are key differentiators.
The Company is actively working to optimize its deployment strategies, secure long-term supplier agreements, and refine its orchestration technology to enhance scalability, utilization, and cost efficiency. As the GPU Cloud platform reaches full-scale deployment, the Company expects to capitalize on the strong demand for AI and HPC compute resources while mitigating the impact of rising costs and supply chain constraints.
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Results of Operations
Results of Operations for the quarter ended June 30, 2026 compared to quarter ended June 30, 2025
The following table sets forth key components of the results of operations during the three months ended June 30, 2026 and 2025.
| For the Three Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 1,931,381 | $ | 376,984 | ||||
| Cost of revenue | 761,755 | 398,266 | ||||||
| Gross profit (loss) | 1,169,626 | (21,282 | ) | |||||
| Share-based compensation | 2,670,588 | 489,345 | ||||||
| Selling, general and administrative expenses | 8,685,424 | 1,083,093 | ||||||
| Other expenses | 14,597,792 | 1,169,712 | ||||||
| Gain on disposal of property and equipment | - | (153,199 | ) | |||||
| Loss from operations | (24,784,178 | ) | (2,610,233 | ) | ||||
| Non-operating income (expense), net: | ||||||||
| Change in fair value of digital assets | - | (62,657 | ) | |||||
| Change in fair value of warrant liabilities | (6,138,775 | ) | - | |||||
| Change in fair value of convertible notes | (400,440,855 | ) | - | |||||
| Change in fair value of share-based payment | 334,502 | - | ||||||
| Gain on investment in NUAI shares | 6,493,245 | - | ||||||
| Gain on sale of investment in TCDC | 856 | - | ||||||
| Interest expense, net | (4,527,540 | ) | (43,521 | ) | ||||
| Loss before income taxes | (429,062,745 | ) | (2,716,411 | ) | ||||
| Income tax (expense) benefit | (1,305,951 | ) | 127,579 | |||||
| Net loss | (430,368,696 | ) | (2,588,832 | ) | ||||
Revenue
Q2 2026: $1,931 thousand| Q2 2025: $377 thousand
Total revenue for the three months ended June 30, 2026 and 2025 was $1,931 thousand and $377 thousand, respectively. The increase of $1,554 thousand, or approximately 412%, was primarily attributable to revenue generated from new customers onboarded during the second quarter of 2026, reflecting the continued expansion of the Company’s GPU infrastructure services business.
Cost of Revenue
Q2 2026: $762 thousand| Q2 2025: $398 thousand
Cost of revenue for the three months ended June 30, 2026 and 2025, was $762 thousand and $398 thousand, respectively, an increase of approximately $363 thousand. The increase was primarily driven by costs incurred in delivering GPU cloud computing operations. Key components included data center costs- comprising colocation facility fees, internet connectivity, and power consumption necessary to support high-performance infrastructure. The Company also incurred service fees under managed service agreements with third-party suppliers who provide and maintain the computer data storage equipment used in its operations. These fees include the use, upkeep, and performance monitoring of the hardware infrastructure.
Share-Based Compensation
Q2 2026: $2,670 thousand| Q2 2025: $489 thousand
Share-based compensation expense for the three months ended June 30, 2026 and 2025 was $2,670 thousand and $489 thousand, respectively. The increase of $2,181 thousand, or approximately 446%, was primarily attributable to new equity awards granted during the quarter to employees, executives, and advisors in support of the Company’s continued growth and talent acquisition initiatives. Share-based compensation expense is recognized over the requisite service period based on the grant-date fair value of the awards, subject to the satisfaction of any applicable performance and service-based vesting conditions.
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Selling, General, and Administrative Expenses (SG&A)
Q2 2026: $8,685 thousand| Q2 2025: $1,083 thousand
Selling, general and administrative expenses for the three months ended June 30, 2026 and 2025 were $8,685 thousand and $1,083 thousand, respectively. The increase of $7,602 thousand, or approximately 702%, was primarily attributable to higher employee-related costs, financing costs, and professional fees, including legal, consulting, and audit services, incurred to support the Company’s growth initiatives, financing activities, and expanding operations.
Other Expenses
Q2 2026: $14,598 thousand| Q2 2025: $1,170 thousand
Other expenses for the three months ended June 30, 2026 and 2025 were $14,598 thousand and $1,170 thousand, respectively. The increase of $13,428 thousand, or approximately 1,148%, was primarily attributable to unrealized foreign exchange losses arising from the remeasurement of foreign currency-denominated monetary balances. The increase was also attributed to routine depreciation and amortization expense recognized on the Company’s property and equipment and intangible assets supporting its GPU infrastructure and cloud services operations.
Other Income
Q2 2026: 0 | Q2 2025: $153 thousand
Other income for the three months ended June 30, 2026 and 2025 was $0 and $153 thousand, respectively. The decrease was attributable to the absence of a gain on the sale of fixed assets recognized in the prior-year period. During the three months ended June 30, 2025, the Company recognized a gain of $153 thousand on the disposal of fully depreciated storage server assets that were no longer in active operational use.
Change in Fair Value of Digital Assets
Q2 2026: $0 | Q2 2025: (63) thousand
Change in the fair value of digital assets for the three months ended June 30, 2026 and 2025 was $0 and a loss of $63 thousand, respectively. No gain or loss on the fair value of digital assets was recognized during the current-year period, as the Company had fully disposed of its digital asset holdings during the third quarter of 2025. The prior-year loss reflected the decline in the market value of digital assets previously held in connection with the Company’s former Filecoin data storage operations.
Change in fair value of warrant liabilities
Q2 2026: $(6,139) thousand| Q2 2025: $0 thousand
The Company recognized a loss of $6,139 thousand from the change in fair value of warrant liabilities for the three months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The warrant liabilities were assumed in connection with the Company’s business combination completed in December 2025 and, accordingly, there were no comparable warrant liabilities outstanding during the three months ended June 30, 2025. The current-year loss was attributable to the periodic remeasurement of these warrant liabilities, with changes in fair value primarily driven by movements in the Company’s share price and other valuation assumptions during the quarter. The resulting fair value adjustment is a non-cash item recognized in the consolidated condensed statements of operations.
Change in Fair Value of Convertible Notes
Q2 2026: ($400,441) thousand | Q2 2025: $0
The Company recognized a loss of $400,441 thousand from the change in fair value of convertible notes for the three months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The convertible notes were issued in December 2025 and were accounted for under the fair value option. Accordingly, changes in their fair value were recognized in the consolidated condensed statements of operations until conversion. During the quarter, approximately 99% of the outstanding convertible notes were converted into the Company’s common shares on June 11, 2026. The significant fair value loss recognized during the period was primarily driven by the increase in the Company’s share price prior to the conversion of the notes. Following the conversion, substantially all of these convertible notes were derecognized from the Company’s balance sheet.
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Change in fair value of share-based payment
Q2 2026: $335 thousand| Q2 2025: $0
The Company recognized a gain of $335 thousand from the change in fair value of share-based payment for the three months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The gain was primarily attributable to adjustments related to the settlement of vested share awards, including the accounting for shares withheld to satisfy employee tax withholding obligations. This was partially offset by a loss from the remeasurement of the Consulting Services Fee payable, which was settled in common shares in April 2026. The resulting fair value adjustment was a non-cash item recognized in the consolidated condensed statements of operations.
Gain (loss) on investment in NUAI shares
Q2 2026: $6,493 thousand| Q2 2025: $0
The Company recognized a gain on investment in NUAI shares of $6,493 thousand for the three months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The NUAI shares were received as part of the consideration for the sale of the Company’s TCDC investment in January 2026. On May 14, 2026, the Company sold all of its NUAI common shares for proceeds of $14,984 thousand. The carrying amount of the investment immediately prior to the sale was $8,490 thousand, resulting in a realized gain on sale of $6,493 thousand, which was recognized in the condensed consolidated condensed statements of operations. The sale proceeds were received and recorded as cash held in trust.
Gain on sale of investment in TCDC
Q2 2026: $856 | Q2 2025: $0
The Company recognized a gain on the sale of its investment in TCDC of $856 for the three months ended June 30, 2026, compared to no such gain in the prior-year period. The gain was attributable to the reversal of an overaccrual of transaction costs associated with the TCDC sale completed in January 2026. No additional gain was recognized from the underlying sale transaction during the current quarter.
Interest Income (Expense), Net
Q2 2026: ($4,527) thousand| Q2 2025: $(44) thousand
Net interest expense for the three months ended June 30, 2026 was $4,527 thousand, compared with net interest expense of $44 thousand for the three months ended June 30, 2025. The increase of $4,484 thousand was primarily attributable to interest expense recognized on the convertible notes issued in December 2025, May 2026, and June 2026, partially offset by interest income earned on the Company’s cash balances.
Income Tax Benefit (Expense)
Q2 2026: $(1,306) thousand| Q2 2025: $128 thousand
Income tax expense for the three months ended June 30, 2026 was $(1,306) thousand, compared with an income tax benefit of $128 thousand for the three months ended June 30, 2025. The increase in income tax expense was primarily attributable to the non-deductibility of the fair value loss on convertible notes for tax purposes, and changes in the valuation allowance maintained against certain deferred tax assets.
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Comparative Results for the six months ended June 30, 2026, and 2025:
Results of Operations for the six months ended June 30, 2026 compared to six months ended June 30, 2025
The following table sets forth key components of the results of operations during the six months ended June 30, 2026 and 2025.
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Revenue | $ | 2,225,396 | $ | 702,077 | ||||
| Cost of revenue | 1,287,572 | 711,648 | ||||||
| Gross profit (loss) | 937,824 | (9,571 | ) | |||||
| Share-based compensation | 3,052,746 | 956,968 | ||||||
| Selling, general and administrative expenses | 12,700,643 | 2,090,523 | ||||||
| Other expenses | 12,787,838 | 1,676,132 | ||||||
| Gain on disposal of property and equipment | - | (961,713 | ) | |||||
| Loss from operations | (27,603,403 | ) | (3,771,481 | ) | ||||
| Non-operating income (expense), net: | ||||||||
| Change in fair value of digital assets | - | (391,090 | ) | |||||
| Change in fair value of warrant liabilities | (5,255,450 | ) | - | |||||
| Change in fair value of convertible notes | (470,668,608 | ) | - | |||||
| Change in fair value of share-based payment | 334,502 | - | ||||||
| Gain on investment in NUAI shares | 4,984,130 | - | ||||||
| Gain on sale of investment in TCDC | 65,920,568 | - | ||||||
| Interest expense, net | (3,267,654 | ) | (55,912 | ) | ||||
| Loss before income taxes | (435,555,915 | ) | (4,218,483 | ) | ||||
| Income tax (expense) benefit | (14,824,603 | ) | 190,161 | |||||
| Net loss | (450,380,518 | ) | (4,028,322 | ) | ||||
Revenue
H1 2026: $2,225 thousand| H1 2025: $702 thousand
Total revenue for the six months ended June 30, 2026 and 2025 was $2,225 thousand and $702 thousand, respectively. The increase of $1,523 thousand, or approximately 217%, was primarily attributable to higher GPU infrastructure services revenue driven by new customers onboarded during the second quarter of 2026, reflecting the continued expansion of the Company’s customer base and operations.
Cost of Revenue
H1 2026: $1,288 thousand| H1 2025: $712 thousand
Cost of revenue for the six months ended June 30, 2026 and 2025 was $1,288 thousand and $712 thousand, respectively. The increase of $576 thousand, or approximately 81%, was primarily attributable to higher costs incurred in delivering the Company’s GPU infrastructure services as operations expanded during the period. These costs primarily consisted of data center expenses, including colocation facility fees, power consumption, and internet connectivity, as well as managed service fees paid to third-party providers for the operation, maintenance, and monitoring of the Company’s computing infrastructure.
Share-Based Compensation
H1 2026: $3,053 thousand| H1 2025: $957 thousand
Share-based compensation expense for the six months ended June 30, 2026 and 2025 was $3,053 thousand and $957 thousand, respectively. The increase of $2,096 thousand, or approximately 219%, was primarily attributable to new equity awards granted during the period to employees, executives, and advisors in support of the Company’s continued growth and talent acquisition initiatives.
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Selling, General, and Administrative Expenses (SG&A)
H1 2026: $12,701 thousand| H1 2025: $2,091 thousand
Selling, general and administrative expenses for the six months ended June 30, 2026 and 2025 were $12,701 thousand and $2,091 thousand, respectively. The increase of $10,610 thousand, or approximately 508%, was primarily attributable to higher legal and other professional fees associated with the Company’s public offering and financing transactions, together with increased employee-related costs and financing costs incurred to support the Company’s continued growth and expansion.
Other Expenses
H1 2026: $12,788 thousand| H1 2025: $1,676 thousand
Other expenses for the six months ended June 30, 2026 and 2025 were $12,788 thousand and $1,676 thousand, respectively. The increase of $11,112 thousand, or approximately 663%, was primarily attributable to unrealized foreign exchange losses arising from the remeasurement of foreign currency-denominated monetary balances. The increase was also attributable, to a lesser extent, to depreciation and amortization expense recognized on the Company’s property and equipment and intangible assets supporting its GPU infrastructure and cloud services operations.
Other Income
H1 2026: $0 | H1 2025: $962 thousand
Other income for the six months ended June 30, 2026 and 2025 was $0 and $962 thousand, respectively. The decrease was attributable to the absence of gains on the sale of fixed assets recognized during the prior-year period. During the six months ended June 30, 2025, the Company recognized gains on the disposal of fixed assets, including storage server assets and other equipment that were no longer required for operations.
Change in Fair Value of Digital Assets
H1 2026: $0 | H1 2025: (391) thousand
Change in the fair value of digital assets for the six months ended June 30, 2026 and 2025 was $0 and a loss of $391 thousand, respectively. No gain or loss on the fair value of digital assets was recognized during the current period, as the Company had fully disposed of its digital asset holdings during the third quarter of 2025. The prior-year loss reflected the decline in the market value of digital assets previously held in connection with the Company’s former Filecoin data storage operations.
Change in fair value of warrant liabilities
H1 2026: $(5,255) thousand| H1 2025: $0 thousand
The Company recognized a loss of $5,255 thousand from the change in fair value of warrant liabilities for the six months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The warrant liabilities were assumed in connection with the Company’s business combination completed in December 2025 and, accordingly, there were no comparable warrant liabilities outstanding during the six months ended June 30, 2025. The current-period loss was attributable to the periodic remeasurement of these warrant liabilities, with changes in fair value primarily driven by movements in the Company’s share price and other valuation assumptions. The resulting fair value adjustment is a non-cash item recognized in the consolidated condensed statements of operations.
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Change in Fair Value of Convertible Notes
H1 2026: ($470,669) thousand | H1 2025: $0
The Company recognized a loss of $470,669 thousand from the change in fair value of convertible notes for the six months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The convertible notes were issued in December 2025 and were accounted for under the fair value option. Accordingly, changes in their fair value were recognized in the consolidated condensed statements of operations until conversion. During the six-month period, approximately 99% of the outstanding convertible notes were converted into the Company’s common shares on June 11, 2026. The significant fair value loss recognized during the period was primarily driven by the increase in the Company’s share price prior to the conversion of the notes. Following the conversion, substantially all of these convertible notes were derecognized from the Company’s balance sheet.
Change in fair value of share-based payment
H1 2026: $335 thousand| H1 2025: $0
The Company recognized a gain of $335 thousand from the change in fair value of share-based payment for the six months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The gain was primarily attributable to adjustments related to the settlement of vested share awards, including the accounting for shares withheld to satisfy employee tax withholding obligations. The resulting fair value adjustment was a non-cash item recognized in the consolidated condensed statements of operations.
Gain (loss) on investment in NUAI shares
H1 2026: $4,984 thousand| H1 2025: $0
The Company recognized a net gain on investment in NUAI shares of $4,984 thousand for the six months ended June 30, 2026, compared to no such gain or loss in the prior-year period. The NUAI shares were received as part of the consideration for the sale of the Company’s TCDC investment in January 2026 and were subsequently measured at fair value based on quoted market prices. On May 14, 2026, the Company sold all of its NUAI common shares for proceeds of $14,984 thousand. The investment had a carrying amount of $8,490 thousand immediately prior to the sale, resulting in a realized gain on sale of $6,493 thousand. The net gain recognized for the six-month period reflects this realized gain, partially offset by fair value losses recognized prior to the sale. The sale proceeds were received and recorded as cash held in trust.
Gain on sale of investment in TCDC
H1 2026: $65,920 thousand | H1 2025: $0
The Company recognized a gain on the sale of its investment in TCDC of $65,920 thousand for the six months ended June 30, 2026, compared to no such gain in the prior-year period. The gain arose from the completion of the sale of the Company’s investment in TCDC in January 2026. Under the sale agreement, the Company received total consideration with a fair value of approximately $70 million, consisting of $10 million in cash, $10 million of NUAI common shares (including additional shares issued pursuant to the agreement’s top-off mechanism, which was designed to preserve the agreed $10 million equity consideration following a decline in NUAI’s share price), and a $50 million senior secured convertible promissory note.
Interest Income (Expense), Net
H1 2026: ($3,268) thousand| H1 2025: $(56) thousand
Net interest expense for the six months ended June 30, 2026 was $3,268 thousand, compared with net interest expense of $56 thousand for the six months ended June 30, 2025. The increase of $3,212 thousand was primarily attributable to interest expense recognized on the convertible notes issued in December 2025, May 2026, and June 2026, partially offset by interest income earned on the Company’s cash balances and interest earned on the $50 million senior secured convertible promissory note received as part of the consideration for the sale of the Company’s TCDC investment.
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Income Tax Benefit (Expense)
H1 2026: $(14,825) thousand| H1 2025: $190 thousand
Income tax expense for the six months ended June 30, 2026 was $(14,825) thousand, compared with an income tax benefit of $190 thousand for the six months ended June 30, 2025. The increase in income tax expense was primarily attributable to the non-deductibility of the fair value loss on convertible notes for tax purposes, tax impact of the gain recognized on the sale of the Company’s investment in TCDC and the changes in the valuation allowance maintained against certain deferred tax assets
Liquidity and Capital Resources
Liquidity represents the Company’s ability to generate adequate resources to fund operations, meet contractual obligations, and support ongoing and future business activities. The Company’s primary liquidity requirements relate to working capital, capital expenditures associated with infrastructure expansion, and general corporate purposes. Key drivers of liquidity include cash flows from operations, the timing of customer receipts, vendor payment terms, and strategic investment activities.
As of June 30, 2026, the Company had cash and cash equivalents of approximately $1.86 billion. During the six months ended June 30, 2026, the Company significantly strengthened its liquidity position through several financing and strategic transactions, including the completion of its February 2026 Nasdaq listing, which generated gross proceeds of approximately $125 million; the issuance of $350 million aggregate principal amount of Convertible Senior Notes in May 2026; and the completion of the $1.6 billion strategic financing in June 2026. The Company also benefited from the proceeds of approximately $104 million of pre-IPO convertible notes issued during 2025, which provided funding prior to the Company’s public listing.
As disclosed in Note 13, Convertible Notes, to the consolidated condensed financial statements, the Company continues to have outstanding note payables with terms that may require cash settlement, conversion into equity, or repayment upon maturity depending on future events. Other than scheduled repayments associated with these notes, no significant principal repayments are contractually required within the next 12 months. The Company continues to monitor its liquidity position and obligations in light of operational funding needs and market conditions.
Management continuously evaluates the Company’s capital structure and may seek additional financing, including equity issuances, debt facilities, or hybrid instruments, to support the expansion of its GPU infrastructure and related platform capabilities. The Company has historically accessed external capital to fund growth and believes it will be able to continue doing so as needed.
The Company has incurred operating losses to date and expects to continue investing in scaling its infrastructure and operations. The Company also expects to incur significant capital expenditures in connection with the deployment of its AI infrastructure, including investments in GPU hardware, data center infrastructure, and related technology assets to support existing customer commitments and future growth opportunities. As of June 30, 2026, the Company’s material future cash requirements consisted primarily of obligations under finance leases, debt service requirements, and infrastructure-related purchase commitments. The Company expects to satisfy these obligations through a combination of cash generated from operations and available liquidity. Contractual purchase and infrastructure commitments make up the majority of the future spending and total approximately $6 billion as of June 30, 2026.
While management believes existing cash resources, anticipated operating cash flows, and access to capital markets are sufficient to fund currently anticipated requirements, the Company may seek additional financing to support future growth opportunities, strategic investments, or accelerated expansion initiatives.
The Company is actively engaged in capital raising discussions with existing and prospective investors. Management believes that these efforts, together with operational cash flows and strategic investment plans, will provide sufficient liquidity to support the Company’s continued operations.
Cash flow analysis
The following table provides a summary of the cash flow statement for the six months ended June 30, 2026 and 2025:
| For the Six Months Ended | ||||||||
| June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net cash provided by (used in) operating activities | $ | 23,241,180 | $ | (1,708,451 | ) | |||
| Net cash provided by (used in) investing activities | $ | (263,314,000 | ) | $ | 55,708 | |||
| Net cash provided by (used in) financing activities | $ | 2,044,174,430 | $ | (284,491 | ) | |||
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Operating activities
Net cash provided by operating activities was $23,241 thousand for the six months ended June 30, 2026, compared with net cash used in operating activities of $1,708 thousand for the six months ended June 30, 2025. The improvement in operating cash flows was primarily attributable to increased receipts from the Company’s GPU infrastructure and cloud services business, including customer deposits, partially offset by payments for operating expenses, infrastructure-related costs, employee-related costs, and professional fees incurred to support the Company’s continued growth and expansion.
Net cash used in operating activities for the six months ended June 30, 2025 primarily reflected operating expenditures, including product development costs, equipment-related costs to support infrastructure expansion, and professional fees associated with strategic corporate activities. These cash outflows were only partially offset by cash receipts generated from the Company’s Filecoin data storage operations and its early-stage GPU cloud services business.
Investing activities
Net cash used in investing activities was $263,314 thousand for the six months ended June 30, 2026. The cash outflows primarily reflected deposits on capital expenditures, purchases of certificates of deposit, and the investment in Joint Venture interests. These outflows were partially offset by proceeds received from the sale of the Company’s investment in TCDC, the sale of NUAI common shares, and the repayment of the convertible promissory note receivable.
Net cash provided by investing activities was $56 thousand for the six months ended June 30, 2025. Investing cash flows during the period primarily reflected proceeds from the sale of digital assets, which were partially offset by capital expenditures.
Financing activities
Net cash provided by financing activities was $2,044,173 thousand for the six months ended June 30, 2026, compared with net cash used in financing activities of $284 thousand for the six months ended June 30, 2025. The significant increase in financing cash flows was primarily attributable to proceeds from the issuance of common stock, convertible notes, and pre-funded warrants in connection with the Company’s financing activities during the period. Financing cash inflows were partially offset by capital raising costs, repayments of note payable obligations, and payments of lease liabilities.
Net cash used in financing activities for the six months ended June 30, 2025 primarily reflected payments of lease liabilities.
Future cash requirements
The company is in a position of stable cash balance to continue its intrinsic operations and expansion of products. The Company also expects to raise further funds to acquire additional equipment and participation in joint venture requirements for further increase in business expansion.
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US Taxes
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was enacted in the United States. The legislation permanently extends certain expiring provisions of the Tax Cuts and Jobs Act, introduces changes to the international tax framework, and reinstates favorable tax treatment for select business-related provisions. The OBBBA includes multiple effective dates, with some measures applicable beginning in 2025 and others taking effect in subsequent periods. We are currently evaluating the potential impact of the OBBBA on our consolidated condensed financial statements.
Research and development, patents, and licenses
Our research and development, or R&D, program is focused on the software elements of computing and are in the initial stages of researching a range of programs to improve efficiency and accessibility of our products. We are currently only conducting research in Australia under the R&D Tax incentive scheme. We do not operate a separate division or forecast budget for R&D activities instead evaluating expenses occurred through the year on an arrears basis.
The R&D Tax Incentive in Australia is a government program that provides tax offsets to businesses investing in eligible research and development activities. Companies with an aggregated turnover below AUD$20 million receive a refundable tax offset of their corporate tax rate plus an 18.5% premium, while larger businesses receive a non-refundable offset based on their R&D intensity. To qualify, activities must involve systematic experimentation to generate new knowledge, adhering to scientific principles. Businesses must register their R&D activities with Department of Industry Science and Resources and then claim the offset through the Australian Taxation Office. The incentive is designed to support innovation, technology development, and business growth, but companies must ensure reporting and compliance to be eligible.
Off-Balance Sheet Arrangements
As of the reporting date, SharonAI has entered into certain contractual obligations that are not recognized on the balance sheet but may have a material effect on the Company’s financial condition, results of operations, or liquidity. These off-balance sheet arrangements primarily consist of data center colocation facility commitments and managed service agreements.
Colocation Facility Commitments
The Company has entered into colocation agreements for data center facilities under non-cancellable operating lease arrangements. These agreements are generally structured with five-year terms, with costs that fluctuate based on the quantity of deployed equipment and power usage. The Company’s future obligations under these agreements are contingent upon business expansion, changes in IT infrastructure needs, and energy consumption levels.
Although these commitments do not appear as liabilities on the balance sheet under applicable accounting standards, they represent a significant financial obligation that impacts future cash flows. If the Company’s colocation needs increase or energy prices rise, the total financial exposure under these agreements could materially increase. Conversely, the Company’s ability to reduce these commitments may be limited due to contract terms and renewal obligations.
Managed Service Agreements
The Company has multiple agreements for managed service equipment and associated services with third-party vendors. These agreements involve commitments totaling approximately $34,000 per month, with remaining contract durations ranging from 2 to 5 years. The Company’s obligations under these contracts include ongoing infrastructure support, equipment maintenance, and service-level agreements (SLAs).
Although these obligations do not meet the criteria for balance sheet recognition, they represent recurring financial commitments that impact operating expenses and liquidity. If the Company seeks to renegotiate, terminate, or scale these agreements, penalties or additional costs may be incurred.
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Potential Effects on Liquidity and Financial Condition
The Company continuously evaluates its off-balance sheet arrangements to assess their impact on liquidity, financial position, and operational flexibility. Factors that could materially affect these commitments include:
| ● | Changes in power costs: Volatility in energy pricing could increase the total cost of colocation facility commitments. | |
| ● | Scalability of IT infrastructure: Higher-than-expected deployment of new equipment may lead to increased costs under colocation agreements. | |
| ● | Service provider risks: Changes in vendor pricing, contract renewals, or service disruptions could impact the cost-effectiveness of managed service agreements. |
At this time, the Company does not believe that these off-balance sheet arrangements create material risks beyond those disclosed in its financial statements and risk factors. However, the Company will continue to monitor and manage these obligations in alignment with its operational and financial strategies.
Critical Accounting Estimates and Significant Judgements
The preparation of the financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of income and expenses during the reporting periods. Actual results could differ from those estimates. There have been no material changes to our critical accounting policies and estimates as set forth in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, included in our Annual Report on Form 10-K for the year ended December 31, 2025.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
As a smaller reporting company, the Company has elected not to provide the disclosure required by this item.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Certifying Officers, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that any controls and procedures, not matter how well designed and operated, can provide only reasonable, and not absolute, assurance of achieving the desired control objectives. In reaching a reasonable level of assurance, management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. In addition, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.
Under the supervision and with the participation of management, including our Certifying Officers, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of June 30, 2026. Based on this evaluation, our Certifying Officers concluded that our disclosure controls and procedures were not effective as of June 30, 2026.
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A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has determined that the following material weakness existed as of June 30, 2026:
In the period ended December 31, 2025, management identified a material weakness in the Company’s internal control over financial reporting related to the accounting for complex financial instruments and transactions. The Company did not design and maintain effective controls to appropriately evaluate and apply U.S. GAAP to such transactions. We have also concluded that this material weakness continued to exist as of June 30, 2026. In light of this material weakness, we have enhanced our processes to identify and appropriately apply applicable accounting requirements to better evaluate and understand the nuances of the complex accounting standards that apply to our financial statements, including making greater use of third-party professionals with whom we consult regarding accounting applications. Additionally, the Company is addressing the ineffective controls by expanding its accounting and financial reporting group and their capabilities to ensure consistent, complete, and accurate financial reporting and disclosure controls and procedures are achieved. The elements of our remediation plan can only be accomplished over time, and we can offer no assurance that these initiatives will ultimately have the intended effects. We believe our efforts will enhance our controls relating to accounting for complex financial transactions, but we can offer no assurance that our controls will not require additional review and modification in the future as industry accounting practice may evolve over time.
Disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Because of the inherent limitations in any control system, no evaluation of disclosure controls and procedures can provide absolute assurance that all control deficiencies and instances of fraud, if any, have been detected.
Changes in Internal Control over Financial Reporting
During the quarter ended June 30, 2026, management implemented remediation measures to address the previously identified material weakness related to accounting and financial reporting resources and expertise. These actions included strengthening accounting personnel and enhancing review controls within the financial reporting process. The material weakness will not be considered remediated until management completes the design and implementation of the remediation actions described above and the controls operate for a sufficient period of time, and management has concluded, through testing, that these controls are operating effectively.
Other than the remediation activities described above, there were no changes in the Company’s internal control over financial reporting during the quarter ended June 30, 2026 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
We are not currently a party to any material legal or administrative proceedings.
Item 1A. Risk Factors.
This quarterly report should be read in conjunction with the risk factors included in our 2025 Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC on March 31, 2026, and those disclosed in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2026. These risk factors do not identify all risks that we face — our operations could also be affected by factors that are not presently known to us or that we currently consider to be immaterial to our operations. Due to risks and uncertainties, known and unknown, our past financial results may not be a reliable indicator of future performance and historical trends should not be used to anticipate results or trends in future periods.
Except as set forth below, there have been no material changes from the risk factors previously disclosed in those filings.
We are substantially dependent on NEXTDC as our primary data center provider, and any delay, disruption or failure by NEXTDC could materially impair our ability to deliver services and generate revenue.
We have secured up to 87MW of capacity through NEXTDC and rely on NEXTDC to host substantially all of our GPU infrastructure. If NEXTDC experiences construction delays, financial difficulties, power supply issues, or fails to deliver contracted capacity on schedule, we may be unable to deploy our GPU fleet, fulfill customer contracts, or generate anticipated revenue. Our revenue projections and growth strategy are materially dependent on NEXTDC delivering capacity on time and as contracted. Any failure or delay by NEXTDC could cause us to miss revenue guidance, breach customer agreements, and suffer reputational harm, any of which could have a material adverse effect on our business, financial condition, and results of operations.
The Declining GPU Per-Hour Rate Structure in our Agreement with a Significant Customer Will Result in Materially Lower Revenues Over the Term of the Agreement, and Our Ability to Generate Sufficient Revenue From Third Party Sales to Offset This Decline Is Uncertain.
The customer price for GPU services in our agreement with a significant customer declines predictably over the six-year contract term — The business model contemplates that we will sell all or part of this compute to Third Parties, generating a revenue share with such customer on the spread. However, the Third Party market for GPU compute is highly competitive and subject to rapid price changes driven by evolving AI hardware generations, competing hyperscaler offerings, and fluctuating AI workload demand. There is no assurance that we can sustain Third Party revenues, and failure to do so will result in a material decline in revenues and profitability during the contract term.
We Face Significant Execution and Delivery Risk in Deploying a Large-Scale, Multi-Phase GPU Clusters on a Compressed Timeline, and Failure to Meet Agreed Delivery Milestones May Result in Automatic Reductions to the Applicable Service Period and May Give our Customer the Right to Terminate.
We have committed to delivering a specified numbers of GPUs as of specific dates pursuant to our various customer contracts. For each day of delay beyond the handover date, the total service period may be reduced, directly reducing lifetime revenue for that customer contract. If cluster acceptance testing cannot be completed by specified deadlines, the customer may have the right to terminate the contract. Clusters of this scale involve complex hardware procurement and multi-phase acceptance testing. Supply chain disruptions, construction delays, hardware shortages, or technical failures during testing are all realistic risks. Investors should understand that execution risk is extremely high in the critical 2026–2027 period, and that any delay directly reduces the aggregate revenue that can be generated over the life of the various customer contracts.
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Our Revenue Model with Regards to our Agreement with A Significant Customer Is Dependent on Uncertain Third Party Customer Demand, and the Revenue-Sharing Mechanics May Result in Revenues Materially Lower Than Expected.
Our customer contract with a significant customer contemplates that such customer will have little to no access to or use of the services unless they are not fully utilized Third Parties. Our ability to earn revenue above the price such customer has agreed to pay — which is the basis for a Shareable Revenue split — is entirely dependent on our ability to attract Third Party customers at pricing above the price such customer has agreed to pay. Revenue share is only earned on the spread between what a Third Party pays and what such customer would have paid, and all revenue is reduced by any service credits provided to customers. At the same time, the varying contract price over the contract term means that the contract price that the Company is entitled to also varies.. We must simultaneously manage Third Party relationships, negotiate pricing, maintain SLAs for those customers, and comply with all notice obligations to NVIDIA in respect of sold services. The net revenue profile of the business is therefore highly sensitive to Third Party market conditions that we do not control, and investors should not rely on the revenue share as a predictable or stable revenue stream.
Our Australian operations are subject to export control laws that may restrict certain activities
Our Australian subsidiary, SAI AU Holding Co Pty Ltd, is subject to Australian export control laws. While Defence Export Controls (DEC) has advised that our Token-as-a-Service technology does not currently require an export permit under the Defence and Strategic Goods List, this assessment expires after 12 months. The Defence and Strategic Goods List is updated regularly, and any changes could result in our technology becoming subject to additional export control requirements. We are also independently responsible for obtaining authorizations from the Australian Department of Foreign Affairs and Trade before exporting, supplying, or brokering our technology to any sanctioned destination or entity. Failure to comply with applicable export control laws could result in penalties, reputational harm, and disruption to our business.
Changes to United States trade, tariff, import/export regulations or AI-related laws which may require SharonAI to restrict or terminate customer relationships
The United States has recently enacted and proposed to enact significant new tariffs. Additionally, President Trump has directed various federal agencies to further evaluate key aspects of U.S. trade policy and there has been ongoing discussion and commentary regarding potential significant changes to U.S. trade policies, sanctions, export controls, treaties, tariffs, national security and the use and deployment of artificial intelligence technologies. There continues to exist significant uncertainty about the future relationship between the U.S. and other countries with respect to such trade policies, sanctions, export controls, treaties, tariffs, national security and the use and deployment of artificial intelligence technologies. These developments, or the perception that any of them could occur, may have a material adverse effect on global economic conditions and the stability of global financial markets, and may significantly reduce global trade and, in particular, trade between the impacted nations and the U.S. Any of these factors could depress economic activity and restrict the Company’s access to suppliers or customers and have a material adverse effect on the Company’s business, financial condition and results of operations.
Additionally, the United States has proposed and implemented laws and policy measures that restrict the provision of AI related technology, services or infrastructure to entities connected with certain countries and jurisdictions.
If new or expanded US or any other foreign government laws, regulations or government directives are introduced, or existing measures are amended or interpreted more restrictively, the Company may be required to limit, suspend or terminate its ability to provide services to certain customers, including customers that are otherwise compliant under Australian law. This may occur with limited notice and irrespective of existing contractual arrangements.
The termination or restriction of customer relationships could result in lost revenue, contract disputes, increased compliance costs, reputational damage and operational disruption. In some circumstances, the Company may also be exposed to penalties, fines, sanctions or enforcement action if it fails to comply with applicable laws and regulations, including export controls and trade restrictions. The Company may also face increased costs associated with monitoring and adapting to rapidly evolving regulatory requirements. Any such outcomes could materially and adversely affect the Company’s financial performance, growth prospects and business operations. There can be no assurance that the Company will be able to identify and comply with all applicable laws and regulations in a timely manner, or that compliance will not require significant expenditure of management time and financial resources.
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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On: (i) June 11, 2026, SharonAI Holdings Inc. (the “Company”) issued 8,430,784 shares of its Class A Ordinary Common Stock, par value $0.0001 per share (collectively, the “Conversion Shares”) upon conversion of an aggregate principal amount of approximately US$103.6 million of unsecured, redeemable, convertible notes (the “AUS Notes”), together with US$2.08 million of accrued and unpaid interest thereon pursuant to the terms of that certain Convertible Note Agreement (the “Convertible Note Agreement”), dated December 19, 2025, by and among SharonAI, Inc., SharonAI Pty Ltd and certain investors (the “Noteholders”), as previously reported on the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on December 22, 2025. The Company assumed the obligations of SharonAI, Inc. under the Convertible Note Agreement promptly following the closing of the Business Combination Agreement, dated January 28, 2025.
The number of Conversion Shares issued upon conversion of the AUS Notes was calculated in accordance with the conversion formula set forth in Section 4.6 of the Convertible Note Agreement, based on the sum of the principal amount and accrued interest divided by the lower of (i) the applicable Discount Rate multiplied by the relevant transaction price and (ii) the Valuation Cap (each as defined in the Convertible Note Agreement). The conversion price per share was US$12.53.
In connection with conversion of the AUS Notes, the Company agreed to register the Conversion Shares for resale on an S-1 registration statement.
The Conversion Shares have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and were issued in reliance on applicable exemptions from registration pursuant to Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder, and/or Regulation S, based on representations made by the holders of the AUS Notes, including that the holders are accredited investors acquiring the Conversion Shares for investment purposes and not with a view to distribution, and that certain of the holders of AUS Notes are not U.S. persons. The Conversion Shares may not be offered or sold in the United States absent registration under the Securities Act or an applicable exemption from such registration requirements.
On April 22, 2026, the Company issued 90,893 shares of its Class A Ordinary Common Stock to Inbocalupo Pty Ltd (as trustee for the Inbocalupo Trust) in consideration for, and as full and final satisfaction of, the Company’s reimbursement obligation arising under the reimbursement provisions of the Independent Contractor Agreement dated October 14, 2024. The issuance of the shares of Class A Ordinary Common Stock was made in reliance on the exemption from registration under the Securities Act afforded by Section 4(a)(2) and/or Rule 506 promulgated thereunder.
Dividend Restrictions
Pursuant to Section 5.14 of each of the Company’s (i) the May 2026 Indenture governing the 6% Convertible Senior Notes due 2031 and (ii) June 2026 Indenture governing 4.75% Convertible Senior Notes due 2032 for so long as any portion of the Notes remains outstanding, the Company is prohibited from paying cash dividends or distributions on any equity securities of the Company, unless the Required Holders (as defined in each of the May 2026 Indenture and the June 2026 Indenture, being the holders of at least a majority in aggregate principal amount of the 4.75% Notes due 2032 and the 6.00% Notes due 2031, as applicable, then outstanding) shall have otherwise given prior written consent.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
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Item 5. Other Information
Item 2.02 Results of Operations and Financial Condition
On August 6, 2026, the Company issued a press release entitled “Sharon AI Reports Second Quarter 2026 Results” which press release is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
The Company has prepared presentation materials (the “Presentation Materials”) that its management intends to use from time to time. The Presentation Materials are attached hereto as Exhibit 99.2 and are incorporated herein by reference. In addition, the Company posted the Presentation Materials on its website (www.sharonai.com) on August 6, 2026.
Material changes to the procedures by which security holders may recommend nominees to the board of directors.
None.
Director and Officer Trading Arrangements
During
the three months ended June 30, 2026, none of the directors or executive officers of the Company informed us of the
Item 6. Exhibits
| Exhibit No. | Description | |
| 3.1 | Amended and Restated Certificate of Incorporation of registrant, incorporated by reference to Exhibit 3.1 of the registrant’s Current Report on Form 8-K filed with the SEC on December 22, 2025. | |
| 3.2 | Amended and Restated Bylaws of the registrant, incorporated by reference to Exhibit 3.2 of the registrant’s Current Report on Form 8-K filed with the SEC on December 22, 2025 | |
| 3.3 | Certificate of Amendment to Certificate of Incorporation, incorporated by reference to Exhibit 3.1 to the registrant’s Current Report on Form 8-K filed with the SEC on December 23, 2025. | |
| 4.1 | Indenture, incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 21, 2026. | |
| 4.2 | Form of Global Note, incorporated by reference to Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed with the SEC on May 21, 2026. | |
| 4.3 | Form of Subsidiary Guarantee, incorporated by reference to Exhibit 4.3 to the registrant’s Current Report on Form 8-K filed with the SEC on May 21, 2026. | |
| 4.4 | Form of Pre-Funded Warrant, dated June 22, 2026, incorporated by reference to Exhibit 4.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 25, 2026. | |
| 4.5 | Indenture dated June 22, 2026, incorporated by reference to Exhibit 4.2 to the registrant’s Current Report on Form 8-K filed with the SEC on June 25, 2026. | |
| 4.6 | Form of Global Note, dated June 22, 2026, incorporated by reference to Exhibit 4.3 to the registrant’s Current Report on Form 8-K filed with the SEC on June 25, 2026. | |
| 4.7 | Form of Subsidiary Guarantee, dated June 22, 2026, incorporated by reference to Exhibit 4.4 to the registrant’s Current Report on Form 8-K filed with the SEC on June 25, 2026. | |
| 10.1 | Form of Securities Purchase Agreement, incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on April 28, 2026 | |
| 10.2 | Form of Registration Rights Agreement, incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on April 28, 2026 | |
| 10.3 | Director Appointment Letter by and between Andrew Penn and SharonAI Holdings Inc. dated May 21, 2026, incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on May 26, 2026. | |
| 10.4# | Form of Securities Purchase Agreement - Equity, incorporated by reference to Exhibit 10.1 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2026. | |
| 10.5# | Form of Registration Rights Agreement - Equity, incorporated by reference to Exhibit 10.2 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2026. | |
| 10.6# | Form of Securities Purchase Agreement - Convertible Notes, incorporated by reference to Exhibit 10.3 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2026. | |
| 10.7# | Form of Registration Rights Agreement - Convertible Notes, incorporated by reference to Exhibit 10.4 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2026. | |
| 10.8# | Form of Securities Purchase Agreement - Equity (with pre-funded warrants), incorporated by reference to Exhibit 10.5 to the registrant’s Current Report on Form 8-K filed with the SEC on June 17, 2026. | |
| 22.1* | Subsidiary Guarantors | |
| 31.1* | Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2* | Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial and Accounting Officer) pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
| 99.1* | Press Release dated August 6, 2026 | |
| 99.2* | Presentation Materials | |
| 101.INS* | Inline XBRL Instance Document | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB* | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104* | Cover Page Interactive Data File - the cover page from the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 is formatted in Inline XBRL |
| * | Filed herewith. | |
| ** | Furnished herewith. | |
| + | Indicates a management contract or any compensatory plan, contract or arrangement. | |
| # | Portions of this exhibit (indicated by asterisks) have been redacted in compliance with Regulation S-K Item 601(b)(10)(iv). |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SHARONAI HOLDINGS INC. | ||
| Date: August 6, 2026 | By: | /s/ James Manning |
| James Manning | ||
| Chief Executive Officer | ||
| (Principal Executive Officer) | ||
| SHARONAI HOLDINGS INC. | ||
| Date: August 6, 2026 | By: | /s/ Timothy Broadfoot |
| Timothy Broadfoot | ||
| Chief Financial Officer | ||
| (Principal Financial and Accounting Officer) | ||
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