SharonAI Holdings Inc. (SHAZ) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. SharonAI Holdings Inc. is a digital infrastructure provider focused on High-Performance Computing (HPC) and AI cloud services. The company recently completed a business combination with Roth CH Acquisition Co. in December 2025 and listed on the Nasdaq Capital Markets in February 2026. The company has pivoted from a hybrid model to a pure-play neocloud operator, having ceased Filecoin-related operations in mid-2025.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $294,014 | $325,092 |
| Gross Profit (Loss) | $(231,802) | $11,710 |
| Net Loss | $(20,011,821) | $(1,439,490) |
| Net Loss Attributable to Shareholders | $(19,915,764) | $(1,432,580) |
| Cash and Cash Equivalents (End of Period) | $164,288,288 | $2,844,698 |
| Total Assets | $313,886,244 | $133,140,150 |
| Total Liabilities | $225,255,423 | $143,288,407 |
| Convertible Notes (Fair Value) | $199,358,226 | $129,017,286 |
Material Changes vs. Prior Period
- Revenue Decline: Revenue decreased by approximately 10% to $294k, primarily due to the discontinuation of Filecoin mining activities in Q2 2025. Current revenue is derived almost entirely from GPU infrastructure services.
- Significant Net Loss: Net loss widened significantly to $20.0 million compared to $1.4 million in the prior year. This was driven by a $70.2 million unrealized loss on the fair value remeasurement of convertible notes, partially offset by a $65.9 million gain on the sale of the company's 50% interest in Texas Critical Data Centers (TCDC).
- Liquidity Expansion: Cash and cash equivalents surged from $2.8 million to $164.3 million. This increase was fueled by a $125 million Nasdaq IPO in February 2026 and proceeds from convertible note issuances.
- Balance Sheet Growth: Total assets more than doubled to $314 million, reflecting new cash balances, a $51 million convertible note receivable from the TCDC sale, and $42.5 million in equipment prepayments.
Guidance, Outlook, and Risks
- Strategic Pivot: Management is focusing exclusively on GPU-as-a-Service (GPUaaS) to support AI training and inference workloads. The company has secured significant future contracts, including a $1.26 billion agreement with ESDS Software Solutions and a $950 million contract with a global technology company (signed May 2026).
- Capital Commitments: The company has substantial off-balance sheet commitments, including a $92 million hardware procurement commitment with World Wide Technology (WWT) and a $720 million capital expenditure expectation to support the ESDS contract.
- Internal Control Weakness: Management identified a material weakness in internal controls over financial reporting related to the accounting for complex financial instruments. Remediation efforts are underway, including hiring additional accounting personnel.
- Regulatory Risks: The company faces risks related to U.S. trade policies, tariffs, and export controls on AI technologies, which could restrict access to suppliers or customers.
- Subsequent Events: In April 2026, the company entered into an agreement for a $350 million private placement of convertible senior notes (6.00% due 2031), which had not closed as of the filing date.
Investor Verification Checklist
- Revenue Recognition: Verify the timing of revenue recognition for the $1.26 billion ESDS contract and the $950 million subsequent contract, as services have not yet commenced.
- Convertible Note Valuation: Review the assumptions used to value the $199 million convertible notes, as the $70 million fair value loss significantly impacted net income.
- Capital Expenditure Execution: Monitor the company's ability to fund the $720 million in expected capital expenditures required to fulfill new customer contracts.
- Internal Controls: Assess the progress of remediation for the material weakness in accounting for complex financial instruments.
- TCDC Sale Proceeds: Confirm the collection of the remaining principal on the $50 million convertible note receivable from New Era Energy & Digital Inc. (reported as repaid in April 2026).