SharonAI Holdings (SHAZ) secondary offering by insiders; company receives no proceeds

The filing discloses the current trading price of the company's Class A shares on the Nasdaq Capital Market. This is a secondary offering by existing stockholders (the selling stockholders table shows shares being sold by insiders and investors), not a primary offering by the company.

SharonAI has incurred operating losses since inception and expects continued losses. The company was formed in February 2024, giving it approximately two years of operating history as of this filing date.

The company discloses significant customer concentration risk. Recent contracts include a $1.25 billion agreement with ESDS Software Solutions, a $950 million contract with a global technology company, and a $1.32 billion agreement with a global AI Lab, suggesting revenue is concentrated among a small number of large customers.

SharonAI is substantially dependent on NVIDIA as its GPU supplier. The company has a strategic collaboration with NVIDIA to deploy up to 40,000 Grace Blackwell GB300 GPUs under a revenue-sharing and credit-support model where NVIDIA earns both product revenue and a share of cloud revenue.

The company is dependent on NEXTDC as its primary data center provider in Australia. In December 2025, SharonAI entered into an agreement with NEXTDC for up to 50MW of additional capacity to deploy more than 20,000 NVIDIA B200, B300, or GB300 GPUs, concentrating operational risk with a single infrastructure partner.

At least one significant customer contract has a declining GPU per-hour rate structure that may materially reduce revenues over time. The company's ability to offset this decline through third-party sales is uncertain, and the revenue model depends on uncertain third-party customer demand with complex revenue-sharing mechanics that may result in revenues materially lower than expected.

This is a secondary offering where existing stockholders are selling their shares. The company itself receives zero dollars from the sale; all proceeds go to the selling stockholders. This means the offering does not provide capital for the company's operations or growth.

The company is contractually prohibited from paying dividends due to covenants in two series of convertible notes (6.00% notes due 2031 and 4.75% notes due 2032). Even if the board wanted to pay dividends, these debt agreements prevent it until the notes are repaid or converted.

The company derives 82% of its 2025 revenue from only 3 customers. Loss of any one customer could materially harm operating results. The filing states this concentration is expected to continue and that customer demand may fluctuate significantly quarter to quarter.

The company has contracted for 87MW of capacity with NEXTDC and relies on NEXTDC to host the majority of its GPU infrastructure. Revenue projections and growth strategy are materially dependent on NEXTDC delivering capacity on time. Any construction delays, financial difficulties, or power supply issues at NEXTDC could prevent the company from deploying its GPU fleet, fulfilling customer contracts, or generating anticipated revenue.

The company sources substantially all of its GPU computing capacity from NVIDIA, exposing it to supply constraints, allocation risk, pricing power, and export control risks. The company has no long-term supply agreements guaranteeing pricing, volume, or delivery schedules. NVIDIA GPUs have experienced significant supply constraints due to high global demand, and NVIDIA allocates supply based on factors over which the company may have limited control.

The company has entered into contracts with ESDS and a Global Technology Customer totaling approximately $2.21 billion in anticipated contract value, requiring approximately $1.2 billion in capital expenditure ($733 million for ESDS, $468 million for Global Technology Customer). The company intends to seek debt financing for 70-80% of this capex but has no binding financing arrangements as of the prospectus date. If debt financing is not achieved, the company would need alternative financing which may not be available on acceptable terms or at all.

SharonAI has a six-year contract with a significant customer where the GPU service price declines over time. The company's revenue model depends on reselling unused compute capacity to third parties at prices above what the anchor customer pays, earning a revenue share on the spread. However, the third-party GPU market is highly competitive with rapid price changes, and there is no assurance the company can sustain third-party revenues. If third-party sales fail to materialize, revenues and profitability will materially decline during the contract term.

SharonAI has committed to delivering specified numbers of GPUs by specific dates under customer contracts. For each day of delay beyond the handover date, the total service period is automatically reduced, directly cutting lifetime revenue for that contract. If cluster acceptance testing cannot be completed by specified deadlines, the customer may terminate the contract. The company explicitly states that execution risk is extremely high in the critical 2026–2027 period, with realistic risks from supply chain disruptions, construction delays, hardware shortages, or technical failures during testing.

The anchor customer will have little to no access to the GPU services unless they are not fully utilized by third parties. SharonAI's ability to earn revenue above the anchor customer's contracted price—the basis for the revenue-sharing arrangement—is entirely dependent on attracting third-party customers at higher pricing. Revenue share is earned only on the spread between third-party pricing and the anchor customer's price, and all revenue is further reduced by any service credits provided to customers. This creates a highly uncertain revenue profile dependent on third-party market conditions the company does not control.

SharonAI discloses it has generated zero revenue from its data center business segment to date, despite this being a core part of its business model. This is a fundamental disclosure about the company's current financial state and operational maturity.

The company disclosed a six-year agreement with NVIDIA valued at up to $4.88 billion. This is structured as a revenue-sharing and credit-support model where SharonAI will deploy up to 40,000 Grace Blackwell GB300 GPUs in a 72MW AI factory in Australia. NVIDIA will earn both standard product revenue and a share of cloud revenue on the supported capacity, while SharonAI sells NVIDIA-powered cloud services. This represents the company's largest disclosed contract and defines its core business model going forward.

The company signed a five-year contract with ESDS Software Solutions valued at $1.25 billion total contract value (TCV), with an option for two additional years. Revenue is expected to begin in Q3 2026. These three contracts total approximately $3.52 billion in TCV and represent the company's current customer base.

The company raised approximately $900 million in gross proceeds through a June 2026 private placement of Class A common stock at $68.73 per share and pre-funded warrants. Additionally, the company raised $700 million through 4.75% convertible senior notes due 2032 (convertible at approximately $99.66 per share) that closed June 26, 2026. Combined with the February 2026 NASDAQ listing that raised $125 million, the company has raised approximately $1.725 billion in gross proceeds in 2026 to fund the NVIDIA collaboration and GPU deployments.

The company currently operates 411 GPUs (43 A40, 192 L40, 160 H100, 16 H200) generating revenue as of December 31, 2025. The NVIDIA collaboration contemplates deploying up to 40,000 Grace Blackwell GB300 GPUs, which would represent a roughly 16-fold increase from the planned 2,435 GPU level.

The company was designated a NVIDIA Cloud Partner in December 2024, one of only three in Australia. This status provides preferential GPU access, visibility into NVIDIA's 12-to-18-month supply forecast, customer referrals via NVIDIA's consumption desk, and technical support for reference architecture deployment. NVIDIA manages NCP count globally to ensure quality control, creating a barrier to entry for competitors.

The company has secured up to 87MW of data center capacity with NEXTDC across Melbourne and Sydney facilities. NEXTDC operates Tier III and IV data centers with Power Usage Effectiveness of 1.10 to 1.5, meaning 72% to 90% of power goes directly to compute versus cooling/auxiliary, lowering operating costs. The agreement is non-exclusive, and the company states it is in discussions with NEXTDC regarding participation in NEXTDC's 3.5GW development pipeline.

The company has committed to acquire 1,000 NVIDIA B200 GPUs (125 servers) via a financing facility through Lenovo's TruScale program. This facility is structured to reduce upfront capital expenditure and match payment obligations with the asset's useful life. The B200 is based on NVIDIA's Blackwell architecture optimized for AI workloads; NVIDIA has announced Blackwell GPUs are sold out with orders booked through 2026.

The company has shifted from usage-based, on-demand revenue (historically via marketplace aggregators) to term-based 'take or pay' contracts spanning 36 to 60 months. The company targets 10% to 20% of contract value as customer prepayment upon signing, which funds GPU purchase orders. The 'take or pay' structure ensures 100% utilization rate recognition once deployed and provides minimum revenue levels to support debt underwriting. Post initial contract (years 3-6), the company plans to re-contract the fully-paid hardware at lower rates, sell capacity on spot markets, or redeploy older GPUs via its inference engine.

Selling stockholders are converting 12% Convertible Notes from December 2025 into Class A shares for this offering. This is a secondary offering where proceeds go to the selling stockholders, not the company.

The ownership calculations use a baseline of 35,667,164 Class A shares outstanding as of August 10, 2026. This is the denominator for computing post-offering ownership percentages.

Officers and directors are among the selling stockholders. The table assumes maximum selling (all shares offered are sold), though actual selling may be less. This is secondary selling by insiders, not primary issuance.

The company designates Peter Woodward as the audit committee financial expert. This individual is expected to have the accounting or financial expertise to oversee the company's financial reporting and internal controls.