Item 7. Management’s Discussion and Analysis
Item
7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
The
following Management’s Discussion and Analysis of Financial Condition and Results of Operations (this “MD&A”) should
be read in conjunction with our Consolidated Financial Statements and the related notes (the “Notes”) and other
financial information included elsewhere in this Annual Report on Form 10-K.
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Business
Overview
We are an Australian neocloud operator, purpose-built to power the next generation of artificial intelligence (‘ AI’ ) and
high-performance computing (‘ 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
On
January 28, 2025, Roth CH Acquisition Co., a publicly traded Cayman Islands company trading on the OTC Market ( Roth CH ),
entered into a business combination agreement, with Roth CH Merger Sub, Inc., a Delaware corporation and a wholly-owned subsidiary
of Roth CH ( Merger Sub ), SharonAI Inc. (“SharonAI”) and Roth CH Holdings, Inc. ( Roth CH Holdings ) (the BCA ).
Under the BCA, Roth CH merged with and into Roth CH Holdings on 16 December 2025 and was renamed “SharonAI Holdings
Inc.” and become domesticated in the State of Delaware, and Merger Sub merged with and into SharonAI Inc. becoming the wholly
owned subsidiary of the Company. The transaction completed in December 2025.
As
a result of the BCA transaction, equity holders of SharonAI Inc. received securities of SharonAI Holdings. Shares of SharonAI Holdings
Inc. Class A common stock began trading on the OTC Markets under the ticker symbol “SHAZ.”.
To
fund our expansion, we have undertaken two material capital raisings, and a divestment of a non-core asset.
We successfully completed a US$103 million pre-initial public offering (‘ Pre-IPO ’) capital raising in
the form of unsecured convertible notes in January 2026, introducing new institutional and strategic shareholders. As part of this transaction,
Digital Alpha Advisors LLC, which has a strategic collaboration agreement with Cisco, invested in SharonAI via the unsecured
convertible note and remain strategic shareholders in the Company.
Also
in December 2025, we announced a strategic pivot, transitioning from a hybrid model of site development to a pure-play
neocloud operator. We had previously formed a 50:50 joint venture, Texas Critical Data Center LLC (‘ TCDC ’),
with New Era Energy & Digital Inc ( ‘New Era ’) in January 2025, to fund and develop a data center site with a
natural gas fired power plant in the Permian Basin of western Texas. We sold its 50% interest in TCDC to its joint venture
partner, New Era, for consideration of US$70 million, paid via cash, secured promissory note and equity in New Era. The
transaction completed in January 2026.
On
January 22, 2026, Mr. Wolfgang Schubert, resigned as the Company’s Chief Executive Officer and from the Company’s board of
directors (the “Board”). In connection with Mr. Schubert’s resignation as Chief Executive Officer of the Company, on
January 22, 2026, the Board appointed Mr. James Manning, Non-Executive Chairman, director and greater than 10% stockholder of the Company,
as its Chief Executive Officer.
In
February 2026, the Company listed on the NASDAQ, raising US$125 million before costs. This transaction was a key strategic step that
should enable the Company to access the largest public capital market in the world, providing the Company with capital raising alternatives
which could lower its weighted average cost of capital while minimizing near-term equity dilution.
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Key
Factors Affecting Operating Results
The
Company’s operating results for the year were primarily influenced by continued strategic activity following corporate transactions
completed in 2025. A significant portion of the year was dedicated to advancing the planned merger, both from a corporate governance
and regulatory standpoint, and through operational integration efforts. Concurrently, the Company invested heavily in the development
and deployment of new proprietary operating software and cloud computing platforms. While these initiatives did not materially improve
financial performance, they represent foundational work aimed at enabling future scalability, improved product offerings, and enhanced
customer engagement. 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.
Industry
Trends
During
the 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 high-performance computing (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.
Results
of Operations
Results
of Operations for the fiscal year ended December 31, 2025 compared to fiscal years ended December 31, 2024
The
following table sets forth key components of the results of operations during the fiscal years ended December 31, 2025 and 2024.
For the Years Ended
December 31,
2025
2024
Revenue
$ 1,566,631
$ 438,292
Cost of Revenue
1,465,824
719,993
Gross profit (loss)
100,807
(281,701 )
Share based compensation
1,761,785
253,728
Selling, general and administrative expenses
12,116,600
2,368,745
Other expenses
1,024,166
2,047,133
Other income
(1,015,803 )
(921,322 )
Loss from operations
(13,785,941 )
(4,029,985 )
Non-operating income (expense):
Change in fair value of digital assets
(406,345 )
157,923
Change in fair value of warrants
445,000
-
Change in fair value of convertible notes
(26,030,635 )
-
Interest expense, net
(253,334 )
(19,028 )
Loss before income taxes
(40,031,255 )
(3,891,090 )
Income tax benefit (expense)
216,234
(32,908 )
Net Loss
$ (39,815,021 )
$ (3,923,998 )
Net loss attributable to non-controlling interest
(191,112 )
(18,717 )
Net Loss Attributable to SharonAI Holdings Inc.
$ (39,623,909 )
$ (3,905,281 )
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Commentary
on Results of Continuing Operations for the fiscal year ended December 31, 2025 compared to the fiscal year ended December 31, 2024
Revenue
2025:
$1,567 thousand| 2024: $438 thousand
Total
revenue for the year ended December 31, 2025 and 2024, was $1,567 thousand and $438 thousand, respectively. The increase was primarily
driven by the growth of the Company’s GPU cloud services segment, reflecting higher deployment of compute resources and expanding
customer adoption across AI and high-performance computing use cases.
Cost
of Revenue
2025:
$1,466 thousand | 2024: $720 thousand
Cost
of revenue for the year ended December 31, 2025 and 2024, was $1,466 thousand and $720 thousand, respectively, an increase of approximately
$746 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
2025:
$1,762 thousand | 2024: $254 thousand
This
figure represents stock-based compensation expenses issued to employees, executives, or advisors as part of recruitment and retention.
Given the company’s new formation, share-based compensation is a tool to attract key talent and align leadership with long-term
growth objectives. The value of share-based payments represents the amount of share based payments that has reached the performance criteria
of the issuances (if any) pro rata expensed over the time based vesting term.
Selling,
General, and Administrative Expenses (SG&A)
2025:
$12,117 thousand | 2024: $2,369 thousand
Selling,
general and administrative (SG&A) expenses for the year primarily reflect foundational investments to establish and scale the
Company’s operations. The increase in expenses was largely attributable to employee-related costs, professional fees for
legal, consulting, and audit services, and a significant portion of financing-related costs, including the allocation of convertible
note issuance expenses. Management expects SG&A expenses to stabilize over time as the Company transitions from its initial
setup and transactional activities to a more routine operating phase, with these foundational costs becoming less significant in
future periods.
Other
Expenses
2025:
$1,024 thousand | 2024: $2,047 thousand
This
category includes depreciation and amortization expenses recognized during the year related to both new and existing property,
and equipment, as well as intangible assets acquired through recent business combinations. These non-cash charges reflect the systematic
allocation of the cost of long-lived assets over their estimated useful lives and are primarily associated with infrastructure used in
the Company’s data storage operations GPU cloud service operation. In addition, this category captures the impact of material unrealized
gains and losses arising from the remeasurement of cross-currency balances under applicable foreign exchange accounting standards. These
foreign currency translation adjustments, while non-operational in nature, can introduce volatility into reported results depending on
exchange rate movements during the period. Together, these items contribute to the reported net loss but do not impact cash flows from
operations and are expected to fluctuate based on the Company’s investment activity and foreign currency exposure.
Other
Income
2025:
$1,016 thousand| 2024: $921 thousand
Other
income for the year ended December 31, 2025, primarily consisted of non-recurring items, including gains on the disposal of fixed assets
and a settlement related to the reversal of a previously recognized sale of the Modular Data Center (MDC). In comparison, other income
for 2024 mainly comprised research and development (R&D) grant income received under the Australian Taxation Office support program,
which is recognized once all related conditions are met and the amounts are reasonably estimable. Management expects that other income
in future periods will continue to be largely non-recurring in nature and outside the Company’s core operating activities.
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Change
in Fair Value of Digital Assets
2025:
$(406) thousand | 2024: $158 thousand
The
decrease in fair value of digital assets during the year reflects a decline in the market value of cryptocurrency previously held in
connection with the Company’s Filecoin data storage operations. This loss is non-operational in nature and does not directly impact
the core business activities or underlying operating performance. However, it does reduce reported earnings for the year. At December 31, 2025, the Company no longer holds any digital assets,
as all such holdings were fully disposed of during the third quarter of 2025.
Change
in Fair Value of Warrants
2025:
$445 thousand | 2024: $0
The
change in fair value of warrants for the year ended December 31, 2025, reflects the remeasurement of warrants classified as
liabilities under ASC 480 and ASC 815. These warrants are initially recorded at fair value on the date of issuance and subsequently
remeasured at each reporting period. Changes in fair value are recognized as non-cash gains or losses in the consolidated statements
of operations. The fair value measurement considers factors such as the Company’s stock price, expected volatility, risk-free
interest rates, remaining contractual term, and other relevant inputs. Management applies professional judgment in determining
whether warrants meet the criteria for equity classification and in estimating their fair value, and views the resulting changes as
non-cash adjustments that do not affect the Company’s liquidity or operational cash flows.
Change
in Fair Value of Convertible Notes
2025:
$26,031 thousand | 2024: $0
On December 19, 2025, the Company issued convertible notes to a subset
of investors, including related parties, to secure funding until the IPO. The Company elected to account for convertible notes under fair
value option. Accordingly, the notes were initially recorded at fair value, with the difference between the proceeds received and the
initial fair value recognized as a non-cash loss in the statement of operations. Subsequent changes in the fair value of the notes and
associated warrants through December 31, 2025, were immaterial and had no impact on reported earnings for the period .
Interest
Expense, Net
2025:
$253 thousand | 2024: $19 thousand
Net
interest expense for the year primarily relates to interest incurred on lease liabilities recognized under right-of-use (ROU) asset
arrangements and loans. These expenses reflect the financing component of current loans and long-term lease agreements associated with
the Company’s operational infrastructure. The overall interest burden was slightly offset by interest income earned on term deposits
held as part of the Company’s short-term obligations associated with managed service agreements.
Income
Tax Benefit (Expense)
2025:
$216 thousand| 2024: $33 thousand
For
the year ended December 31, 2025, the Company recorded an income tax benefit of $216 thousand, primarily attributable to operating losses
incurred during the period. These losses are consistent with the Company’s early-stage growth trajectory and reflect continued
investment in product development, infrastructure buildout, and strategic corporate initiatives.
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 December 31, 2025, the Company held cash of $71.07 million. During the year, the Company successfully closed approximately USD
$104 million of pre-IPO funding through the issuance of convertible notes, strengthening its liquidity position. The Company also
has outstanding note payables, as disclosed in Note 11, Note Payable , and Note 12, Convertible Notes , to the
consolidated financial statements. These instruments contain terms that may require settlement in cash, conversion into equity, or
repayment upon maturity, depending on future events. Subsequent to year end, in January 2026, the Company repaid in full the note
payable related to the Yorkville loan. Other than this repayment, no significant principal repayments are contractually required
within the next 12 months. The Company continues to monitor its obligations closely 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. These factors
indicate that additional capital will be required to support ongoing activities and meet obligations as they become due.
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.
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Cash
Flow Analysis
The
following table provides a summary of the cash flow statement for the year ended December 31, 2025 and 2024:
For the Years Ended
December 31,
2025
2024
Net cash provided by (used in) operating activities
$ (2,638,947 )
$ (2,205,993 )
Net cash provided by (used in) investing activities
$ (13,805,595 )
$ (3,036,503 )
Net cash provided by (used in) financing activities
$ 83,044,339
$ 10,023,764
Operating
Activities
Net cash used in operating activities was $2,639 thousand for the year ended December 31, 2025. Operating cash flows reflected receipts
from the Company’s Filecoin data storage operations and GPU cloud services, offset by operating expenditures, including product
development costs, infrastructure-related expenses to support expansion, and professional fees. The Company ceased its Filecoin data storage
operations during the second quarter of 2025. Future operating cash flows will depend on the performance and scaling of the Company’s
GPU cloud business and its ability to manage operating costs.
Investing
Activities
Net
cash used in investing activities was $13,806 thousand for the year ended December 31, 2025, primarily attributable to capital expenditures
for the purchase of servers and related infrastructure equipment to support the Company’s operations and expansion of its GPU cloud
capacity.
Financing
Activities
Net cash provided by financing activities was $83,044 thousand for the year ended December 31, 2025, primarily driven by proceeds from
the issuance of convertible notes during the year. These inflows were partially offset by cash payments for debt issuance costs associated
with the convertible notes and payments made toward lease liabilities in accordance with the Company’s lease agreements.
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.
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
financial statements.
Research
and Development, Patents, and Licenses
Our
research and development, or R&D, program is focused on researching and exploring opportunities to develop proprietary data storage
software and system architecture to accelerate storage and retrieval of data across distributed networks and management of complex compute
resource demands to enable idle compute to serve multiple purposes. We procure all the necessary hardware and conduct research and development
on service management, focusing on enhancing user interfaces, optimizing load management, and improving orchestration for seamless and
efficient operations.
We
have also commenced research into 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 annual 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 AusIndustry 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.
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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.
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
Our
consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. (“GAAP”).
In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about
future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures.
We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes
to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting
policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP.
However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions
and estimates, and such differences could be material.
While
our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements, we believe that
the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated
financial statements.
Accounting
for Reverse Recapitalization and Basis of Presentation
The
business combination with Roth was accounted for as a reverse recapitalization under ASC 805-40, with SharonAI Inc. determined to be
the accounting acquirer. As a result, the transaction was treated as a capital transaction rather than a business combination, and no
goodwill or intangible assets were recognized.
This
determination required significant judgment, particularly in identifying the accounting acquirer and evaluating the substance of the
transaction. The consolidated financial statements reflect the historical financial position and results of operations of SharonAI Inc.
prior to the transaction.
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In
addition, our consolidated financial statements have been prepared using the predecessor value method for entities under common control,
which requires judgment in determining the appropriate basis of presentation.
Goodwill
Impairment
Goodwill
of $18.0 million arose from the acquisition of Distributed Storage Solutions Pty Ltd in June 2024 and is allocated to our single reporting
unit.
We
evaluate goodwill for impairment annually as of October 1, or more frequently if events or changes in circumstances indicate that the
carrying amount may not be recoverable. During the second quarter of 2025, we approved the closure of our distributed storage operations,
which constituted a triggering event. As a result, we performed an interim impairment assessment as of June 30, 2025.
Our
impairment assessments require significant judgment in estimating the fair value of the reporting unit, which we determine using a discounted
cash flow (“DCF”) model. Key assumptions used in the analysis include projected future cash flows, expected growth rates,
and discount rates. These assumptions are inherently uncertain and are based on management’s expectations regarding future operating
performance and market conditions.
As
of both June 30, 2025 and October 1, 2025, the estimated fair value of the reporting unit exceeded its carrying amount, and no impairment
was recognized. Changes in key assumptions, particularly projected cash flows and discount rates, could result in a materially different
outcome in future periods.
Fair
Value of Convertible Notes
We
have elected the fair value option for our convertible notes under 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 (other than changes attributable
to instrument-specific credit risk, which are recorded in other comprehensive income).
The
determination of fair value requires the use of valuation techniques and significant judgment, particularly when observable market data
is limited. Key assumptions may include expected volatility, discount rates, and other inputs that are sensitive to changes in market
conditions.
Because
these estimates involve the use of unobservable inputs, changes in assumptions could result in significant fluctuations in the reported
fair value of these instruments and related gains or losses in our consolidated statements of operations.
Share-Based
Compensation
We
account for share-based compensation in accordance with ASC 718. The fair value of stock-based awards is measured at the grant date and
recognized as expense over the requisite service period.
The
valuation of stock options requires the use of the Black-Scholes option pricing model, which involves significant judgment in determining
key assumptions, including expected volatility, expected term, risk-free interest rate, and expected forfeiture rates. Restricted stock
units are generally valued based on the market price of our common stock on the grant date.
These
assumptions are inherently subjective and may differ from actual future results. Changes in these assumptions could have a material impact
on the amount of share-based compensation expense recognized in future periods.
Item
7A. Quantitative and Qualitative Disclosures About Market Risk
As
a smaller reporting company, we are not required to provide the information required by this item.
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