SharonAI Holdings Inc. 10-Q

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” 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. 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 We accomplished the following key milestones in the fiscal quarter ended March 31, 2026 and the second quarter of 2026: 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 December 16, 2025 and was renamed “SharonAI Holdings Inc.” and became 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. - 20 - Also in December 2025, we announced a strategic pivot, transitioning from a hybrid model of site development to a pure-play neocloud operator for the short term. 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 our 50% interest in TCDC to our joint venture partner, New Era, for consideration of US$70 million (which was subsequently modified to approximately $74 million post adjustments), 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, we listed on the NASDAQ Capital Markets, raising US$125 million in a concurrent underwritten public offering before costs. This transaction was a key strategic step that is expected to enable us access to the largest public capital market in the world, providing us with capital raising alternatives which could lower our weighted average cost of capital while minimizing near-term equity dilution. On March 31, 2026, through its wholly-owned subsidiary (together, the “Company”), entered into (i) a Master Services Agreement (the “MSA”) and (ii) Service Order No. 1 (the “Service Order,” and together with the MSA, the “Agreements”) with ESDS Software Solutions Limited and certain of its subsidiaries (together, the “Customer”), pursuant to which the Company agreed to provide high-performance managed GPU compute and cloud infrastructure services to the Customer. The Service Order has an initial term of 60 months commencing on the Service Start Date (as defined in the Service Order), with a total contract value of approximately USD $1,260,000,000. The Customer has an option to extend for an additional 24 months. Service fees are payable monthly in advance. The Customer is required to provide security in the form of letters of credit or bank guarantees in an aggregate amount of USD $140,000,000. 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. As of the date of this report, this transaction has not yet closed. 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. 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 first quarter of 2026 showed a net loss of $20,012 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 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. - 21 - Results of Operations Results of Operations for the quarter ended March 31, 2026 compared to quarter ended March 31, 2025 The following table sets forth key components of the results of operations during the quarters ended March 31, 2026 and 2025. For the Three Months Ended March 31, 2026 2025 Revenue $ 294,014 $ 325,092 Cost of Revenue 525,816 313,382 Gross profit (loss) (231,802 ) 11,710 Share-based compensation 382,158 467,623 Selling, general and administrative expenses 4,015,219 1,007,430 Other expenses 1,318,001 506,418 Other income (3,127,957 ) (808,513 ) Loss from operations (2,819,223 ) (1,161,248 ) Non-operating income (expense), net: Change in fair value of digital assets - (328,433 ) Change in fair value of warrant liabilities 883,325 - Change in fair value of NUAI shares (1,509,115 ) - Change in fair value of convertible notes (70,227,754 ) - Gain on sale of investment in TCDC 65,919,712 - Interest income (expense), net 1,259,886 (12,391 ) Loss before income taxes (6,493,169 ) (1,502,072 ) Income tax (expense) benefit (13,518,652 ) 62,582 Net loss (20,011,821 ) (1,439,490 ) Net loss attributable to non-controlling interest (96,057 ) (6,910 ) Net loss attributable to SharonAI Holdings Inc. $ (19,915,764 ) $ (1,432,580 ) Revenue Q1 2026: $294 thousand| Q1 2025: $325 thousand Total revenue for the three months ended March 31, 2026 and 2025 was $294 thousand and $325 thousand, respectively. The decrease was primarily attributable the discontinuation of Filecoin activities in the second quarter of 2025. Cost of Revenue Q1 2026: $526 thousand| Q1 2025: $313 thousand Cost of revenue for the three months ended March 31, 2026 and 2025, was $526 thousand and $313 thousand, respectively, an increase of approximately $213 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 Q1 2026: $382 thousand| Q1 2025: $468 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) Q1 2026: $4,015 thousand| Q1 2025: $1,007 thousand Selling, general and administrative (SG&A) expenses for the quarter 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. 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 Q1 2026: $1,318 thousand| Q1 2025: $506 thousand This category includes depreciation and amortization expenses recognized during the quarter 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 and GPU cloud service operation. - 22 - Other Income Q1 2026: $3,128 thousand| Q1 2025: $808 thousand 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. Change in Fair Value of Digital Assets Q1 2026: $0 | Q1 2025: (328) thousand At March 31, 2026, the Company no longer holds any digital assets, as all such holdings were fully disposed of during the third quarter of 2025. The decrease in fair value of digital assets in Q1 2025 reflects a decline in the market value of cryptocurrency previously held in connection with the Company’s Filecoin data storage operations. Change in Fair Value of Warrants Q1 2026: $883 thousand| Q1 2025: $0 thousand The change in fair value of warrants for the quarter ended March 31, 2026, 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 NUAI shares Q1 2026: $(1,509) thousand| Q1 2025: $0 The change in fair value of NUAI shares for the three months ended March 31, 2026 reflects a loss of $1.5 million. The NUAI shares were received as part of the consideration from the sale of the Company’s TCDC investment in January 2026. Upon initial recognition, the shares were measured at $10.0 million and are subsequently remeasured at fair value based on quoted market prices. Change in Fair Value of Convertible Notes Q1 2026: ($70,228) thousand | Q1 2025: $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 are initially recognized and subsequently remeasured at fair value at each reporting date, with changes in fair value recognized in the statement of operations. Gain on sale of investment in TCDC Q1 2026: $65,920 thousand| Q1 2025: $0 For the three months ended March 31, 2026, the Company recognized a gain on sale of its investment in TCDC of $65.9 million. Under the sale agreement, the Company is entitled to total contractual consideration of $70.0 million, consisting of $10.0 million in cash consideration, $10.0 million in NUAI common shares, and a $50.0 million senior secured convertible promissory note due June 30, 2026. The gain recognized during the period primarily reflects the excess of the fair value of consideration received over the carrying value of the Company’s investment in TCDC at the date of disposal. Interest Income, Net Q1 2026: $1,260 thousand| Q1 2025: $(12) thousand Net interest income for the three months ended March 31, 2026 was $1,260 thousand, compared with net interest expense of $12 thousand in the prior-year period. The increase was primarily attributable to interest earned on the $50.0 million convertible note and higher interest income from bank deposits, partially offset by interest expense on lease liabilities under right-of-use assets. Income Tax Benefit (Expense) Q1 2026: $(13,519) thousand| Q1 2025: $63 thousand Income tax expense for the three months ended March 31, 2026 was $13.5 million, compared with an income tax benefit of $63 thousand in the prior-year period. The significant increase in income tax expense was primarily attributable to the tax impact of the gain recognized on the sale of the Company’s investment in TCDC. - 23 - 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 March 31, 2026, the Company held cash of $164.29 million. The Company strengthened its liquidity position through multiple financing activities, including the issuance of approximately $104 million of pre-IPO convertible notes during 2025 and the receipt of approximately $125 million in gross proceeds from its February 2026 Nasdaq Stock Market 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 condition 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. Cash flow analysis The following table provides a summary of the cash flow statement for the three months ended March 31, 2026 and 2025: For the Three Months Ended March 31, 2026 2025 Net cash provided by (used in) operating activities $ (7,449,588 ) $ (1,328,105 ) Net cash provided by (used in) investing activities $ (32,720,098 ) $ (32,963 ) Net cash provided by (used in) financing activities $ 132,202,208 $ (109,225 ) Operating activities Net cash used in operating activities was $7,450 thousand for the quarter ended March 31, 2026. Operating cash flows reflected receipts from the data storage operations and GPU cloud services, offset by operating expenditures, including product development costs, infrastructure-related expenses to support expansion, and professional fees. Net cash flows used in operating activities was $1,328 thousand for the quarter ended March 31, 2025. Cash flows from operating activities during the period were primarily driven by the continuation of the Company’s Filecoin storage operations and the emerging revenue from its growing GPU cloud services business. The Filecoin operations ceased during the second quarter of 2025. Investing activities Net cash used in investing activities was $32,720 thousand for the three months ended March 31, 2026, primarily reflecting the Company’s payment for the deposit on capital expenditures, partially offset by proceeds received from the sale of TCDC investment. Net cash flows used in investing activities was $33 thousand for the quarter ended March 31, 2025. Cash flows used in investing activities during the period primarily reflect capital outflows used for payment for the purchase of equipment. Financing activities Net cash provided by financing activities was $132,202 thousand for the quarter ended March 31, 2026, primarily driven by proceeds from the issuance of common stock in February 2026 and the receipt of the remaining proceeds from convertible notes issued in December 2025. These cash inflows were partially offset by repayments of the Yorkville loan and lease liabilities. Net cash flows used in financing activities was $109 thousand for the quarter ended March 31, 2025. Cash flows used in financing activities during the period was for the payment of lease liabilities. - 24 - 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 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 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. 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. - 25 - 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.