10-Q: Roth CH Acquisition Co. Reports Q3 Loss, Extends SharonAI Merger Deadline

Roth CH Acquisition Co. reported a significant net loss in Q3 2025, driven by warrant liability changes, and extended its merger deadline with AI target SharonAI Inc. to December 31, 2025.

Summary

• Roth CH Acquisition Co. (USCTF) reported a net loss of $707,953 for the three months ended September 30, 2025, and a net loss of $2,058,473 for the nine months ended September 30, 2025.
• The net loss for the nine months ended September 30, 2025, contrasts sharply with a net income of $450,355 for the same period in 2024.
• A significant factor in the loss was a change in the fair value of warrant liabilities, resulting in an expense of $1,112,500 for the nine months ended September 30, 2025, compared to a gain of $529,550 in the prior year.
• The company's cash balance increased to $16,083 as of September 30, 2025, from $6,738 at December 31, 2024.
• Total liabilities increased to $3,142,950 as of September 30, 2025, from $2,258,424 at December 31, 2024, primarily due to a rise in warrant liabilities.
• The company has a working capital deficit of $1,786,659 as of September 30, 2025, raising substantial doubt about its ability to continue as a going concern.
• The business combination agreement with SharonAI Inc., a company focused on high-performance computing (HPC) and artificial intelligence (AI), was amended to extend the closing date to December 31, 2025.
• A promissory note from related parties, totaling $1,181,000, was converted into 39,366,667 Class A ordinary shares on January 24, 2025.
• The company identified material weaknesses in its internal control over financial reporting related to accounting for complex financial instruments and shareholder redemption approval procedures.

Sentiment

Score: 3

Explanation: The sentiment is negative due to a significant net loss, increased liabilities, a substantial working capital deficit, and explicit going concern doubt. While the business combination is progressing, its repeated delays and the company's financial fragility overshadow the potential upside. Identified material weaknesses in internal controls further contribute to the negative outlook.

Positives

• Cash balance increased to $16,083 as of September 30, 2025, from $6,738 at December 31, 2024.
• A promissory note from related parties totaling $1,181,000 was converted into 39,366,667 Class A ordinary shares, reducing debt obligations.

Negatives

• Reported a net loss of $707,953 for the three months ended September 30, 2025, and a net loss of $2,058,473 for the nine months ended September 30, 2025, a significant decline from the prior year's net income.
• Operating costs increased to $945,973 for the nine months ended September 30, 2025, from $514,632 in the same period of 2024.
• Warrant liabilities significantly increased to $1,335,000 as of September 30, 2025, from $222,500 at December 31, 2024, contributing to a non-cash loss.
• The company has a working capital deficit of $1,786,659 and a total shareholders' deficit of $3,121,659, indicating a precarious financial position.
• Management has determined that the liquidity condition raises substantial doubt about the company's ability to continue as a going concern.
• Material weaknesses were identified in internal control over financial reporting related to accounting for complex financial instruments and shareholder redemption approval procedures.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to a significant working capital deficit and the need to raise additional capital.
• The company may not be able to obtain additional financing on commercially acceptable terms, if at all, to meet its working capital needs and finance acquisition plans.
• Geopolitical instability from the Russia-Ukraine conflict and the Israel-Hamas conflict could lead to market disruptions, affecting the company's search for an initial business combination and any target business.
• The company's ability to complete the business combination with SharonAI Inc. is subject to the satisfaction or waiver of various conditions, and there is no assurance it will be consummated.
• Material weaknesses in internal control over financial reporting could adversely affect the company's ability to record, process, summarize, and report financial information accurately.
• The fair value of warrant liabilities is subject to re-measurement at each reporting date, leading to potential non-cash gains or losses that can significantly impact reported net income or loss.

Future Outlook

The company expects to incur significant costs related to identifying a target business, undertaking due diligence, and negotiating an initial business combination. It anticipates needing to raise additional funds to meet operating expenditures prior to completing its initial business combination. The business combination with SharonAI Inc. is expected to close by December 31, 2025, subject to customary closing conditions.

Management Comments

• Management has determined that the liquidity condition raises substantial doubt about the company's ability to continue as a going concern.
• Management believes efforts to enhance controls relating to accounting for complex financial transactions and shareholder redemption approvals will improve internal controls, but cannot assure that additional review and modification will not be required in the future.

Industry Context

The proposed business combination with SharonAI Inc. positions the company within the rapidly growing high-performance computing (HPC) and artificial intelligence (AI) technology sectors. SharonAI Inc. aims to acquire assets and technology associated with the development and delivery of HPC services, leveraging large amounts of graphic and central processing units combined with data storage expertise. This aligns with the increasing demand for advanced computing infrastructure to support AI development and deployment across various industries.

Corporate Governance

Related Party Transactions

• A promissory note from related parties, initially for up to $1,000,000 (later amended to $2,000,000), was converted into 39,366,667 Class A ordinary shares in the amount of $1,181,000 on January 24, 2025.
• The Sponsor advanced the company $256,636 as of September 30, 2025, included in advances from related party.

Stakeholder Impact

• Shareholders face potential dilution from the conversion of the promissory note into a large number of Class A ordinary shares.
• Shareholders are subject to uncertainty regarding the successful completion of the business combination, which has seen multiple delays.
• The going concern doubt raises significant risk for all stakeholders, particularly equity holders, regarding the company's long-term viability.
• The identified material weaknesses in internal controls could impact investor confidence and the perceived reliability of financial reporting.

Next Steps

• Complete the business combination with SharonAI Inc. by the extended deadline of December 31, 2025.
• File a registration statement for a shelf registration (Form S-1 or S-3) covering the resale of all registrable securities within 30 days of the closing of the business combination.
• Continue efforts to remediate material weaknesses in internal control over financial reporting, particularly concerning complex financial instruments and shareholder redemption approvals.
• Seek additional capital through loans or investments to address working capital deficiencies and finance transaction costs.

Key Dates

Recommendation

The company's financial position is highly precarious, marked by a significant net loss, a substantial working capital deficit, and explicit going concern doubt. The material weaknesses in internal controls further undermine confidence. While the proposed merger with SharonAI Inc. offers a potential path forward, its repeated delays and the company's current financial fragility present extreme risks. The conversion of a related-party note into a large number of shares also suggests potential dilution. Given these severe financial and operational challenges, the stock carries a very high risk profile, making it an unfavorable investment.

Keywords

SPAC, Roth CH Acquisition Co., SharonAI Inc., Business Combination, Artificial Intelligence, High Performance Computing, Warrant Liability, Going Concern, Quarterly Report, SEC Filing, Financial Results