A quick overview of $SHAZ

On the 23th of June, I posted on X that i think that Situational Awareness will likely file a form 13G for $SHAZ on 29 Jun
I am writing this as a follow up to document what i have learnt while digging into the company.
First off, Situational Awareness filed it yesterday
What strikes me immediately is that Situational Awareness stake ballooned to 19.9%. This is significant for many reasons. 20% is the threshold where the stake crosses a major accounting and regulatory level.
Under both IFRS and GAAP, owning 20% or more presumes “significant influence” and the fund has to use the “equity method” of accounting. (goosebumps, thank you accounting class)
At 20%, the stake can hardly be called passive anymore. It becomes one of the largest singular shareholders and have extreme leverage in getting a seat on the board.
Situational Awareness bought all the way till the limit.
Next, in order to acquire such a stake, this means for the entire equity deal, Situational Awareness took 35%.
Linking into the first quarter financial statements, we can see that Sharon AI only had ~164M of cash on the balance sheet.
Post this deal, SHAZ -2.83%↓ will have an additional 1.6B of cash on its balance sheet to fund the build out.
Also, back in January 26, USDai ($CHIP) approved a 500m debt facility for SHAZ -2.83%↓
This answers one of the most important question for SHAZ -2.83%↓ - Can this company build what it is promising to build. With access to about 2.1B of cash and debt - the build out is now financially realistic.
Next, the revenue stream for SHAZ -2.83%↓ cannot be discounted anymore. It has a 2.2B backlog in a take or pay contract.
Also, NVDA 0.28%↑ is making SHAZ -2.83%↓ a strategic collaborator in the 72MW deal in Australia. This secures the GPUs.
In any neocloud buildout, the three questions i will ask is
1 - Can the company fund this in an equity accretive manner?
2 - Can the company deliver the compute? (Sourcing GPUs etc is a big part of the problem)
3 - Can the company continue to sign good contracts that are suitable for its capital structure
Thus far, i see that SHAZ -2.83%↓ has significantly derisked the first 2 concerns i have for a starting neocloud.
This brings the total capacity for SHAZ to 132MW. Which indicates about ~1.3B in ARR for SHAZ -2.83%↓
A neocloud is more like a bank for compute. It raises capital and deploys it into compute. The valuation of a neocloud is therefore the NPV of all the projects that it will ever deploy into.
Currently, any neocloud operator will tell you that compute is sold out. Every neocloud project is +EV.
Don’t believe me? Go rent out some GPUs yourself. Tell me what is the payback period.
Non believers of neos often dont understand the real business of a neocloud and hence anchor valuation to current deployment. That misleads people.
If it was any other anchor investor besides Situational Awareness, i would not put too much weight on the ability of SHAZ to execute.
However, Leopold lending his name and weighting this deal heavily biases me towards that the execution for SHAZ will probably be good.
He in all likelihood knows a great deal more than me.
To recap, the latest funding deal has answered 2 crucial questions for SHAZ, whether it has the ability to raise capital for the build out and to procure the GPUs required.
Leopold lending his name to SHAZ also heavily reduces any reputational taint that SHAZ might have.
Hope you enjoyed this!