Business Context and Reporting Period
Company: Hyperscale Data, Inc. (NYSE American: GPUS)
Filing Type: Form 10-Q (Unaudited)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Hyperscale Data operates as a holding company with a strategic focus on AI data centers and Bitcoin mining (via subsidiary Sentinum), alongside a diversified portfolio of businesses in defense, energy (crane operations), real estate, and fintech (via Ault Capital Group). The Company expects to divest Ault Capital Group in 2027 to become a focused AI and digital asset infrastructure company.
Key Financial Metrics
| Metric | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Total Revenue | $34.8 million | $78.9 million |
| Gross Profit | $8.8 million (25% margin) | $23.9 million (30% margin) |
| Net Loss (Attributable to Common Stockholders) | $(21.7) million | $(54.1) million |
| Cash and Cash Equivalents | $36.8 million | $36.8 million (as of June 30) |
| Restricted Cash | $28.3 million | $28.3 million (as of June 30) |
| Total Current Liabilities | $201.7 million | $201.7 million (as of June 30) |
| Notes Payable (Current + Long-Term) | $105.9 million | $105.9 million (as of June 30) |
| Convertible Notes Payable | $37.6 million (Gross) | $37.6 million (Gross) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 35% year-over-year for the quarter and 55% for the six-month period. This was driven primarily by a 604% increase in Defense segment revenue (due to the reconsolidation of Gresham Worldwide) and a 414% increase in Fintech revenue.
- Operating Expenses: Operating expenses surged 96% for the quarter and 144% for the six-month period. General and Administrative expenses doubled, largely due to the reconsolidation of Gresham and increased compensation. Research and Development expenses increased significantly ($4.3M vs $0.1M for the quarter) due to AI and blockchain initiatives.
- Impairment Charges: The Company recorded a $2.3 million impairment of property and equipment (Bitcoin mining hardware) and a $7.1 million impairment of restricted crypto assets (cbBTC) during the quarter, reflecting a strategic shift from mining to AI compute at its Michigan facility.
- Non-Operating Items: A $16.1 million gain on the extinguishment of a settlement obligation significantly offset operating losses in the quarter.
Guidance, Outlook, Risks, and Unusual Items
- Going Concern Warning: Management has raised substantial doubt about the Company's ability to continue as a going concern. Existing cash and liquidity sources are insufficient to fund operations, debt obligations, and planned capital expenditures (specifically the $100M+ Michigan data center expansion) for the next 12 months without additional financing.
- Strategic Pivot: The Company is transitioning its Michigan data center from Bitcoin mining to AI compute and colocation services. This strategic reallocation triggered the aforementioned asset impairments.
- Financing Activities: The Company is actively raising capital through At-the-Market (ATM) offerings of Class A common stock and Series D preferred stock, as well as Bitcoin-backed borrowings via the Morpho protocol. A new $300M ATM facility for Class A stock was established in June 2026.
- Legal Proceedings: A class action lawsuit was filed in May 2026 alleging excessive noise from the Michigan data center. The Company intends to vigorously defend the action but cannot estimate potential losses.
- Subsequent Events: Following the quarter-end, the Company sold Bitcoin to repay Morpho borrowings in full and authorized a 1-for-5 reverse stock split, expected to be effective in late August 2026.
Investor Verification Checklist
- Liquidity Runway: Verify the status of the $100M+ capital requirement for the Michigan data center and the Company's ability to secure the necessary equity or debt financing to avoid default.
- Debt Covenants: Review the status of the AGREE construction loans, which are noted as being in default due to missed principal payments, and confirm if lenders have granted waivers.
- Asset Valuation: Assess the fair value of the remaining crypto asset holdings and the recoverability of the impaired mining equipment given the strategic shift to AI.
- Reverse Stock Split: Confirm the effective date and ratio of the 1-for-5 reverse stock split and its impact on share count and trading liquidity.
- Legal Exposure: Monitor the progress of the Dowagiac data center noise litigation for potential financial impact or operational restrictions.