Business Context and Reporting Period
Company: Hyperscale Data, Inc. (GPUS)
Filing Type: Form 10-Q (Unaudited)
Period: Three months ended March 31, 2026
Business Overview: Hyperscale Data operates as a holding company focused on AI data center infrastructure and Bitcoin mining (via subsidiary Sentinum). It also holds a diversified portfolio of businesses under Ault Capital Group (ACG), including defense solutions (Gresham), crane operations (Energy), hotel/real estate (AGREE), and fintech/lending. The Company anticipates divesting ACG in 2027 to focus solely on data center and Bitcoin operations.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenue | $44.1 million | $25.0 million |
| Gross Profit | $15.1 million | $5.3 million |
| Gross Margin | 34.2% | 21.1% |
| Net Loss (Attributable to Common Stockholders) | $(32.5) million | $(6.2) million |
| Diluted EPS | $(0.09) | $(0.98) |
| Cash and Cash Equivalents | $10.5 million | $13.1 million (Dec 31, 2025) |
| Restricted Cash | $25.7 million | $36.2 million (Dec 31, 2025) |
| Total Debt (Current + Long-Term Notes & Convertibles) | ~$109.0 million | ~$97.7 million (Dec 31, 2025) |
| Crypto Assets (Unrestricted) | $26.3 million | $46.2 million (Dec 31, 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 76% to $44.1 million, driven primarily by the inclusion of Gresham (Defense Solutions) revenue of $10.2 million (not present in Q1 2025 due to bankruptcy proceedings) and a surge in Fintech lending/trading revenue to $11.5 million.
- Operating Loss: Loss from operations widened to $(21.3) million from $(6.4) million. This was largely due to a $7.4 million unrealized loss on crypto assets and a 101% increase in General and Administrative expenses ($18.5 million vs. $9.2 million) driven by Gresham integration and professional fees.
- Segment Performance:
- Sentinum (Mining): Revenue decreased 2% to $5.1 million due to lower Bitcoin prices and higher network difficulty.
- Energy (Cranes): Revenue decreased 20% to $11.0 million due to reduced demand in the oil and gas sector.
- AGREE (Hotels): Revenue increased 14% to $3.6 million.
- Debt Obligations: Current notes payable increased to $88.8 million. The Company is in default on AGREE construction loans ($68.8 million) and certain related-party notes, though lenders have not issued formal notices of default as of the filing date.
Guidance, Outlook, Risks, and Unusual Items
- Divestiture Plan: Management expects to divest Ault Capital Group (ACG) in the second quarter of 2027. Upon completion, the Company will operate as a focused AI data center and Bitcoin infrastructure entity.
- Liquidity Strategy: The Company is actively raising capital through At-The-Market (ATM) offerings of Class A common stock and Series D Preferred stock. Subsequent to the quarter end (through May 15, 2026), the Company raised an additional $14.0 million in common stock and $0.4 million in preferred stock.
- Unusual Items:
- Crypto Volatility: Significant unrealized losses ($7.4 million on unrestricted assets and $4.7 million on restricted assets) impacted earnings due to Bitcoin price declines.
- Debt Extinguishment: Recognized a $0.5 million gain on extinguishment of debt in Q1 2026, contrasting with a $4.6 million loss in Q1 2025.
- Subsequent Litigation Proceeds: Received approximately $16.6 million in cash proceeds in April 2026 from the resolution of litigation involving a former subsidiary.
- Risks & Controls:
- Material Weaknesses: Disclosure controls and procedures were deemed ineffective due to material weaknesses in internal controls, specifically regarding insufficient accounting resources, lack of segregation of duties, and ineffective IT user access/change management controls.
- Debt Default Risk: Several debt instruments are in default or near maturity, including AGREE construction loans and short-term term notes maturing in June 2026.
Investor Verification Checklist
- Debt Default Status: Verify the current status of the AGREE construction loans ($68.8 million) and related-party notes, specifically whether lenders have issued formal notices of default or acceleration.
- Liquidity Runway: Assess the sufficiency of cash ($10.5 million) and restricted cash ($25.7 million) against upcoming debt maturities, including the $10.8 million term note maturing June 29, 2026, and weekly principal payments required starting May 2026.
- Crypto Asset Valuation: Confirm the fair value of unrestricted ($26.3 million) and restricted ($16.7 million) crypto assets and the impact of further price volatility on the balance sheet.
- Internal Control Remediation: Review the progress of remediation plans for material weaknesses in financial reporting and IT controls, as these impact the reliability of future financial statements.
- Divestiture Timeline: Monitor the progress of the planned ACG divestiture scheduled for Q2 2027 and any potential delays or changes in strategy.