10-Q: TurnOnGreen Reports Q1 2026 Results, Net Loss Widens

TurnOnGreen, Inc. reported a wider net loss for the first quarter of 2026, with revenues increasing 9% year-over-year, but operating expenses and interest expenses significantly rising.

Summary

• TurnOnGreen, Inc. reported a net loss of $773,000 for the three months ended March 31, 2026, an increase from the $541,000 net loss in the same period of 2025.
• Revenue for the first quarter of 2026 increased by 9% to $1,736,000, up from $1,592,000 in the first quarter of 2025.
• Gross profit increased by 11% to $813,000, compared to $730,000 in the prior year period.
• Total operating expenses rose significantly by 26% to $1,434,000 from $1,140,000 in Q1 2025, driven by increased general and administrative costs.
• Interest expense, including related party interest, increased by 37% to $170,000 and other interest expense rose by 614% to $50,000.
• The company has substantial doubt about its ability to continue as a going concern due to recurring operating losses and insufficient cash flows.
• Cash and cash equivalents increased to $127,000 as of March 31, 2026, from $65,000 as of December 31, 2025.
• The company has a negative working capital of $9 million as of March 31, 2026.
• The company continues to rely on advances from Hyperscale Data, Inc. for its working capital needs.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative filing due to the widening net loss, increasing operating expenses, and the continued substantial doubt about the company's ability to continue as a going concern, despite a modest increase in revenue.

Positives

• Revenue increased by 9% to $1,736,000 for the first quarter of 2026 compared to the same period in 2025.
• Gross profit increased by 11% to $813,000 for the first quarter of 2026 compared to the same period in 2025.
• Cash and cash equivalents increased to $127,000 as of March 31, 2026, from $65,000 as of December 31, 2025.
• The company received an equipment-related government grant of $49,000 during the first quarter of 2026.

Negatives

• Net loss for the first quarter of 2026 widened to $773,000 from $541,000 in the prior year period.
• Total operating expenses increased by 26% to $1,434,000 in Q1 2026, primarily due to a $200,000 increase in costs for office and warehouse relocation, a $62,000 increase in selling and marketing expenses, and a $63,000 increase in professional fees.
• Interest expense, including related party interest, increased by 37% to $170,000, and other interest expense increased by 614% to $50,000.
• The company has substantial doubt about its ability to continue as a going concern.
• The company has negative working capital of $9 million as of March 31, 2026.
• The company's lawsuit liability is $1.2 million as of March 31, 2026.

Risks

• The company has recurring operating and net losses and has not generated sufficient cash flows, leading to substantial doubt about its ability to continue as a going concern.
• The company's inability to continue as a going concern could negatively impact its ability to obtain needed financing.
• There is no assurance that Hyperscale Data, Inc. will continue providing financing to the company on acceptable terms.
• The company has a material weakness in its internal control over financial reporting due to insufficient resources in its accounting function and inadequate segregation of duties.
• The company is involved in litigation, including a $1.2 million judgment from a wrongful termination and disability discrimination lawsuit.
• The company's financial statements are prepared assuming it will continue as a going concern, but there are no adjustments for potential issues if it cannot.
• The company's convertible notes are secured by a security interest in substantially all of its assets and intellectual property.
• The company's financial condition and results of operations are subject to market risks, although specific disclosures are not required for smaller reporting companies.

Future Outlook

The company expects to continue incurring operating and net losses each quarter until at least the time it begins significant deliveries of its products. Future development activities and working capital needs will be financed largely through advances from Hyperscale Data, Inc. until funds provided by operations are sufficient.

Management Comments

• Management believes that the Company will continue to incur operating and net losses each quarter until at least the time it begins significant deliveries of its products.
• Management believes that capital sources will be available, but there can be no assurances that Hyperscale will continue providing financing to the Company when needed or on terms acceptable to the Company.
• Management has identified material weaknesses in internal control over financial reporting, including insufficient resources in the accounting function and inadequate segregation of duties.

Industry Context

StockSavvy.ai notes that TurnOnGreen operates in the competitive power electronics and EV charging solutions market. The company's focus on premium, custom solutions for mission-critical applications differentiates it, but the increasing operating expenses and net losses highlight the challenges of scaling in this sector, especially given the ongoing need for external financing.

Comparison to Industry Standards

• The company's revenue growth of 9% in Q1 2026 is modest compared to many rapidly growing EV charging infrastructure companies, which often report triple-digit growth.
• The widening net loss and the ongoing going concern warning are significant negative deviations from industry standards for companies seeking to attract investment and scale operations.
• The reliance on related-party financing from Hyperscale Data, Inc. is a common strategy for early-stage companies but is less common for established players in the power electronics sector.
• The company's operating expenses as a percentage of revenue (82.6% in Q1 2026) are high, indicating potential inefficiencies or significant investment in growth that has not yet translated to profitability.

Corporate Governance

Legal Proceedings

• A lawsuit resulted in a judgment against the company for $1.2 million (inclusive of interest, legal fees, etc.) related to wrongful termination and disability discrimination.

Related Party Transactions

• The company receives advances from Hyperscale Data, Inc. (parent company) for working capital, with a credit limit of $8,000,000 and an interest rate of 10%.
• Interest expense related to Hyperscale advances was $170,000 for Q1 2026.
• The company has related party sales of $13,000 in Q1 2026.
• A sublease agreement with Gresham Worldwide, Inc. (a related party) for office and warehouse space was entered into.

Stakeholder Impact

• Shareholders: Continued losses and going concern issues may negatively impact share value and investor confidence. Dilution risk from potential future capital raises.
• Creditors: Increased debt levels (convertible notes, related party advances) and going concern issues may raise concerns about repayment.
• Employees: Uncertainty surrounding the company's financial stability could impact morale and job security.
• Suppliers: Potential for delayed payments due to cash flow constraints.
• Customers: Continued reliance on custom solutions and potential for supply chain disruptions if financial issues persist.

Next Steps

• Continue to finance future development activities and working capital needs through advances from Hyperscale Data, Inc. until funds provided by operations are sufficient.
• Manage operating expenses, particularly general and administrative costs, to mitigate the widening net loss.
• Seek to achieve significant product deliveries to improve cash flows and address going concern issues.
• Address material weaknesses in internal control over financial reporting.

Key Dates

Recommendation

The company shows revenue growth and improved gross profit, but the widening net loss, significant increase in operating expenses, and persistent going concern issues are major red flags. The reliance on related-party financing and the ongoing legal liabilities add further risk. While there's potential in the EV charging and power solutions market, the current financial trajectory and control deficiencies warrant a cautious 'hold' until a clear path to profitability and improved financial stability is demonstrated.

Keywords

TurnOnGreen, Form 10-Q, Quarterly Report, Financial Statements, Net Loss, Revenue, Operating Expenses, Going Concern, EV Charging, Power Solutions, Hyperscale Data, Convertible Notes, Lawsuit Liability