Fermi Inc. (FRMI) is a pre-revenue AI datacenter power developer in Amarillo, Texas. The Q1 2026 10-Q filed May 15 discloses a governance crisis, the first-ever ASC 205-40 going concern, and no binding tenant six months before a hard covenant date — while the operating AI-datacenter cohort signs investment-grade hyperscaler leases at record pace.

What the filing says

Three subsequent events reshape the company. April 17: Board removes founder Toby Neugebauer as CEO. April 19: CFO Bryant Everson resigns "without Good Reason." April 30: Neugebauer terminated for Cause — auto-removed from the Board for "conduct in violation of agreement and Company policies." Neugebauer filed for a TRO and Rule 202 pre-suit discovery on May 1; a Rule 11 settlement on May 4 seated his nominee on the Board. Proxy contest active.

Q1 financials: $0 revenue, $188.7M net loss, cash declining from $408.5M to $207.5M in one quarter. Management triggered ASC 205-40 substantial doubt for the first time. The MUFG $500M facility's nine-month covenant lands November 10, 2026: absent a 400 MW investment-grade lease, 10% quarterly amortization triggers and the administrative agent may begin marketing the equipment. Keystone $120M follows December 31. A $165M Beal facility carries a change-of-control prepayment trigger — making the proxy contest itself a lender risk.

Three officers (Everson, Hamilton, Ortiz Blanes) sold ≈$11.5M combined at $4.71 on April 9 — eight days before the public Cause-termination drama. Form 4 codes unverified. The Lupia securities class action references "termination of a prospective tenant's funding commitment." A new $5M "contract cancellation costs" line item appears in Q1, unidentified.

What the market thinks

Probability-weighted fair value — 18% lease-recovery to $20, 40% waiver-with-dilution to $4.50, 18% distressed M&A to $2, 18% Ch11 stub to $0.75, 6% Beal-cascade to $0.15 — yields ≈$5.91 against $6.51. Implied lease probability: ≈22%. The tape has digested most of the bear case.

Sell-side has not refreshed. Only Evercore updated post-10-Q ($11, In-Line). Macquarie ($20), Citizens ($30), Cantor ($27) all pre-date the Cause termination. Mean target $20.75 implies ≈80% bull probability — anchored at the IPO thesis.

Why the gap exists

Cohort context is uncomputed. Tier 1 AI-DC peers (HUT, CIFR, CORZ, APLD, WULF, IREN, MARA) signed multiple IG hyperscaler leases in Q1 2026; HUT issued the first IG single-sponsor datacenter construction bond. Zero peer going-concern hits. The "AI demand softening" cover narrative is empirically false — FRMI is execution failure inside healthy demand.

The Beal change-of-control mechanic is buried in covenant text. A Neugebauer proxy victory itself triggers $165M mandatory prepayment against $207.5M cash. Compound failure mode not in any analyst note we've seen.

Reference class. Five comparable pre-revenue founder-led post-IPO companies with concurrent Cause-firing + going concern + covenant pressure (Lordstown, WeWork, Bird, Nikola, Canoo) reached Chapter 11 within 1-3 years. Retail anchors on recovery; the base rate doesn't.

Risks

Squeeze. Short interest 10.9% of float, 1.8 days to cover. Founder-controlled, Trump branding — a single 8-K Item 1.01 disclosure could move +50-100% in 48 hours. Fat right tail.

Tenant signing. P(binding 400 MW IG lease by Dec 31, 2026) is 18% — not zero. Interim management carries the negotiation.

"Binding lease" definition. MUFG qualifying-lease threshold not public. Loose interpretation could raise P(satisfied) materially.

Asset recovery floor. Turbines have a tight global secondary market. Distressed recovery above 50¢ on the CIP dollar compresses the bear payoff.

Catalysts

• June 30, 2026 — Form 4 lockup-expiry window closes
• August 11, 2026 — Q2 earnings, first under interim management
• November 10, 2026 — MUFG nine-month covenant. The hard date.
• December 31, 2026 — Keystone mandatory prepayment trigger
• Q1 2027 — Q4 2026 10-K with auditor going concern + ICFR opinion

What would change our mind

• 8-K announcing a 400 MW IG hyperscaler lease before Nov 10 — bull lane opens
• Permanent CEO named with datacenter or restructuring credibility, plus Neugebauer settling the proxy contest
• MUFG/Keystone covenant amendment granted proactively before Nov 10 — cliff removed
• Distressed-M&A comparable pricing >50¢ on CIP dollar — bear payoff compresses
• Tier 1 cohort cracking (any peer going concern triggered) — kills the isolation read

Evidence