Hyperscale Data, Inc. (NYSE American: GPUS), a company specializing in electronic components, announced today that it has entered into a Material Definitive Agreement and completed an unregistered sale of equity securities to Ault & Company, Inc., an affiliated entity. The transaction, which took place on Monday, includes the sale of 100 shares of Series C convertible preferred stock and warrants to purchase an additional 29,564 common shares, for a purchase price of $100,000.
This recent sale is part of a larger arrangement where Hyperscale Data has sold a cumulative total of 45,700 shares of Series C Convertible Preferred Stock and Series C Warrants, enabling the purchase of 13,510,718 common shares, for an aggregate investment of $45.7 million. The Securities Purchase Agreement, dated November 6, 2023, allows for the purchase of up to $75 million of Series C Convertible Preferred Stock and accompanying warrants in one or more transactions.
The funding obtained from the Purchaser, Ault & Company, Inc., will add to Hyperscale Data’s financial resources, as the company continues to develop in the electronic components sector. The Series C Convertible Preferred Stock and the Series C Warrants were sold in reliance upon an exemption from the registration requirements under Section 4(a)(2) of the Securities Act of 1933, indicating that the sale was made to an accredited investor and not through a public offering.
Hyperscale Data, Inc., formerly known as Ault Alliance, Inc., BitNile Holdings, Inc., and Ault Global Holdings, Inc., has undergone several name changes, with the most recent occurring on January 3, 2023. The company is incorporated in Delaware and has its principal executive offices in Las Vegas, Nevada.
In other recent news, Hyperscale Data, Inc. has continued to raise capital through the sale of its Series C convertible preferred stock and associated warrants to Ault & Company, Inc. The aggregate investment by Ault & Company has reached $45.6 million, as part of an agreement that allows for the potential purchase of up to $75 million of Series C Convertible Preferred Stock and Series C Warrants.
The company has also entered into an agreement to sell a real estate property in St. Petersburg, Florida for $13.2 million, with $11 million of the purchase price to be deposited into an account for the benefit of its senior secured lenders.
In terms of strategic developments, Hyperscale Data is focusing on enhancing its data center operations, specifically its artificial intelligence (AI) data center in Michigan. The company plans to increase the facility’s capacity from approximately 30 megawatts to 300 megawatts, contingent on necessary regulatory approvals and financing. Goldman Sachs has suggested that AI could drive a 160% surge in data center power demand, aligning with Hyperscale Data’s expansion plans.
Furthermore, Hyperscale Data’s shareholders have approved the conversion of a 10% OID Convertible Promissory Note into common stock. This move aligns with the company’s recent rebranding from Ault Alliance, Inc., and its strategic shift towards data center operations.
InvestingPro Insights
Recent financial data from InvestingPro sheds additional light on Hyperscale Data’s current situation. The company’s market capitalization stands at a modest $8.53 million, reflecting its small-cap status. This valuation comes amid challenging financial metrics, with the company reporting a negative operating income of $63.06 million over the last twelve months as of Q2 2024.
InvestingPro Tips highlight some concerns for investors. The company is operating with a significant debt burden and may have trouble making interest payments. This aligns with the recent equity sale to Ault & Company, which could be seen as a move to bolster the company’s financial position. Additionally, Hyperscale Data is trading at a low Price / Book multiple of 0.32, which could indicate that the market is undervaluing its assets or reflecting concerns about future profitability.
The company’s stock price has experienced significant volatility, with a 94.3% decline over the past year. This performance underscores the challenges Hyperscale Data faces in the competitive electronic components sector.
For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips for Hyperscale Data, providing a deeper understanding of the company’s financial health and market position.
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