Hyperscale Data Enters into an Agreement for a Financing of up to $25 Million

Rhea-AI Summary

Hyperscale Data (NYSE: GPUS) has entered into a Securities Purchase Agreement for up to $25 million financing from Ault & Company (A&C), a related party. The agreement involves issuing Series G Convertible Preferred Stock with a stated value of $1,000 per share, convertible into common stock at the greater of $0.10 per share or a 5% premium to the closing price. The preferred stock pays a 9.5% annual dividend and includes warrants for approximately 4.25 million common shares at $5.92 per share.

The financing proceeds will fund MI data center expansion for AI computing infrastructure, debt repayment, and working capital. The agreement allows for multiple closings through December 31, 2025, subject to regulatory and stockholder approval, as well as A&C securing financing.

Positive

• Secured up to $25 million in additional financing
• 9.5% annual dividend payment on preferred stock
• Conversion price represents 25% premium over current market price
• Proceeds will support AI infrastructure expansion and debt reduction

Negative

• Financing dependent on A&C securing their own funding
• Potential dilution from preferred stock conversion and warrants
• Full ratchet price protection could lead to additional dilution
• Transaction requires stockholder approval

Insights

Financial Analyst

This $25 million financing agreement marks a strategic capital injection with notable terms. The Series G Convertible Preferred Stock structure, with its 9.5% dividend rate and conversion features, presents a complex but calculated financing instrument. The conversion price at a 25% premium over market indicates strong insider confidence, while the full ratchet protection safeguards investor interests.

The warrants for 4.25M shares at $5.92 per share provide additional upside potential. Most importantly, the capital allocation towards MI data center infrastructure upgrades positions the company to capitalize on the growing AI computing demands - a important market opportunity.

Think of this like building a bigger power plant when electricity demand is surging - it's a timely infrastructure investment backed by a major stakeholder who already has $50 million invested through similar instruments.

Tech Infrastructure Expert

The focus on expanding high-performance computing infrastructure for AI applications demonstrates strategic foresight. Data centers supporting AI workloads require specialized configurations - more power density, enhanced cooling systems and optimized server architectures. This capital injection enables critical infrastructure upgrades at a time when AI computing demand is accelerating exponentially.

In simpler terms, imagine upgrading from a regular highway to an expressway with special lanes for high-speed vehicles - that's what these data center improvements represent for AI computing capacity. The timing aligns perfectly with industry trends as more enterprises seek robust infrastructure for AI deployment.

LAS VEGAS, Dec. 23, 2024 (GLOBE NEWSWIRE) -- Hyperscale Data, Inc. (NYSE American: GPUS), a diversified holding company (“Hyperscale Data” or the “Company”), announced today that it has entered into a Securities Purchase Agreement (the “Agreement”) providing for up to $25 million of financing (the “Financing”) from Ault & Company, Inc., a related party (“A&C”). Pursuant to the Agreement, Hyperscale Data has agreed to issue and sell to A&C up to $25 million in shares of Series G Convertible Preferred Stock (the “Preferred Shares”). The Preferred Shares will be senior to all other classes of preferred stock the Company has outstanding except with respect to the Series C Convertible Preferred Stock (the “Series C Preferred Stock”), with which it ranks in parity, as well as senior to the Company’s Class A common stock (“Common Stock”).

Each Preferred Share shall have a stated value of $1,000.00 per share and, upon stockholder approval, shall be convertible at the holder’s option into shares of Common Stock at a conversion price equal to the greater of (i) $0.10 per share (the “Floor Price”), which Floor Price shall not, except for voting rights purposes, be adjusted for stock dividends, stock splits, stock combinations and other similar transactions and (ii) the lesser of (A) $6.74, or (B) a 5% premium to the closing sale price of the Common stock on the day immediately prior to the date of conversion (the “Conversion Price”). The Conversion Price will be subject to standard anti-dilution provisions in connection with any stock split, stock dividend, subdivision or similar reclassification of the Common Stock. The Preferred Stock also has “full ratchet” price protection in the event the Company should issue securities at a lower price than the Conversion Price. The Preferred Stock shall pay a dividend at an annual rate of 9.5%, which the Company may, during the first two years, pay in shares of Common Stock.

Further, A&C will receive warrants (“Warrants”) to purchase up to approximately 4.25 million shares of Common Stock, presuming that the full amount of the Preferred Shares is sold, exercisable for five years at $5.92 per share, subject to adjustment.

The proceeds from the Financing will be used for expansion of the MI data center to support infrastructure upgrades necessary to support the growing demands of high-performance computing services powering Artificial Intelligence solutions, repayment of outstanding indebtedness and general working capital purposes.

"The conversion price of the Preferred Shares is nearly a 25% premium over the current market price. That A&C is willing to invest an additional up to $25 million, beyond the $75 million in shares of a virtually identical series of preferred stock, the Series C Preferred Stock of which it has already purchased approximately $50 million, on those terms should be a clear indicator of our belief that the market has been undervaluing the Company, which I've been highlighting for years. This transaction is more than a number—it’s a declaration of my steadfast confidence in our data centers, the crane company, the lending firm, and the exceptional portfolio companies we've nurtured over the past seven years. Each is a vital component of our collective success," said Milton "Todd" Ault III, Executive Chairman of Hyperscale Data and Chairman & CEO of A&C.

The Agreement provides for several closings through December 31, 2025, though such dates may be extended by A&C as set forth in the Agreement. The consummation of the transactions contemplated by the Agreement, specifically the conversion of the Preferred Shares and the exercise of the Warrants in an aggregate number in excess of 19.99% on the execution date of the Agreement, are subject to various customary closing conditions as well as regulatory and stockholder approval. In addition to customary closing conditions, the closing of the Financing is also conditioned upon the receipt by A&C of financing to consummate the transaction.

Additional information regarding the securities described above and the terms of the Financing will be included in a Current Report on Form 8-K to be filed with the United States Securities and Exchange Commission (“SEC”).

The Preferred Shares and Warrants will be issued in reliance upon the exemption from the securities registration afforded by Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”) as promulgated by SEC under the Securities Act.

This press release does not constitute an offer to sell or the solicitation of an offer to buy the securities, nor will there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of such jurisdiction.

For more information on Hyperscale Data and its subsidiaries, Hyperscale Data recommends that stockholders, investors and any other interested parties read Hyperscale Data’s public filings and press releases available under the Investor Relations section at hyperscaledata.com or available at www.sec.gov.

About Hyperscale Data, Inc.

Hyperscale Data is transitioning from a diversified holding company pursuing growth by acquiring undervalued businesses and disruptive technologies with a global impact to becoming solely an owner and operator of data centers to support high performance computing services. Through its wholly and majority-owned subsidiaries and strategic investments, Hyperscale Data owns and operates a data center at which it mines digital assets and offers colocation and hosting services for the emerging artificial intelligence ecosystems and other industries. It also provides, through its wholly owned subsidiary, Ault Capital Group, Inc., mission-critical products that support a diverse range of industries, including an artificial intelligence software platform, social gaming platform, equipment rental services, defense/aerospace, industrial, automotive, medical/biopharma and hotel operations. In addition, Hyperscale Data is actively engaged in private credit and structured finance through a licensed lending subsidiary. Hyperscale Data’s headquarters are located at 11411 Southern Highlands Parkway, Suite 240, Las Vegas, NV 89141.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements generally include statements that are predictive in nature and depend upon or refer to future events or conditions, and include words such as “believes,” “plans,” “anticipates,” “projects,” “estimates,” “expects,” “intends,” “strategy,” “future,” “opportunity,” “may,” “will,” “should,” “could,” “potential,” or similar expressions. Statements that are not historical facts are forward-looking statements. Forward-looking statements are based on current beliefs and assumptions that are subject to risks and uncertainties.

Forward-looking statements speak only as of the date they are made, and the Company undertakes no obligation to update any of them publicly in light of new information or future events. Actual results could differ materially from those contained in any forward-looking statement as a result of various factors. More information, including potential risk factors, that could affect the Company’s business and financial results are included in the Company’s filings with the U.S. Securities and Exchange Commission, including, but not limited to, the Company’s Forms 10-K, 10-Q and 8- K. All filings are available at www.sec.gov and on the Company’s website at www.hyperscaledata.com.

Hyperscale Data Investor Contact:
IR@hyperscaledata.com or 1-888-753-2235

FAQ

What is the size and purpose of Hyperscale Data's (GPUS) new financing agreement?

Hyperscale Data (GPUS) has secured up to $25 million in financing to expand MI data center infrastructure for AI computing, repay debt, and provide working capital.

What are the key terms of GPUS's Series G Convertible Preferred Stock?

The Series G Preferred Stock has a $1,000 per share stated value, 9.5% annual dividend, and converts to common stock at the greater of $0.10 or a 5% premium to the closing price.

How many warrants are included in GPUS's financing agreement?

The agreement includes warrants to purchase approximately 4.25 million common shares at $5.92 per share, exercisable for five years.

When does GPUS's new financing agreement expire?

The financing agreement allows for multiple closings through December 31, 2025, with possible extensions by Ault & Company.

What approvals are needed for GPUS's $25M financing to close?

The financing requires regulatory and stockholder approval, particularly for conversion of preferred shares and warrant exercises exceeding 19.99% of current shares.