LAS VEGAS, NV - Hyperscale Data, Inc. (NYSE American: GPUS), a company specializing in electronic components, has entered into a significant financial transaction, according to a recent SEC filing. On Monday, the company completed the sale of 500 shares of Series C convertible preferred stock and related warrants to Ault & Company, Inc., an affiliated entity, for a total purchase price of $500,000.
This latest transaction is part of a larger agreement that was initially signed on November 6, 2023, which allows for the purchase of up to $75 million of Series C Convertible Preferred Stock and Series C Warrants. To date, Ault & Company, Inc. has acquired 45,150 shares of Series C Convertible Preferred Stock and warrants to purchase an additional 13,348,116 shares of common stock, totaling an investment of $45.15 million.
The Series C Convertible Preferred Stock comes with warrants that give the holder the right to purchase additional shares of the company’s common stock. These securities were sold to the purchaser without being registered under the Securities Act of 1933, as they were deemed exempt under Section 4(a)(2) due to the nature of the transaction and the relationship between the company and the purchaser.
Hyperscale Data, Inc., previously known as Ault Alliance, Inc., BitNile Holdings, Inc., and Ault Global Holdings, Inc., has undergone several name changes, with the most recent being on January 3, 2023. The company is headquartered in Las Vegas, Nevada, and is incorporated in the state of Delaware.
In other recent news, Hyperscale Data, Inc. has been making significant strides in its financial and strategic developments. The company has been selling its Series C convertible preferred stock to affiliate Ault & Company, Inc., with the aggregate purchase price reaching $44.65 million. This is part of a larger agreement that could see Ault & Company invest up to $75 million in Hyperscale Data.
Additionally, Hyperscale Data has entered into an agreement to sell a real estate property in St. Petersburg, Florida for $13.2 million, depositing $11 million of the purchase price into an account for the benefit of its senior secured lenders.
The company is also focusing on enhancing its data center operations, particularly its artificial intelligence (AI) data center in Michigan, planning to increase its capacity from approximately 30 megawatts to 300 megawatts. This expansion is contingent on necessary regulatory approvals and financing. In line with this, Hyperscale Data has undergone a significant rebranding from Ault Alliance, Inc. and changed its trading symbols on the NYSE American, a move that aligns with the company's strategic direction.
Furthermore, Hyperscale Data's shareholders have approved the conversion of a 10% OID Convertible Promissory Note into common stock, a move that could potentially influence the company's capital structure. This decision aligns with the analysis from Goldman Sachs, which suggests that Hyperscale Data's strategic reorganization fits with industry trends, as AI could drive a 160% surge in data center power demand. As part of its capital-raising efforts, Hyperscale Data sold 300 shares of Series C convertible preferred stock and accompanying warrants for a total of $300,000.
InvestingPro Insights
Recent InvestingPro data provides additional context to Hyperscale Data's financial situation. The company's market capitalization stands at a modest $8.74 million, reflecting its current position in the electronic components sector. With a price-to-book ratio of 0.33, the stock appears to be trading below its book value, which aligns with the InvestingPro Tip indicating that the company is "Trading at a low Price / Book multiple."
However, investors should note that Hyperscale Data is facing significant challenges. The company reported a negative operating income of $63.06 million in the last twelve months, with an operating income margin of -40.9%. This performance is consistent with the InvestingPro Tip that the company is "Not profitable over the last twelve months." Additionally, the stock has experienced a substantial decline, with a one-year price total return of -94.07%, supporting another InvestingPro Tip that the "Price has fallen significantly over the last year."
These insights suggest that while Hyperscale Data is actively seeking funding through transactions like the recent preferred stock sale, it continues to face financial headwinds. Investors considering this stock may want to review the full set of 13 additional tips available on InvestingPro for a more comprehensive analysis of the company's prospects and challenges.
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