Hyperscale Data Completes $50 Million of the Aggregate $75 Million Preferred Equity Investment from Ault & Company

Rhea-AI Summary

Hyperscale Data (NYSE: GPUS) has completed a $50 million preferred equity investment through the issuance of 50,000 Series C Convertible Preferred Stock shares to Ault & Company. The investment, made over the past 13 months, is part of a larger $75 million offering, with $25 million still pending completion.

The company is transforming into a pure AI data center business by spinning out all non-data center and non-Bitcoin mining assets. The funds will be used to expand the MI data center, implement infrastructure upgrades for high-performance computing services powering AI solutions, repay outstanding debt, and provide working capital.

Positive

• Secured $50 million in preferred equity investment
• Additional $25 million investment commitment pending
• Strategic transformation into pure AI data center focus
• Infrastructure expansion for high-performance computing services

Negative

• Uncertainty over timing and completion of remaining $25 million investment
• Potential dilution from convertible preferred stock issuance
• Outstanding debt requiring repayment from investment proceeds

Insights

Financial Analyst

The $50 million preferred equity investment completion represents a important financial milestone for Hyperscale Data, with an additional $25 million potentially forthcoming. The strategic significance lies in the company's transformation toward becoming a pure AI data center player. The capital injection provides essential funding for the MI data center expansion and infrastructure upgrades, particularly targeting high-performance computing services for AI solutions.

The deal structure through Series C Convertible Preferred Stock offers Ault & Company significant potential upside while providing Hyperscale Data with immediate capital. The ongoing divestment of non-core assets (non-data center and non-Bitcoin mining) signals a focused strategy that could improve operational efficiency and market positioning. However, investors should note the uncertainty around the timing and completion of the remaining $25 million investment.

The debt repayment component strengthens the balance sheet, though the exact allocation of funds between growth initiatives and debt reduction remains unclear. With a market cap of $5.8 million, this investment represents a substantial capital injection relative to the company's size, indicating potential significant dilution for existing shareholders depending on the conversion terms of the preferred stock.

Tech Industry Analyst

The strategic pivot to pure-play AI data center operations aligns with explosive market demand for AI computing infrastructure. The MI data center expansion specifically targets high-performance computing capabilities essential for AI workloads, positioning Hyperscale Data to capitalize on the growing enterprise demand for AI infrastructure-as-a-service.

The focus on AI-driven data centers is particularly timely given the surge in computing requirements for large language models and other AI applications. The infrastructure upgrades mentioned will likely include advanced cooling systems, power distribution improvements and specialized hardware configurations optimized for AI workloads. The consolidation of operations by spinning off non-core assets should enable more efficient capital allocation toward AI-specific technology investments.

This specialized focus could provide Hyperscale Data with a competitive advantage in the rapidly evolving AI infrastructure market, though success will depend heavily on execution and the ability to deliver the high-density, low-latency environments required for AI computing at scale.

LAS VEGAS, Dec. 26, 2024 (GLOBE NEWSWIRE) -- Hyperscale Data, Inc. (NYSE American: GPUS), a diversified holding company (“Hyperscale Data” or the “Company”), today announced the completion of a $50 million preferred equity investment, whereby the Company sold that dollar amount through the issuance to Ault & Company, Inc. (“Ault and Company”) of 50,000 shares of Series C Convertible Preferred Stock (the “Series C Shares”). Ault & Company has invested $50 million through multiple closings over the past thirteen (13) months. This strategic influx of capital has enabled Hyperscale Data to accelerate its growth trajectory, enhance its technological offerings, and execute its business expansion plans more effectively, with a focus on becoming a pure AI data center company. The Company would like to remind its stockholders that on March 25, 2024, the Company and Ault and Company agreed to raise the aggregate offering of Series C Shares from $50 million to $75 million. This offering is continuing apace, but the Company cannot assure you when Ault and Company will complete the remaining purchases of $25 million in Series C Shares, if at all.

In addition to this significant investment, Hyperscale Data is strategically spinning out all of its non-data center and non-Bitcoin mining assets. This move is aimed at refining the Company’s core focus and reinforcing its commitment to leading the AI-driven data center industry.

“The $50 million investment was critical for our transformation into a pure AI data center company,” said Will Horne, CEO of Hyperscale Data. “This investment has propelled, and could continue to propel, our efforts to innovate and expand our capabilities at a significant pace, ultimately allowing us to serve our customers’ needs with even greater agility and efficiency.”

The substantial infusion of capital from Ault & Company underscores the confidence and trust placed in Hyperscale Data’s mission to redefine the digital landscape with cutting-edge solutions. This investment marks a significant milestone in Hyperscale Data’s journey, supporting its commitment to deliver unparalleled services and products to its growing client base.

“We’re excited to partner with Hyperscale Data, a company positioning itself at the forefront of the data center industry,” said Milton “Todd” Ault III, CEO of Ault & Company. “We recognize the enormous potential in leveraging Hyperscale Data’s innovative technologies and are proud to support its vision as they transition into a pure play data center business.”

The funds received from this investment, along with the previously announced additional $25 million investment, will be used for the expansion of the MI data center to implement 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.

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

How much has Ault & Company invested in Hyperscale Data (GPUS) through Series C Preferred Stock?

Ault & Company has invested $50 million through multiple closings over the past 13 months through Series C Convertible Preferred Stock.

What is the total planned investment amount for GPUS's Series C Preferred Stock offering?

The total planned investment amount is $75 million, with $50 million completed and $25 million remaining to be invested by Ault & Company.

How will Hyperscale Data (GPUS) use the investment proceeds?

The funds will be used to expand the MI data center, implement infrastructure upgrades for AI computing services, repay outstanding debt, and provide working capital.

What strategic changes is GPUS implementing with this investment?

GPUS is transforming into a pure AI data center company by spinning out all non-data center and non-Bitcoin mining assets to focus on the AI-driven data center industry.