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Hyperscale Data, Inc. (NYSE American: GPUS), a manufacturer of electronic components with a market capitalization of $15.67 million, has entered into a financial agreement with Jorico, LLC, issuing a convertible promissory note with a principal amount of $110,000, the company disclosed in a recent SEC filing. According to InvestingPro data, the company currently maintains a concerning current ratio of 0.23, indicating potential liquidity challenges.
On Monday, the Delaware-based company, which operates from its Las Vegas headquarters, finalized the transaction that provided it with $100,000 in immediate capital from the California-based investor. The note carries an original issue discount of 10% and an annual interest rate of 15%, which could increase to 18% in the event of default. With total debt of $127.62 and a weak overall financial health score as reported by InvestingPro, this additional debt adds to the company's financial obligations.
The note is set to mature on September 30, 2025, and is convertible into shares of Hyperscale Data's Class A common stock at a price subject to certain conditions. The conversion price will be the higher of $0.45 per share or 75% of the stock's volume-weighted average price (VWAP) over specific periods before the closing date or conversion date. The stock currently trades at $2.49, having declined 46.09% year-to-date. Based on InvestingPro's Fair Value analysis, the stock appears to be trading near its fair value. The conversion price will not adjust for stock splits or similar events unless the company undertakes such actions.
Hyperscale Data's filing also noted that the conversion of the note into common stock is contingent upon the NYSE American's approval of the Supplemental Listing Application (SLAP).
The issuance of the note is part of an off-balance sheet arrangement and was conducted under an exemption from registration requirements pursuant to Section 4(a)(2) of the Securities Act of 1933, as amended, indicating that the securities were sold in a private placement to a qualified investor.
The transaction follows a series of name changes for the company, which was formerly known as Ault Alliance, Inc., BitNile Holdings, Inc., and Ault Global Holdings, Inc., with the most recent change occurring on January 3, 2023.
Investors and market observers will be watching how Hyperscale Data utilizes this influx of capital and how it might impact the company's financial strategy moving forward. With annual revenue of $139.43 million and the company's next earnings report due in 8 days, InvestingPro subscribers can access detailed financial analysis and earnings forecasts to better understand the company's trajectory. The information for this article is based on a press release statement.
In other recent news, Hyperscale Data, Inc. has been actively engaging in several financial maneuvers and strategic developments. The company has issued a convertible promissory note worth $1.65 million to Orchid Finance LLC, with a maturity date set for September 30, 2025. This note is part of their strategy to manage capital structure and finance operations. Additionally, Hyperscale Data has secured up to $50 million in equity financing from an institutional investor to expand its Michigan data center, focusing on scalable and energy-efficient infrastructure. The company also announced a significant financial gain of $17.5 million from the deconsolidation of its subsidiary, Avalanche International, Inc., which will enhance its balance sheet by eliminating current liabilities.
Moreover, Hyperscale Data's shareholders have approved the conversion of Series G Preferred Stock into Class A Common Stock and warrants, reflecting strong shareholder support for the company's financial strategies. In another development, the company has entered into an amended forbearance agreement, extending the period through May 15, 2025, with a $3.5 million convertible promissory note. This extension is contingent on approvals from the NYSE and stockholders. These recent developments indicate Hyperscale Data's ongoing efforts to strengthen its financial position and focus on its core operations.
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