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Hyperscale Data, Inc. (NYSE American: GPUS), an electronic components manufacturer with a market capitalization of approximately $14 million, has entered into a financial agreement with Orchid Finance LLC on Monday, issuing a convertible promissory note with a principal amount of $1.65 million, according to a recent SEC filing. InvestingPro analysis reveals the company operates with a significant debt burden, with a concerning current ratio of 0.23.
The note, which carries a 10% original issue discount, was issued in exchange for a prior $1.5 million advance from Orchid Finance. It accrues interest at an annual rate of 15%, escalating to 18% in the event of default, and is set to mature on September 30, 2025. According to InvestingPro data, the company may face challenges meeting interest payments, as it’s currently burning through cash rapidly with negative EBITDA of -$37.25 million.
Conversion of the note into Hyperscale Data’s Class A common stock is permissible post-approval of the Supplemental Listing Application by the NYSE American. The conversion price is determined as the greater of $0.40 per share or 75% of the average stock price preceding the conversion date, with adjustments only applicable for stock splits or similar transactions.
The issuance is capped at 19.99% of the total outstanding common stock as of the closing date, in compliance with NYSE regulations, until stockholder approval is obtained. Hyperscale Data has committed to seeking this approval through a proxy or information statement.
The note includes standard default provisions, including payment failures, delivery of conversion shares, and bankruptcy events. The issuance of the note and subsequent conversion shares are based on exemptions from registration requirements under Section 4(a)(2) of the Securities Act of 1933.
This financial move by Hyperscale Data, previously known as Ault Alliance, Inc., BitNile Holdings, Inc., and Ault Global Holdings, Inc., is detailed in the Form 8-K filed with the SEC on April 1, 2025. The transaction is part of the company’s strategy to manage its capital structure and finance its operations. With a weak Financial Health Score of 1.37 and the stock down 54% year-to-date, investors seeking deeper insights can access 14 additional key metrics and tips through InvestingPro.
In other recent news, Hyperscale Data, Inc. announced a significant financial agreement for up to $50 million in equity financing to expand its Michigan data center. This financing will support the development of infrastructure for enterprise, AI, and high-performance computing cloud providers. Additionally, the company reported a one-time financial gain of $17.5 million from the deconsolidation of its subsidiary, Avalanche International, Inc., which will improve its balance sheet by eliminating current liabilities. Hyperscale Data’s shareholders approved the conversion of Series G Preferred Stock into Class A Common Stock and warrants, involving a purchase price of up to $25 million.
In another development, the company entered into an amended forbearance agreement, extending the period through May 15, 2025, with a promissory note of $3.5 million. This note includes a high annual interest rate and is convertible into shares, pending NYSE and stockholder approval. Furthermore, Hyperscale Data amended the terms of its Series G Convertible Preferred Stock, adjusting the "Voting Floor Price" from $5.38 to $6.244. These recent developments highlight Hyperscale Data’s strategic financial maneuvers and ongoing adjustments to its financial and governance structures.
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