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Hyperscale Data, Inc., a Delaware-based electronic components manufacturer, disclosed on Monday, December 10, 2024, that it has entered into a significant financial arrangement with its affiliate Ault & Company, Inc. The agreement involves the sale of Series C convertible preferred stock and corresponding warrants, which could potentially reach a total value of $75 million.
As of today, Ault & Company has invested $47.6 million in exchange for 47,600 shares of Series C Convertible Preferred Stock and warrants to purchase an additional 402,069 common shares.
Additionally, Hyperscale Data has reached a forbearance agreement with an institutional investor regarding a $5,390,000 convertible promissory note issued in a registered direct offering on July 19, 2024. This agreement comes as the company manages a substantial total debt of $127.62 million, with InvestingPro analysis indicating potential challenges in meeting interest payments.
The investor has agreed to withhold exercising their rights until December 31, 2024, in exchange for a new forbearance note valued at $853,067.93. This note includes a forbearance extension fee, a true-up amount, and forbearance interest.
The forbearance note carries an 18% annual interest rate and is set to mature on February 15, 2025. It can be converted into common stock at a price of $5.47 per share, pending approval from the NYSE American LLC and the company's shareholders. The note's conversion is subject to standard events of default, including payment failures, covenant breaches, and bankruptcy events, among others.
The securities mentioned in this transaction were sold in reliance upon exemptions from registration requirements under Section 4(a)(2) of the Securities Act of 1933. This financial maneuver is part of Hyperscale Data's broader strategy to manage its capital structure and ensure liquidity.
The company, which operates under the ticker GPUS on the NYSE American exchange, has undergone several name changes over the years, with its former identities including Ault Alliance, Inc., BitNile Holdings, Inc., and Ault Global Holdings, Inc. With a current market capitalization of just $7.59 million, the company's stock has shown significant volatility.
The information provided in this article is based on a press release statement filed with the Securities and Exchange Commission. For comprehensive financial analysis and 13 additional key insights about GPUS, visit InvestingPro.
In other recent news, Hyperscale Data, Inc. has made strategic advancements in its financial strategy by raising significant funds through the sale of equity securities. The company has raised a total of $47.55 million through the sale of Series C convertible preferred stock and accompanying warrants. In addition, Hyperscale Data has secured an investment totaling $46.98 million through the sale of convertible preferred stock and associated warrants to Ault & Company, Inc.
The company has also announced a reverse stock split, consolidating every thirty-five shares into one. Hyperscale Data has been active in expanding its equity, with the aggregate investment from these transactions reaching $46.53 million, with the potential to reach up to $75 million.
These are recent developments in Hyperscale Data's ongoing activity in the electronic components sector. The company is also focusing on enhancing its data center operations, specifically its artificial intelligence (AI) data center in Michigan, with plans to increase the facility's capacity from approximately 30 megawatts to 300 megawatts, contingent on regulatory approvals and financing.
Finally, Hyperscale Data's shareholders have approved the conversion of a 10% OID Convertible Promissory Note into common stock. This aligns with the company's strategic shift towards data center operations.
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