SCHEDULE 13D/A: Ault & Company and Milton C. Ault, III Solidify Dominant Stake in Hyperscale Data, Inc. with Over 91% Beneficial Ownership

Ault & Company, Inc. and its CEO, Milton C. Ault, III, have significantly increased their beneficial ownership in Hyperscale Data, Inc. to 91.74% of Class A Common Stock, primarily through conversions of preferred stock and warrants, and a substantial Class B stock dividend.

Summary

• Ault & Company, Inc. and Milton C. Ault, III collectively beneficially own 13,900,765 Class A Shares of Hyperscale Data, Inc., representing 91.74% of the Class A Common Stock.
• This beneficial ownership includes 8,249 directly held Class A Shares, 4,234,561 Class A Shares issuable from Class B Shares, 9,140,771 Class A Shares from Series C Convertible Preferred Stock, 88,494 Class A Shares from Series G Convertible Preferred Stock, and 428,690 Class A Shares from outstanding warrants.
• The calculation of beneficial ownership is based on 1,259,893 Class A Shares outstanding as of January 3, 2025, as reported by the Issuer.
• Ault & Company and Mr. Ault's combined beneficial ownership represents 82.8% of the Issuer's total voting power, considering all voting securities including Class A, Class B, Series C Preferred, and Series G Preferred Stock.
• Series C Preferred Stock has a stated value of $1,000 per share and is convertible into Class A Shares at a conversion price of $5.47 for this filing's calculation.
• Series G Preferred Stock has a stated value of $1,000 per share and is convertible into Class A Shares at a conversion price of $5.5936 for this filing's calculation.
• Milton C. Ault, III's direct beneficial ownership includes 500 Class A Shares, 346 Class A Shares from Class B Shares, and one Class A Share from a stock option, in addition to the shares held by Ault & Company.
• William B. Horne sold 2 Class A Shares on December 30, 2024, at $5.205 per share and received 1 Class B Share as a dividend on December 16, 2024.
• Henry C.W. Nisser received 1 Class B Share as a dividend on December 16, 2024.
• Ault & Company made significant purchases of Series C Convertible Preferred Stock totaling $3,900,000 and acquired associated Series C Warrants during the past sixty days.
• Ault & Company also received 4,234,561 Class B Shares as a stock dividend on December 16, 2024.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the significant and increasing insider ownership, which often signals confidence from key stakeholders. However, the potential for future dilution from convertible securities introduces a degree of neutrality.

Positives

• The significant beneficial ownership by Ault & Company and Milton C. Ault, III (91.74% of Class A shares and 82.8% of total voting power) indicates strong insider alignment and a concentrated interest in the company's long-term success.
• The substantial investment in Series C and Series G Preferred Stock, totaling $50,495,000, demonstrates a strong financial commitment to Hyperscale Data, Inc.

Negatives

• The highly concentrated ownership and voting power (82.8% of total voting power) by Ault & Company and Milton C. Ault, III could limit the influence of minority shareholders.
• The conversion of a large volume of preferred stock and warrants into Class A shares could lead to significant dilution for existing Class A shareholders.

Risks

• Potential dilution of Class A shares due to the conversion of a large number of Series C and Series G Convertible Preferred Stock and warrants.
• The conversion prices for preferred stock are subject to the volume weighted average price (VWAP) of Class A Shares, introducing variability in the number of shares received upon conversion.
• Certain warrants (Series C and Series G Warrants) are not exercisable until six months after issuance, creating future potential for additional dilution.

Future Outlook

The document primarily details current beneficial ownership and past transactions, with no explicit forward-looking statements or guidance regarding the company's future operations or financial performance. It notes that certain warrants are not exercisable until six months after issuance, indicating a future potential for additional share conversions.

Industry Context

This Schedule 13D filing is a regulatory disclosure of significant ownership changes and does not provide specific industry context or analysis of broader industry trends for Hyperscale Data, Inc. It focuses solely on the reporting persons' stake in the company.

Corporate Governance

Related Party Transactions

• Ault & Company, Inc. and Milton C. Ault, III, as reporting persons and significant shareholders/officers, have engaged in various transactions with Hyperscale Data, Inc., including the purchase of Class A Shares, Series C and Series G Convertible Preferred Stock, and warrants.
• The Class B Shares owned by the Reporting Persons were issued as a stock dividend by the Issuer.
• Stock options owned by Messrs. Ault, Horne, and Nisser were awarded in their capacities as officers and/or directors of the Issuer.
• Restricted stock units vesting into Class A Shares were awarded to Mr. Nisser and Mr. Ault in their capacities as officers and directors.
• Warrants held by Ault & Company were issued in connection with a $17.5 million Senior Secured Convertible Promissory Note sold by the Issuer to Ault & Company, which was subsequently repaid.

Stakeholder Impact

• Shareholders: The high concentration of beneficial ownership and voting power by Ault & Company and Milton C. Ault, III means that their interests will heavily influence company decisions, potentially limiting the impact of other shareholders. Future conversions of preferred stock and warrants could dilute the ownership percentage of existing Class A shareholders.
• Employees: The document does not directly address employee impact, but stock options and restricted stock units were awarded to officers/directors, aligning their interests with company performance.

Next Steps

• Future conversions of Series C and Series G Preferred Stock and warrants into Class A Shares, particularly those warrants not yet exercisable, are expected to occur as per their terms.

Key Dates

Keywords

Schedule 13D, Beneficial Ownership, Class A Common Stock, Class B Common Stock, Convertible Preferred Stock, Series C Preferred Stock, Series G Preferred Stock, Warrants, Hyperscale Data Inc., Ault & Company, Milton C. Ault III, Shareholder Disclosure, Voting Power, Dilution