S-1: Hyperscale Data Files for S-1 Registration to Resell Shares Upon Conversion of Convertible Notes

Sentiment:

S-1 Filing 25 April 2025 9:57 PM

Hyperscale Data, Inc. has filed an S-1 registration statement for the resale of up to 29,331,683 shares of Class A common stock issuable upon conversion of certain convertible notes.

Capital raiseThe company is registering for the potential resale of up to 29,331,683 shares of Class A common stock.These shares are linked to the conversion of convertible notes held by selling stockholders.The company has issued several convertible notes to various entities, including Esousa Group Holdings, Orchid Finance, Jorico, Target Capital 14 LLC, and Secure Net Capital LLC.The company has also been involved in sales of Series C and Series G Convertible Preferred Stock to Ault & Company.The company has entered into a securities purchase agreement with an institutional investor pursuant to which we agreed to sell up to 50,000 shares of Series B Convertible Preferred Stock.

Worse than expectedThe company has a history of operating losses and may need to raise additional capital to fund its operations.The company is transitioning its data centers to focus on high-performance computing (HPC) and AI applications, which will likely increase Sentinum's losses unless these costs can be passed on to future customers.

Summary

Hyperscale Data, Inc. has filed a Form S-1 registration statement with the SEC.
The registration covers the potential resale of up to 29,331,683 shares of Class A common stock.
These shares are issuable upon the conversion of convertible notes held by selling stockholders.
The company will not receive any proceeds from the sale of these shares by the selling stockholders.
The selling stockholders may sell these shares from time to time on the NYSE American or in private transactions.
The company is a smaller reporting company and has elected to comply with certain reduced reporting requirements.
The company's business includes data centers, Bitcoin mining, AI software, social gaming, and other diverse operations through its subsidiaries.
The company is transitioning its data centers away from Bitcoin mining to high-performance computing (HPC) and AI purposes.
The company has been involved in several recent financing activities, including issuing convertible notes and preferred stock.
The company's strategy focuses on managing and supporting its subsidiaries, pursuing monetization opportunities, and maximizing stockholder value.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While there are positive aspects such as the transition to AI and HPC and the diverse business operations, the company's history of operating losses, potential dilution, and regulatory risks contribute to a more cautious outlook.

Positives

The company is transitioning its data centers to focus on high-performance computing (HPC) and AI applications, which may offer higher growth potential.
The company has a diverse range of business operations through its subsidiaries, reducing its reliance on any single industry.
The company's management team has decades of experience in financial, investing, and securities transactions.
The company is actively seeking opportunities to maximize stockholder value through various initiatives, including public offerings and sales of subsidiaries.
The company has a strategy to find undervalued companies and disruptive technologies with a global impact.

Negatives

The company will not receive any proceeds from the sale of shares by the selling stockholders.
The potential issuance of a large number of shares upon conversion of the convertible notes could dilute existing stockholders.
The company has a history of operating losses and may need to raise additional capital to fund its operations.
The company's stock price is volatile and may be subject to significant fluctuations.
The company is subject to a highly evolving regulatory landscape, particularly regarding Bitcoin mining and AI technologies.

Risks

The company's reliance on the price of Bitcoin and the level of demand for Bitcoin poses a significant risk.
The company's growth strategy is subject to a significant degree of risk.
The company is heavily dependent on its senior management, and the loss of a member of the senior management team could cause the stock price to suffer.
The company may fail to anticipate and adequately respond to rapid technological changes in its industry.
The company is subject to risks related to governmental regulation and enforcement with respect to Bitcoin mining.
The company may be significantly impacted by developments and changes in laws and regulations, including increased regulation of the industry in which it operates.
The company's common stock could be delisted from the NYSE American if it does not continue to satisfy the continued listing requirements.
The company may experience future dilution as a result of future equity offerings.
The company has a substantial number of convertible notes, warrants, and preferred stock outstanding that could affect its stock price.
The company's recent issuance of Class B common stock could provide certain persons with voting control, leaving other stockholders with little influence over management.

Future Outlook

The company anticipates large expenditures in its Michigan Facility to facilitate the transition of the facility to support HPC and AI applications, which will likely increase Sentinum's losses unless these costs can be passed on to future customers. The company expects cash generated from Bitcoin mining operations to exceed operating costs in 2025, given the significance of depreciation charges.

Management Comments

Our long-term objective is to maximize per share intrinsic value.
All major investment and capital allocation decisions are made for us by Mr. Ault and the Executive Committee.
Led by our Founder and Executive Chairman, Milton C. (Todd) Ault, III, we seek to find undervalued companies and disruptive technologies with a global impact.
We use a traditional methodology for valuing securities that primarily looks for deeply depressed prices.
Upon making an investment, we often become actively involved in the companies we seek to acquire.

Industry Context

The document highlights the company's involvement in several industries, including data centers, Bitcoin mining, AI software, social gaming, and commercial lending. The company is transitioning its data centers to focus on high-performance computing (HPC) and AI applications, reflecting a broader trend in the industry towards these technologies. The document also discusses the regulatory environment for Bitcoin mining and the challenges and opportunities in the online gaming industry.

Comparison to Industry Standards

The document mentions several competitors in the Bitcoin mining industry, including Argo Blockchain PLC, Bit Digital, Inc., CleanSpark, Inc., Core Scientific, Inc., and Marathon Digital Holdings, Inc.
These companies are all involved in Bitcoin mining at scale and compete with Hyperscale Data for resources such as capital, electricity, and access to energy sites.
The document also mentions competitors in the online gaming industry, such as Chumba Casino, Stake.us, Luckyland, Fortnite, and Roblox.
These companies compete with RiskOn International for user engagement and revenue in the sweepstakes and social gaming market.
The document does not provide specific performance metrics for these competitors, making it difficult to directly compare Hyperscale Data's results to industry standards.

Related Party Transactions

The company has entered into several transactions with Ault & Company, including sales of Series C and Series G Convertible Preferred Stock and warrants.
The 2024 Credit Agreement was entered into with OREE Lending Company, LLC and Helios Funds LLC, as lenders, each a 50% member of Orion Equity Partners, LLC, an affiliate of Orion.

Stakeholder Impact

Existing stockholders may experience dilution due to the potential issuance of a large number of shares upon conversion of the convertible notes.
The company's employees may be affected by the transition to AI and HPC and any potential changes in business operations.
The company's customers may benefit from the improved services and technologies resulting from the transition to AI and HPC.
The company's suppliers and creditors may be affected by the company's financial performance and ability to meet its obligations.

Next Steps

The company needs to obtain stockholder approval for the issuance of shares upon conversion of certain convertible notes.
The company is obligated to use commercially reasonable efforts to file a resale registration statement with the SEC and have it declared effective.
The company will continue to manage and support its subsidiaries, pursue monetization opportunities, and maximize stockholder value.
The company will continue to evaluate opportunities to add HPC and AI applications to its data centers.

Key Dates

Date	Description
September 2017	Hyperscale Data, Inc. was incorporated in Delaware.
October 7, 2019	Executive Committee created to address critical needs and approve transactions.
January 2021	ACS purchased the Michigan Facility.
June 4, 2024	Entered into a Loan Agreement with OREE Lending Company, LLC and Helios Funds LLC.
June 20, 2024	Entered into the ELOC Purchase Agreement with Orion.
July 18, 2024	Entered into a note purchase agreement with an institutional investor for a $5.4 million 10% OID Convertible Promissory Note.
September 10, 2024	Changed name from Ault Alliance, Inc. to Hyperscale Data, Inc.
November 20, 2024	Filed an Amendment to Certificate of Incorporation to effectuate a reverse stock split of one-for-thirty-five.
November 22, 2024	Reverse stock split became effective.
December 9, 2024	Completed the distribution of 650,000 shares of Series E Preferred Stock.
December 10, 2024	Entered into a forbearance agreement with the investor and issued a convertible promissory note in the amount of $0.9 million.
December 13, 2024	Third Avenue Apartments LLC completed the sale of its real property in St. Petersburg, Florida for $13.0 million.
December 16, 2024	Completed the distribution of approximately 5.0 million shares of Class B Common Stock.
December 21, 2024	Entered into a securities purchase agreement with Ault & Company to sell up to 25,000 shares of Series G convertible preferred stock.
December 23, 2024	Completed the distribution of 1.0 million shares of Series F Exchangeable Preferred Stock.
January 9, 2025	Amended the 2024 Credit Agreement and notes with each Lender.
February 5, 2025	Entered into an exchange agreement with an institutional investor and issued a convertible promissory note in the principal face amount of $1.9 million.
February 25, 2025	Issued to Esousa Group Holdings, LLC an amended and restated convertible promissory note in the amount of $3.5 million.
March 14, 2025	Issued to Orchid Finance LLC a convertible promissory note in the amount of $4,193,315.
March 21, 2025	Entered into an exchange agreement with an institutional investor and issued a convertible promissory note in the principal face amount of $4.9 million.
March 28, 2025	Avalanche International Corp. filed a petition for liquidation under Chapter 7 of the bankruptcy laws.
March 30, 2025	Entered into an amendment to the November 2023 SPA to provide for an extension of the date on which the final closing may occur.
March 31, 2025	Entered into a securities purchase agreement with an institutional investor pursuant to which we agreed to sell up to 50,000 shares of Series B Convertible Preferred Stock.
April 1, 2025	Issued to Orchid Finance LLC a convertible promissory note in the amount of $1,650,000.
April 1, 2025	Issued to an accredited investor a convertible promissory note in the principal face amount of $1.65 million.
April 8, 2025	Issued to Jorico, LLC a convertible promissory note in the amount of $110,000.
April 8, 2025	Issued to an accredited investor a convertible promissory note in the principal face amount of $110,000.
April 15, 2025	Issued to Target Capital 14 LLC a convertible promissory note in the amount of $3,750,000.
April 15, 2025	Issued to Secure Net Capital LLC a convertible promissory note in the amount of $1,250,000.
April 15, 2025	Issued to two accredited investors convertible promissory notes in the aggregate principal face amount of $5 million.
April 23, 2025	The last reported sales price of the Common Stock, as reported by NYSE American, was $2.02 per share.
April 24, 2025	1,697,224 shares of Common Stock outstanding.

Keywords

convertible notes, common stock, hyperscale data, registration statement, bitcoin mining, selling stockholders, preferred stock, data centers, AI, securities

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