Hyperscale Data, Inc. Q2 FY2021 earnings call

Management Statement and Operational Highlights

• Leadership Team: Executive Chairman Todd Ault, Vice Chairman & CEO William Horne, President/Director/General Counsel Henry Nisser, CFO Ken Cragun, and key executives like Chris Wu (Head of Alternative Investments), Douglas Gintz (CTO).
• Financial Performance: Q2 revenue $62M, net income before taxes $44.6M ($40.3M from Alzamend IPO). Excluding Alzamend, profit was $4.3M. Assets reached $250M with cash, marketable securities, and various investments.
• Key Initiatives: Preparing Gresham Worldwide and Coolisys/TurnOnGreen for IPOs; hiring Jean Ho (Chief Accounting Officer) for carve-out audits and filings.
• Crypto Mining: Michigan data center build-out expected Sept, plans to increase hash rate; limited to 10% of asset base.
• Activist Strategy: Positions in SilverSun Technologies, Briacell Therapeutics, etc.; active in extracting value from these companies.

Segment Performance

• Ault Alliance: Comprises Ault Alliance Cloud services (617,000 sq ft building with 300 MW power potential and crypto mining). Contributes significantly to revenue.
• Gresham Worldwide: Includes Gresham Power (UK), Microphase (CT, defense contracts), Relec (UK, acquired Nov 2020), Enertech (Israel). Showed year-over-year revenue growth.
• Coolisys: Run by Jodi Brichan and Amos Kohn, saw substantial year-over-year growth, involved in EV and power electronics.
• Digital Power Lending: Drives investing activities in Alzamend, MTIX International, AdTech Pharma, Greyledge.
• Alzamend: Owns 6.7 million shares, with warrants and potential to invest more; IPO in June contributed $40.3M to revenue.
• MTIX International: Hotel development with S-1 filing pending.
• AdTech Pharma: Potential 40% position, with key industry talent; potential 2022 IPO.
• Greyledge: Stem cell company with special warrant and recoupment potential.

Guidance

• Asset Growth: Aim to grow assets to $1B, with allocations to lending ($250M), real estate ($250M), and acquisitions ($500M).
• IPO/Go Public Plans: Potential IPOs for TurnOnGreen, Gresham Worldwide, AdTech Pharma, Greyledge; MTIX International working on S-1 filing.
• Acquisitions: Open to acquisitions in sectors like real estate, biotech, tech; focus on companies with sustainable profits, using non-recourse debt to limit risk.

Risks

• Investment Volatility: Mark-to-market accounting causes earnings volatility due to concentrated positions like Alzamend.
• COVID-19 Impact: Ongoing disruptions to operations, travel, and employee health.
• Execution Risks: Uncertainty in timing/success of IPOs, acquisitions, and milestones for companies like Alzamend and AdTech Pharma.

Question and Answer

• Q: Are we against the idea of buying back stock? A: Ken Cragun - Discussions at Board level, but currently evaluating against overall needs and future initiatives; not ruling it out but not committing yet.
• Q: Are you considering any cash dividend? A: Will Horne - Not envisioning cash dividend in next 12 months; focus on liquidity events and growing balance sheet first.
• Q: Are you considering any investment in Dogecoin? A: Todd Ault - Not investing in Dogecoin; primarily focused on Bitcoin and Ethereum, with up to 10% of asset base in cryptocurrencies.
• Q: Will there be IPOs? A: Ken Cragun - Almost inevitable, with internal team working on separate financials and working with auditor; timing not guaranteed but initiatives in place.