HESSCLOUD — AI CLOUD INFRASTRUCTURE
Senior Secured Notes Offering
CONFIDENTIAL PRIVATE OFFERING MEMORANDUM
INVESTMENT OVERVIEW
Hesscloud Technologies, Inc. (“Hesscloud” or the “Company”) is offering up to $50,000,000 aggregate principal amount of Senior Secured Notes to qualified prospective investors.
Hesscloud operates an AI cloud-computing platform providing GPU-accelerated computing, artificial intelligence processing, machine-learning infrastructure, storage, networking, and related services to developers, researchers, enterprises, and other commercial users.
Proceeds are intended principally to expand Hesscloud’s AI-computing infrastructure, acquire and deploy additional GPU servers, increase data-center capacity, develop its software platform, and support working capital requirements.
Offering Term Details
Issuer Hesscloud Technologies, Inc.
Offering Size: Up to $50,000,000
Minimum Subscription: $2,500
Maximum Subscription: $2,500,000
Interest Rate: 8.00%–16.00% per annum
Maturity: 24–60 months
Interest Payments: Quarterly
Security: First-priority security interest in specified eligible assets, subject to existing liens and definitive security documents
Offering Type: Private placement pursuant to an applicable exemption from registration under the Securities Act of 1933
THE Hesscloud PLATFORM
Hesscloud provides infrastructure designed for organizations that require scalable computing resources for artificial intelligence and machine-learning workloads.
Core Services
GPU computing
AI model training
AI inference
Machine-learning workloads
Dedicated GPU clusters
Cloud storage
Data processing
Enterprise AI infrastructure
API-based computing services
The Company expects to generate revenue principally through recurring subscriptions and usage fees paid by customers for access to its computing infrastructure.
PROPOSED NOTE SERIES
SERIES A
8.00% Senior Secured Notes
Minimum subscription: $2,500
Maturity: 24 months
Interest: 8.00% per annum
Interest payments: Quarterly
SERIES B
10.00% Senior Secured Notes
Minimum subscription: $25,000
Maturity: 36 months
Interest: 10.00% per annum
Interest payments: Quarterly
SERIES C
12.00% Senior Secured Notes
Minimum subscription: $100,000
Maturity: 36 months
Interest: 12.00% per annum
Interest payments: Quarterly
SERIES D
14.00% Senior Secured Notes
Minimum subscription: $500,000
Maturity: 48 months
Interest: 14.00% per annum
Interest payments: Quarterly
SERIES E
16.00% Senior Secured Notes
Minimum subscription: $1,000,000
Maturity: 60 months
Interest: 16.00% per annum
Interest payments: Quarterly
The Company reserves the right to establish additional Series having different interest rates, maturities, payment schedules, covenants, collateral requirements, and minimum subscription amounts.
NOTE STRUCTURE
The Notes will constitute senior obligations of Hesscloud.
Interest will accrue on the outstanding principal balance at the fixed annual rate applicable to the Series selected by the investor. Interest is payable quarterly in arrears.
Unless earlier redeemed in accordance with the applicable Note Purchase Agreement, outstanding principal will become due and payable at maturity.
The Notes do not represent ownership of Hesscloud. Holders will have no voting rights and will not participate directly in the Company’s profits or losses except as expressly provided in the definitive agreements.
COLLATERAL
Subject to execution and filing of definitive security documents, the Notes may be secured by a first-priority lien on specified Company-owned equipment and other eligible assets, including certain:
GPU servers
AI accelerators
Networking equipment
Storage equipment
Racks and related infrastructure
Collateral values may fluctuate substantially and equipment may become technologically obsolete.
No representation is made that liquidation of the collateral would be sufficient to repay all outstanding principal and accrued interest.
The precise collateral package, priority of liens, permitted liens, exclusions, and enforcement rights will be established in the definitive Security Agreement and related documents.
USE OF PROCEEDS
Hesscloud presently expects to allocate net offering proceeds approximately as follows:
70% — AI COMPUTING INFRASTRUCTURE
GPU servers, AI accelerators, networking equipment, storage, racks, and related infrastructure.
15% — DATA-CENTER CAPACITY
Colocation, electricity, cooling, bandwidth, installation, and related infrastructure costs.
10% — SOFTWARE & PLATFORM DEVELOPMENT
Cloud-management software, orchestration, billing, security, monitoring, and customer-facing technology.
5% — WORKING CAPITAL
General corporate and administrative purposes.
Actual allocations may differ based on market conditions, equipment pricing, customer demand, financing requirements, and the Company’s operating needs.
SOURCE OF PAYMENT
Payment of interest and principal will depend upon Hesscloud’s financial condition and its ability to generate or otherwise obtain sufficient funds to satisfy its obligations.
The Company expects its principal sources of operating revenue to include recurring subscriptions and usage fees associated with its computing infrastructure.
The Notes are not guaranteed by Hesscloud’s customers, any governmental agency, or the Federal Deposit Insurance Corporation.
INVESTOR REPORTING
Hesscloud intends to provide holders with quarterly reports containing selected operating and financial information, which may include:
Revenue
Recurring subscription revenue
GPU utilization
Available computing capacity
Customer count
Operating expenses
Capital expenditures
Cash balances
Outstanding indebtedness
Interest payments
Reserve balances
Additional reporting may be provided to institutional and qualified investors pursuant to applicable confidentiality arrangements.
ILLUSTRATIVE INVESTMENT
For illustration only.
An investor purchasing $500,000 of Series D 14.00% Notes would receive $70,000 in stated annual interest, assuming the entire principal balance remains outstanding for the year and all payments are made when due.
An investor purchasing $2,500,000 of Series E 16.00% Notes would receive $400,000 in stated annual interest, under the same assumptions.
These figures represent stated interest only. They are not a guarantee of payment and do not assure the investor will receive principal at maturity.
RISK FACTORS
An investment in the Notes involves substantial risk. Investors could lose some or all of their investment.
Hesscloud is an early-stage technology and infrastructure business and may not achieve projected revenue, utilization, margins, or cash flow.
The AI-computing industry is highly competitive and capital intensive. GPU and accelerator technology may become obsolete rapidly. Equipment acquisition costs, electricity prices, data-center expenses, financing costs, and customer demand may fluctuate materially.
The Company may require additional capital to expand infrastructure or meet operating obligations.
Failure to achieve sufficient customer utilization could materially impair the Company’s ability to make scheduled interest and principal payments.
The collateral securing the Notes may decline in value, become obsolete, or prove insufficient to satisfy the Company’s obligations.
The Notes are illiquid securities. There may be no established secondary market, and holders may be unable to sell their Notes before maturity.
Prospective investors should carefully review all risk factors contained in the definitive offering documents before making an investment decision.
TRANSFER RESTRICTIONS
The Notes have not been registered under the Securities Act of 1933 or applicable state securities laws.
Unless registered or an applicable exemption from registration is available, the Notes may not be offered, sold, pledged, or otherwise transferred.
Each purchaser must satisfy the eligibility requirements applicable to the offering and execute the applicable subscription and investment representations.
SECURITIES LAW NOTICE
The Notes are being offered pursuant to an exemption from registration under the Securities Act of 1933.
Prospective investors will be provided with the definitive offering documents, including the applicable:
Note Purchase Agreement
Subscription Agreement
Security Agreement
Related disclosures and investor representations
Prospective investors should consult their own legal, tax, and financial advisers before purchasing the Notes.
This page is not intended to constitute an offer to sell or a solicitation of an offer to buy securities. Any investment may be made only pursuant to the definitive offering documents and applicable law.
CONFIDENTIALITY
This offering information is confidential and intended solely for review by prospective investors and their professional advisers.
Information contained herein is subject to change and is qualified in its entirety by the definitive offering documents.
Hesscloud TECHNOLOGIES, INC.
AI CLOUD INFRASTRUCTURE
Senior Secured Notes — Private Offering
CONFIDENTIAL — FOR QUALIFIED PROSPECTIVE INVESTORS ONLYY