Z Squared Acquires Majority Stake in Paradox Data

Z Squared is significantly enhancing its artificial intelligence infrastructure capabilities through a strategic agreement to acquire a controlling stake in Paradox Data. This move targets the critical need for high-density, immersion-cooled compute solutions, a bottleneck for many advanced AI and high-performance computing operations. The transaction, structured entirely as Series D Convertible Preferred Stock, underscores Z Squared's focus on acquiring operational assets that can be rapidly scaled for AI workloads.

The acquisition centers on Paradox Data's Union County Campus in El Dorado, Arkansas. This site is being developed as a next-generation data center facility specifically engineered to accommodate the intense power and cooling demands of AI compute. Z Squared views this acquisition as a direct response to the current market constraints of grid access, interconnection capacity, and overall power availability, which are increasingly challenging for AI deployments.

Key assets included in the proposed deal are Paradox Data's proprietary technology, intellectual property, and data, alongside an approximately 10-acre land parcel under contract and 8 MW of operational, energized power. A crucial element of the agreement involves a post-closing milestone structure aimed at securing an interconnection request for an additional 50 MW of utility power. This expansion is vital for meeting the escalating demands of AI infrastructure.

Beyond the initial 8 MW connection, Z Squared intends to develop a behind-the-meter generation system capable of delivering up to 150 MW of continuous, industrial-grade power. The 170-acre site, already zoned and permitted for industrial use, benefits from existing infrastructure and a supportive local jurisdiction. This robust power strategy will combine existing utility connections with natural gas-fired industrial turbines, supported by substantial pipeline capacity ensuring fuel security for the planned generation capacity.

The Union County Campus boasts significant logistical advantages, including confirmed utility services from Entergy Arkansas and Energy Gas Transfer Utilities, direct rail access via Union Pacific, and a completed fiber buildout offering up to 400 Gbps dedicated connectivity. Redundant carrier services from AT&T Fiber, Lumen, and Optimum further solidify the site's connectivity. Additionally, the campus is positioned to benefit from economic incentives tied to job creation and capital investment through Arkansas Enterprise Zone designations.

David Halabu, CEO of Z Squared, highlighted the strategic importance of the deal, stating, “Energized power and high-density immersion cooling are two of the scarcest and most valuable assets in AI infrastructure today.” He emphasized that Paradox Data represents the ideal asset to advance their strategy of acquiring and scaling operational sites for AI colocation, focusing on locations with existing power and infrastructure readiness.

This transaction, valued at an initial liquidation preference of $5 million in Series D Convertible Preferred Stock, avoids cash and debt financing, aligning with Z Squared's capital-efficient growth model. The deal is contingent on definitive documentation, thorough due diligence, and necessary approvals, including potential stockholder consent under Nasdaq rules.