What changed in this filing

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Item 9A. Controls and Procedures

2023-08-02 compared with 2022-08-29 · 235 added, 240 removed, 751 unchanged (39% of the section changed)

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A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis.

In connection with our initial public offering, we identified a material weakness in the design of our internal controls, which could adversely affect our ability to record, process, summarize and report financial data.

We are in the process of designing and implementing user access controls to ensure appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel.

We have identified the following material weakness in the design of our internal controls:

• We have not designed and implemented controls to ensure we can record, process, summarize, and report financial data.

• We have not yet designed and implemented user access controls to ensure appropriate segregation of duties that would adequately restrict user and privileged access to the financially relevant systems and data to appropriate personnel.

• We did not design and maintain effective controls associated with related party transactions and disclosures.

Controls in place were not designed or implemented at a sufficient level of precision or rigor to effectively identify related party relationships and disclose their related transactions in our financial statements.

• We also do not have a properly designed internal control system that identifies critical processes and key controls.

In order to remediate these material weaknesses, we are taking the following steps, among others:

Continued hiring of additional qualified accounting and financial reporting personnel to support division of responsibilities;

In order to remediate these material weaknesses, we have begun to take the following steps, among others:

Hiring additional qualified accounting and financial reporting personnel to support division of responsibilities;

Improving and updating our systems;

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Internal Control over Financial Reporting

This annual report does not include a report of management's assessment regarding internal control over financial reporting or an attestation report of the company's registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly registered public companies.

This annual report does not include an attestation report of the Company's registered public accounting firm due to the fact that the Company is a Smaller Reporting Company and exempt from the requirement.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2022, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Except as set forth above, there were no changes in the Company’s internal control over financial reporting during the fourth quarter of 2023, which were identified in connection with management’s evaluation required by paragraph

(d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Information

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Executive Officers and Directors

The following table provides information regarding our Named Executive Officers (as defined below) and directors as of August 25, 2022

The following table provides information regarding our Named Executive Officers (as defined below) and directors as of June 30, 2023.

Name Age Position(s) Period of Service

Executive Officers

Wes Cummins Executive Officer, Secretary, Treasurer, Chairman of the Boar 44 Chief Director from February 2007 to December 2020 and March 2021 to Present, sole officer from March 2012 to December 2020 and CEO, Secretary and Treasurer from March 2021 to Present

Wes Cummins 45 Chief Executive Officer and Chairman of the Board of Directors Director from February 2007 to December 2020 and March 2021 to Present, sole officer from March 2012 to December 2020 and CEO, Secretary and Treasurer from March 2021 to Present

David Rench 45 Chief Financial Officer March 2021 to Present

Chief Marketing Officer 34 Executive April to Present

Michael Maniscalco 43 Chief Technology Officer Executive Vice President of Technology from September 2021 to June 2023;

Chief Technology Officer beginning in July 2023

Non-Employee Directors

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Richard Nottenburg 69 Director June 2021 to Present

Jason Zhang 29 Director April 2021 to Present

Executive officers

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Riley & Co., from 2002 to 2011.

serves as a member of the boards of Sequans Communications S.A.

Cummins also serves as a member of the boards of Sequans Communications S.A.

SQNS), a fabless designer, developer and supplier of cellular semiconductor solutions for massive, broadband and critical Internet of Things markets and Vishay Precision Group, Inc.

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Louis where he majored in finance and accounting.

We believe Mr.

Cummins’ experience building a business and as a chief executive officer and his experience investing in technology gives him insight and perspective into creating and building a technology based company as well as operating as a public company and enables him to be an effective board member.

Rench became our chief financial officer in March 2021 and continues to serve in that capacity.

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Rench holds a BBA from the Neeley School of Business at Texas Christian University in Fort Worth, Texas, and an MBA from the Cox School of Business at Southern Methodist University in Dallas, Texas.

He is skilled in talent management and focused on long-term business growth, revenue, and profitability.

He has strong experience leading the full spectrum of accounting, budgets, financial analysis, forecast planning, IT strategy, and reporting processes to achieve and exceed corporate financial goals.

He has demonstrated expertise in developing and implementing streamlined tools and procedures to maximize departmental efficiency.

Ingel became our Vice President of Operations in March 2021, and was named Chief Marketing Officer in July 2022.

Her experience is in marketing and operations to support growth of companies across sectors.

From 2016 to 2018, Ms.

Ingel worked with operations in the corporate buying offices at Neiman Marcus, a large department store chain, where she worked closely with the executive team on projections, marketing and planning for the web business.

Ingel also founded an event planning company in Dallas in 2019, which she grew through creative marketing and sales despite a nationwide pandemic.

Ingel sold her company in early 2021 to pursue a career in the cryptocurrency marketplace and specifically as our Vice President of Operations.

Michael Maniscalco

Maniscalco became our Executive Vice President of Technology in September 2022, and was named Chief Technology Officer in July 2023.

Maniscalco co-founded Ihiji, a remote network management services company, where he served as the Vice President of Product through February 2018, after Ihiji was acquired in 2017.

From 2018 until his employment with the Company, Mr.

Maniscalco founded and and served as Chief Executive Officer of Better Living Technologies from 2018 to 2022..

In addition, Mr.

Maniscalco has founded several other companies and organizations over the last five years.

Appointment of Officers

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Earlier in his career, Mr.

Hastings served as a convertible bond trader at Morgan Stanley in New York.

Hastings served as a convertible bond trader at

Morgan Stanley in New York.

Hastings also serves as a Board member for IQvestment Holdings.

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He is a recognized leader in the financial industry with more than two decades of global financial and business expertise.

We believe Mr.

Hastings’ experience and

expertise will be of tremendous value as we pursue opportunities to leverage our initial investment and further scale our mining operations and build our co-hosting operations and enables him to be an effective member of the Board.

Kelli McDonald

McDonald has a passion for high impact charity work in her local community as well as social and environmental causes.

McDonald has been active in early childhood education since 2006.

She has served as the Fundraising Chairperson and Social Media Manager for KSD NOW since 2019 and works in merchandising for an independent bookseller.

In addition to work in non-profit development, early childhood education and the Literacy Project from 2017 to 2020, Ms.

McDonald founded NG Gives Back — a community service and engagement program focused on the St.

McDonald has a passion for high impact charity work in her local community.

McDonald works in merchandising and book sales for an independent bookstore.

She worked in early childhood education from 2006 to 2020.

She served as the Fundraising Chairperson and Social Media Manager for KSD NOW in the early inception of the district-wide supplemental nutrition program, helping social workers launch a now-vital service.

In addition to work in non-profit development, early childhood education and the Literacy Project, Ms.

McDonald founded NG Gives Back.

She earned a Bachelor of Arts degree from The University of Wisconsin Oshkosh.

We believe Ms.

McDonald’s education and community outreach background bring a unique perspective to the Board and enables her to be an effective member of the Board.

Douglas Miller

Miller has served as a member of the board of directors of three public companies over the past nine years:

Telenav, Inc (NASDAQ:

TNAV), CareDx, Inc.

CDNA) and Procera Networks.

He has chaired the Audit Committee for each of these companies, and has also served as Lead Independent Director and as chair or committee member on Compensation, Nominating and Governance and Special committees.

Telenav, Inc.

TNAV) from July 2015 to February 2021, CareDx, Inc.

CDNA) from July 2016 to May 2017, and Procera Networks, Inc.

PKT) from May 2013 to June 2015.

He has chaired the Audit Committee for each of these companies, and has also served as a Lead Independent Director and as chair or committee member on Compensation, Nominating and Governance and Special committees.

Prior to his roles as board member, Mr.

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in Accounting from Santa Clara University.

We believe Mr.

Miller’s experience as a chief financial officer and board member of public companies gives him insight and perspective into how other boards function and enables him to be an effective member of the Board.

Virginia Moore

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Moore earned a Business Administration degree from Universidad Católica de Cordoba in her native Argentina and an MBA from ESADE Business School in Barcelona, Spain.

Moore’s business and entrepreneurial experience brings a unique perspective to our Board and enable her to be an member of the Board.

Richard Nottenburg

Nottenburg is currently on the board of directors of Cognyte Software Ltd., (NASDAQ:

Nottenburg is Executive Chairman of NxBeam Inc., which designs and builds leading proprietary mmWave ICs and radio products to power the next generation of satellite and terrestrial communication networks.

Nottenburg is on the board of directors of Cognyte Software Ltd., (NASDAQ:

CGNT),a global leader in security analytics software and Verint Systems Inc.

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SQNS), a leading developer and provider of 5G and 4G chips and modules for massive, broadband and critical IoT applications where he serves on both the audit and compensation committees.

Nottenburg is also Executive Partner at OceanSoundPartners LP, a private equity firm, and an investor in various early stage technology companies.

Previously, Dr.

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from 2008 through 2010.

2004 until 2008, Dr.

From 2004 until 2008, Dr.

Nottenburg was an officer with Motorola, Inc., ultimately serving as its Executive Vice President, Chief Strategy Officer and Chief Technology Officer.

We believe that Dr.

Nottenburg’s deep experience in global technology-focused businesses and will be a valuable resource to us as we look to leverage our supply chain and scale our operations and enable him to be an effective member of the Board.

Zhang is an investor and entrepreneur in the technology sector.

Zhang currently consults to the Company in addition to his role on the Board.

Zhang founded Valuefinder, LLC, a British Virgin Island limited liability company (“Valuefinder”), which advises, or invests in, cryptoasset related companies.

Prior to that Mr.

Zhang served as an investment analyst at MSD Capital from 2015 to 2017.

MSD Capital is a private investment firm established in 1998 to exclusively manage the assets of Michael Dell and his family.

From 2017 to 2019, Mr.

Zhang was an investment analyst at SCGE Management LP (Sequoia), an investment company that invests in early stage companies.

At both MSD Capital and Sequoia, Mr.

Zhang focused investments in startup companies, including companies involved with cryptoassets, enterprise software, consumer products and hardware.

Zhang graduated from Harvard College in 2015.

We believe that Mr.

Zhang’s experience with startup companies and companies involved in cryptoassets is a valuable resource to us as we build and expand our operations and enable him to be an effective member of the Board.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) requires the Company’s directors, executive officers and persons who beneficially own more than 10% of its Common Stock to file reports of ownership and changes in ownership with the Commission and to furnish the Company with copies of all such reports they file.

Based on the Company’s review of the copies of such forms received by it, or written representations from certain reporting persons, the Company believes that none of its directors, executive officers or persons who beneficially own more than 10% of the Common Stock failed to comply with Section 16(a) reporting requirements during the fiscal year ended May 31, 2022 (the “Last Fiscal Year”).

Code of Business Conduct and Ethics

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The full text of our code of business conduct and ethics is posted on the Investors section of our website:

www.appliedblockchaininc.com.

www.applieddigital.com.

We intend to disclose future amendments to certain provisions of our code of business conduct and ethics, or waivers of these provisions, on our website or in public filings.

Board of Directors Composition

Our Board currently consists of seven members.

Our Board currently consists of six members.

Each of our current directors serves until the next annual meeting of our stockholders or earlier death, resignation or removal.

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Compensation Committee

Our Compensation Committee is comprised of Ms.

Our Compensation Committee is comprised of Mr.

Nottenburg, Ms.

McDonald, Ms.

Moore and Messrs.

Miller and Nottenburg.

McDonald is the chairperson of our Compensation Committee.

The composition of our Compensation Committee meets the requirements for independence under the current Nasdaq Global Select Market listing standards and SEC

rules and regulations.

Moore and Mr.

Nottenburg is the chairperson of our Compensation Committee.

The composition of our Compensation Committee meets the requirements for independence under the current Nasdaq Global Select Market listing standards and SEC rules and regulations.

Each member of this committee is a non- employee director, as defined in Rule 16b-3 promulgated under the Exchange Act.

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The Board Diversity Matrix below presents the Board’s diversity statistics in the format prescribed by the Nasdaq rules.

Board Diversity Matrix (as of August 25, 2022)

Board Diversity Matrix (as of July 25, 2023)

Total Number of Directors

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Did Not Disclose Demographic Background

To see our Board Diversity Matrix as of August 30, 2022, please see our proxy statement filed with the SEC on

September 27, 2022.

Legal Proceedings

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creates any conflict of interest.

Our 2022 Incentive Plan was approved in January 2022.

Previously, compensation was primarily in the form of cash, except for grants made in 2021 outside of the 2022 Incentive Plan.

Going forward, compensation will be in the form of a mix of cash and equity, and we expect equity compensation to be a significant portion of the overall pay mix.

Compensation and Governance Practices and Policies

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The Compensation Committee reviews market data of companies that we believe are comparable to us.

With Compensia’s assistance, the Compensation Committee developed a peer group for use when making its compensation decisions for the fiscal year ending May 31 2022, which consisted of publicly traded technology

companies headquartered in the U.S.

With Compensia’s assistance, the Compensation Committee developed a peer group for use when making its compensation decisions for the fiscal year ending May 31, 2023, which consisted of publicly traded technology companies headquartered in the U.S.

that generally had a market capitalization between 0.25x and 4.0x the Company’s market capitalization.

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The following is a list of the public companies that composed our peer group for the fiscal year ending May 31, 2023:

Alkami Technology

Core Scientific

Riot Blockchain

Bakkt Holdings

Global Tech Industries Group

Greenidge Generation Holdings

Stronghold Digital Mining

BTRS Holdings

Marathon Digital Holdings

Paya Holdings

Cipher Mining

Payoneer Global

Alkami Technology CleanSpark Paya

Backblaze Couchbase Riot Platforms

Bakkt Holdings Fastly Stronghold Digital Mining

Bit Digital Greenidge Generation Holdings Sumo Logic

Cantaloupe IronNet TeraWulf

Cipher Mining Marathon Digital Holdings Veritone

Base Salaries

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Base Salary FY22

EVP of Operations

Michael Maniscalco

$200,000 $275,000

Annual Bonuses

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Target Bonus (% of Salary)

EVP of Operations

Michael Maniscalco

Equity Compensation

During the fiscal year ended May 31, 2022, we granted restricted stock units to each of our Named Executive Officers.

During the fiscal year ended May 31, 2023, we granted restricted stock units (“RSUs”) and performance stock units (“PSUs”) to each of our Named Executive Officers.

We feel this equity mix effectively aligns Named Executive Officer compensation with shareholder returns while also achieving retention objectives.

On January 4, 2022, grants to our Named Executive Officers were as follows:

Named Executive Officer Position # of Restricted Stock Units

Wes Cummins CEO 500,000

David Rench CFO 166,666

Regina Ingel EVP of Operations 100,000

During the fiscal year , grants to our Named Executive Officers were as follows:

Named Executive Officer

# of Restricted Stock Units

# of Performance-Based Restricted Stock Units (at target)

1,100,000 1,400,000

460,000 490,000

Michael Maniscalco

216,000 175,000

The RSUs are time-based and provide for vesting in tranches over three years.

The PSUs are performance-based and provide for earning between 50% -250% of the employee’s target units if certain financial targets are met during the measurement period, which consists of two fiscal years, and for vesting of any earned units on the third anniversary of grant.

Employment Agreements with Named Executive Officers

The Company currently has employment agreements with Mr.

Rench and Ms.

Cummins, and Mr.

The employment agreements include non-compete and non-solicitation provisions.

See “Employment Agreements and Arrangements Between the Company and Named Executives” of this Item 11 for a description of the material terms of Mr.

Cummins’s, Mr.

Rench’s and Ms.

Ingel’s employment agreements.

Cummins’s and Mr Rench's employment agreements.

The Company does not currently have an employment agreement with Mr.

Welfare and other Benefits

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Under the terms of each Named Executive Officer’s restricted stock award (each, an “Award”), if the Named Executive Officer’s employment terminates before the Award is vested and the termination is on account of the Named Executive Officer’s death, disability or termination by the Company without Cause (as defined in the Award), the Named Executive Officer will vest in a portion of the unvested Award based on the number of full months of employment that the Named Executive Officer has completed as of the termination date, and since the grant date of the Award.

Under the terms of each Named Executive Officer’s PSU Award, the portion

of the Target Award that will be earned and vested is determined based on both the months of employment

completed as of the termination date and on achievement of certain performance factors defined in the Award during

the period prior to the termination of employment

In addition, if there is a change in control of the Company as defined in the Award (“Change in Control”) of the Company while the Award remains unvested, the Award will be treated in accordance with one of the following as determined by the Compensation Committee:

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Notwithstanding any of the foregoing, the Committee may determine that any unvested portion of the Award will be cancelled and terminated for consideration instead.

COMPENSATION COMMITTEE REPORT

The following report does not constitute soliciting material and is not considered filed or incorporated by reference into any other filing by the Company under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

The Compensation Committee has reviewed and discussed the Compensation Discussion & Analysis that precedes this Report as required by Item 402(b) of the SEC’s Regulation S-K.

Based on its review and discussions with

management, the Compensation Committee recommended to the Board the inclusion of the Compensation Discussion & Analysis in this proxy statement.

The Compensation Discussion & Analysis discusses the philosophy, principles, and policies underlying the Company’s compensation programs that were in effect during fiscal 2022.

Respectfully submitted,

The Compensation Committee of the Board of Directors

Kelli McDonald, Chair

Douglas Miller

Virginia Moore

Richard Nottenburg

Notwithstanding

the foregoing, for PSU Awards, if the Change in Control occurs prior to the date that the Committee determines the

number of units earned under the Award, the Named Executive Officer will vest in a portion of the Award based on

the months of employment completed as of the Change in Control, applied to the higher of 100% of the target Award and the amount earned based on actual performance as of the end of the last full calendar quarter preceding the Change in Control date.

If payment of an Award in connection with a Change in Control would result in liability for an excise tax under

Section 4999 of the Code for “excess parachute payments” as defined in Section 280G of the Code, the amount of

the Award may be reduced to avoid imposition of the excise tax, if such reduction results in a greater post-tax

benefit to the Named Executive Officer as compared to payment of the full amount of the Award and imposition of

the excise tax.

Executive Compensation

We are a “smaller reporting company” under applicable SEC rules and are providing disclosure regarding our executive compensation arrangements pursuant to the rules applicable to emerging growth companies, which means that we are not required to provide a compensation discussion and analysis and certain other disclosures regarding our executive compensation.

The following discussion relates to the compensation of each of the Company’s Chief Executive Officer and its two other most highly compensated individuals who were serving as executive officers at the end of the fiscal year ended May 31, 2022, for services rendered in all capacities during such year (the “Named Executive Officers”), consisting of Wes Cummins, our Chief Executive Officer, Secretary, Treasurer, Chairman of the Board, David Rench, our Chief Financial Officer, and Regina Ingel, our Chief Marketing Officer.

Executive Officers”), consisting of Wes Cummins, our Chief Executive Officer, Secretary, Treasurer, Chairman of the Board, David Rench, our Chief Financial Officer, and Michael Maniscalco, our Chief Technology Officer.

Summary Compensation Table

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2021 41,667 20,000 — — 61,667

Regina Ingel 2022 $105,000 $60,000 $— $— $165,000

Chief Marketing Officer 2021 12,500 9,000 — — 21,500

Michael Maniscalco 2023 $200,000 $92,500 — $854,941 $1,147,441

Chief Technology Officer (4)

2022 $61,667 — — — $61,667

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Consists of value of restricted stock awards made outside of the 2022 Incentive Plan.

Consists of all other compensation not covered in the salary, bonus, and non-equity incentive compensation categories.

Consists of restricted stock units granted through the 2022 Incentive Plan and health care premiums paid by the Company.

Maniscalco joined the Company in September 2021 as EVP, Technology, and became Chief Technology Officer on July 5, 2023.

Employment Agreements

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Rench’s annual base salary to $275,000, effective August 1, 2022.

Ingel Agreement

Regina Ingel is our Chief Marketing Officer On January 4, 2022, we and Ms.

Ingel entered into an Employment Agreement, effective as of November 1, 2021 (the “Ingel Employment Agreement”).

Pursuant to the Ingel Employment Agreement, Ms.

Ingel receives a base salary of $120,000 per annum, subject to annual review, and shall also be eligible for an annual bonus of up to 50% of her base salary, to be determined at our sole discretion.

The term of the Ingel Employment Agreement ends on October 31, 2024, with automatic one (1) year extensions unless notice not to renew is given by either party at least 60 days prior to the relevant end date.

The Ingel Employment Agreement granted Ms.

Ingel an incentive award of 100,000 shares of Restricted Stock.

The Restricted Stock will vest in accordance with the following schedule, (pending an effective registration statement covering the resale of shares of common stock comprising the stock award, which has yet to occur at the time of this filing) :

Number of Shares Vesting Date*

__________________

* Shares will vest on such date or the Later Date, if later.

The Ingel Employment Agreement requires Ms.

Ingel to devote forty (40) hours per week to her employment duties and obligations, and provides that Ms.

Ingel will be entitled to participate in all benefit plans provided to our

employees in accordance with our applicable plan, policy or practices, as well as in any long-term incentive program established by us.

It also provides for unlimited annual paid vacation, and reimbursement of reasonable business expenses, and provides that either party may terminate the employment arrangement pursuant to the notice requirements set forth in the Ingel Employment Agreement.

The Ingel Employment Agreement contains restrictive covenants prohibiting Ms.

Ingel from disclosing our confidential information at any time, from competing with us in any geographic area where we do business during her employment, and from soliciting our employees, contractors or customers, during her employment and for one year thereafter.

On August 1, 2022, the Ingel Employment Agreement was amended to change Ms.

Ingel’s title to Chief Marketing Officer and increase her annual base salary to $185,000.

The Company does not currently have an employment agreement with Mr.

Maniscalco receives a base salary of $275,000 per annum, subject to annual review, and is eligible for an annual bonus of up to 75% of his base salary, to be determined at our sole discretion.

Maniscalco is entitled to participate in all benefit plans provided to our employees in accordance with our applicable plan, policy or practices, as well as in any long-term incentive program established by us.

Severance Agreements

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Market Value of Shares or Units of Stock That Have Not Vested ($)

Michael Maniscalco

_____________________

(1) Reflects shares of restricted stock granted outside of the 2022 Incentive Plan.

Such shares vest as follows:

one-half vest on April 1, 2022 or, if later, the date that a registration statement including the resale of such shares is declared effective by the SEC (the “Later Date”), and one-eighth vest on each of July 1, 2022, October 1, 2022, January 1, 2023 and April 1, 2023, or in each case, if later, the Later Date.

(1) Consists of restricted stock units that vest as follows:

83,333 on each of August 5, 2023, August 5, 2024 and February 5, 2025 and 83,334 on each of February 5, 2024 and August 5, 2025.

(2) Consists of restricted stock units that vest as follows:

200,000 on April 4, 2024 and 100,000 on each of October 4, 2024, April 4, 2025, October 4, 2025 and April 4, 2026.

(3) Consists of performance stock units, at threshold, that may be earned during the two fiscal years beginning in 2023 and 2024 if certain financial performance criteria are met and will vest on April 4, 2026.

(4) Consists of restricted stock units that vest as follows:

41,667 on each of August 5, 2023, February 5, 2024, February 5, 2025 and August 5, 2025 and 41,666 on August 5, 2024.

(5) Consists of restricted stock units that vest as follows:

70,000 on April 4, 2024 and 35,000 on each of October 4, 2024, April 4, 2025, October 4, 2025 and April 4, 2026.

(6) Consists of performance stock units, at threshold, that may be earned during the two fiscal years beginning in 2023 and 2024 if certain financial performance criteria are met and will vest on April 4, 2026.

(7) Consists of restricted stock units that vest as follows:

30,556 on August 5, 2023, and 23,611 on each of February 5, 2024, August 5, 2024, February 5, 2025 and August 5, 2025.

(8) Consists of restricted stock units that vest as follows:

25,000 on April 4, 2024 and 12,500 on each of October 4, 2024, April 4, 2025, October 4, 2025 and April 4, 2026.

(9) Consists of performance stock units, at threshold, that may be earned during the two fiscal years beginning in 2023 and 2024 if certain financial performance criteria are met and will vest on April 4, 2026.

Equity Compensation Plans

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________________

(1) Shares of Common Stock.

(1) Reflects restricted stock units which were not granted under the 2022 Incentive Plan or 2022 Non-Employee Director Stock Plan.

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The Incentive Plan

The following summary of the material features of the Incentive Plan is qualified in its entirety by reference to the Incentive Plan, a copy of which is attached as Exhibit 10.12 to the registration statement of which this prospectus forms a part.

The following is a summary of the material features of the Incentive Plan, qualified in its entirety by reference to the Incentive Plan.

Administration

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The Compensation Committee has full and exclusive discretionary power to interpret the terms and the intent of the Incentive Plan and any award agreement or other agreement or document ancillary to or in connection with the Incentive Plan, to select eligible employees and third-party service providers to receive awards (“Participants”), to determine eligibility for awards and to adopt such rules, regulations, forms, instruments, and guidelines for administering the Incentive Plan as it may deem necessary or proper.

Such authority shall include, but not be limited to, selecting award recipients, establishing all award terms and conditions, including the terms and conditions set forth in award agreements, granting awards as an alternative to or as the form of payment for grants or rights earned or due under compensation plans, service contracts or other of our arrangements, construing any ambiguous provision of the Incentive Plan or any award agreement, and, subject to stockholder or Participant approvals as may be required, adopting modifications and amendments to the Incentive Plan or any award agreement.

subject to stockholder or Participant approvals as may be required, adopting modifications and amendments to the Incentive Plan or any award agreement.

All actions taken and all interpretations and determinations made by the Compensation Committee shall be final and binding upon Participants, us, and all other interested individuals.

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Options granted under the Incentive Plan may be incentive stock options (“ISOs”) or nonqualified stock options.

Administrator may determine consistent with the Incentive Plan, including, without limitation, restrictions on transferability of the underlying shares.

Options entitle the Participant to purchase a specified number of shares of common stock from us at a specified option price, subject to applicable vesting conditions and such other provisions as the Incentive Plan Administrator may determine consistent with the Incentive Plan, including, without limitation, restrictions on transferability of the underlying shares.

The per-share option price will be fixed by the Incentive Plan Administrator at the time the option is granted, but cannot be less than the per- share fair market value of the underlying common stock on the date of grant (or, with respect to ISOs, in the case of a holder of more than 10 percent of outstanding voting securities, 110 percent of such per share fair market value).

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The Award Agreement shall set forth the extent to which a Participant may exercise the SAR following termination of employment.

The amount payable upon the exercise of an SAR may, in the Incentive Plan Administrator’s discretion, be settled in cash, common stock, or a combination thereof, or any other manner approved by the Incentive Plan Administrator.

The amount payable upon the exercise of an SAR may, in the Incentive Plan

Administrator’s discretion, be settled in cash, common stock, or a combination thereof, or any other manner approved by the Incentive Plan Administrator.

Restricted Stock and Restricted Stock Units.

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Participants may be granted full voting rights with respect to restricted stock during the applicable restriction period, but will have no voting rights with respect to restricted stock units until common stock is issued in settlement thereof.

Restricted stock will become freely transferrable by the Participant after all conditions and restrictions have been satisfied.

Restricted stock will become freely transferable by the Participant after all conditions and restrictions have been satisfied.

Vested restricted stock units may, in the Incentive Plan Administrator’s discretion, be settled in cash, common stock, or a combination of cash and common stock or any other manner approved by the Incentive Plan Administrator.

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The award agreement shall set forth the extent to which a Participant may retain cash-based and other stock and equity-based awards following termination of employment.

To the extent that any cash-based and other stock and equity-based awards are granted, they may, in the Incentive

Plan Administrator’s discretion, be settled in cash or common stock.

To the extent that any cash-based and other stock and equity-based awards are granted, they may, in the Incentive Plan Administrator’s discretion, be settled in cash or common stock.

Dividend Equivalents

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Share Authorization

The maximum aggregate number of shares of common stock that may be issued under the Incentive Plan is 13,333,333 shares, all of which can be issued pursuant to the exercise of incentive stock options.

The maximum aggregate number of shares of common stock that may be issued under the Incentive Plan was initially 13,333,333 shares.

On January 1st of each year, for a period of not more than nine years, beginning on January 1, 2023 and ending on (and including) January 1, 2031, the number of shares authorized under the Incentive Plan automatically increases in an amount equal to 3% of the total number of shares of common stock outstanding on December 31st of the preceding calendar year.

On January 1, 2023, 2,834,229 shares were added to the Incentive Plan, resulting in a new number of shares authorized under the Incentive Plan of 16,167,562, all of which can be issued pursuant to the exercise of incentive stock options.

In connection with any corporate event or transaction (including, but not limited to, a change in our shares or our capitalization) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin off, or other distribution of our stock or property, combination of shares, exchange of shares, dividend in kind, or other like change in capital structure, number of outstanding shares or distribution (other than normal cash dividends) to our stockholders, or any similar corporate event or transaction, the Compensation Committee, in its sole discretion, in order to prevent dilution or enlargement of Participants’ rights under the Incentive Plan, shall substitute or adjust, as applicable, the number and kind of shares that may be issued under the Incentive Plan or under particular forms of awards, the number and kind of shares subject to outstanding awards, the option price or grant price applicable to outstanding awards, and other value determinations applicable to outstanding awards.

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The exercise of a nonqualified stock option or SAR generally is a taxable event that requires the Participant to recognize, as ordinary income, the difference between the shares’ fair market value and the option price.

If a Participant disposes of shares

acquired under an ISO before two years after the ISO was granted, or before one year after the ISO was exercised, this is a “disqualifying disposition” and any gain recognized by the Participant upon the disposition of such shares will be taxed as ordinary income to the extent such gain does not exceed the fair market value of such shares on the date the ISO was exercised over the option price.

If a Participant disposes of shares acquired under an ISO before two years after the ISO was granted, or before one year after the ISO was exercised, this is a “disqualifying disposition” and any gain recognized by the Participant upon the disposition of such shares will be taxed as ordinary income to the extent such gain does not exceed the fair market value of such shares on the date the ISO was exercised over the option price.

Income is recognized on account of the award of restricted stock and performance shares when the shares first become transferable or are no longer subject to a substantial risk of forfeiture unless the Participant makes an election to recognize income on the grant date under Section 83(b) of the Code.

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Such capital gain or loss will equal the difference between the amount realized on the sale of the shares and the Participant’s tax basis in such shares (generally, the amount previously included in income by the Participant in connection with the grant or vesting of the shares or the exercise of the related option).

We generally will be entitled to claim a federal income tax deduction on account of the exercise of a nonqualified stock option or SAR or upon the taxability to the recipient of restricted stock and performance shares, the settlement of a performance unit or restricted stock unit, and the payment of a cash-based or other stock-based award (subject to tax limitations on our deductions in any year that certain remuneration paid to certain executives exceeds $1 million).

of a performance unit or restricted stock unit, and the payment of a cash-based or other stock-based award (subject to tax limitations on our deductions in any year that certain remuneration paid to certain executives exceeds $1 million).

The amount of the deduction is equal to the ordinary income recognized by the Participant.

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The Director Plan

The following summary of the material features of the Director Plan is qualified in its entirety by reference to the Director Plan, a copy of which is attached as Exhibit 10.13 to the registration statement of which this prospectus forms a part.

The following is a summary of the material features of the Director Plan, qualified in its entirety by reference to the Director Plan.

Awards and Deferrals

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In connection with the occurrence of any corporate event or transaction (including, but not limited to, a change in our shares or our capitalization) such as a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of our stock or property, combination of shares, exchange of shares, dividend in kind, or other like change in capital structure, number of outstanding shares or distribution (other than normal cash dividends) to our stockholders, or any similar corporate event or transaction, the Director Plan Administrator, in its sole discretion, in order to prevent dilution or enlargement of the Directors’ rights under the Director Plan, shall substitute or adjust, as applicable, the number and kind of shares that may be issued under the Director Plan, the number and kind of shares subject to outstanding grants, the annual grant limits, and other value determinations applicable to outstanding grants.

The Director Plan Administrator may also make appropriate adjustments in the terms of any grants under the Director Plan to reflect or relate to such changes or distributions and to modify any other terms of outstanding grants.

The Director Plan Administrator may also make appropriate adjustments in the terms of any grants under the

Director Plan to reflect or relate to such changes or distributions and to modify any other terms of outstanding grants.

Grant of Shares

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We may revise the foregoing formula for any year without stockholder approval, subject to the Plan’s overall share limits.

First Amendment to the Director Plan, adopted as of April 4, 2023 and effective as of November 10, 2022, adjusted the definition of the compensation year and changed the annual amount of shares of common stock to be awarded to the number of shares having a fair market value as of the date of grant of $160,000, rounded up to the nearest whole share.

Vesting of Shares

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Prior to the Board’s taking action to permit deferrals under the Director Plan, no cash or stock deferrals shall be permitted.

Administrator may designate) of the calendar year preceding the calendar year in which such compensation is earned or granted or, if later, within 30 days after first becoming eligible to make deferrals under the Director Plan.

Deferred cash and stock accounts, once permitted and created, would be unfunded and maintained for record keeping purposes only, and directors wishing to defer amounts under the 2021 Directors’ Plan would be required to make their deferral elections by December 31st (or such earlier date as the Director Plan Administrator may designate) of the calendar year preceding the calendar year in which such compensation is earned or granted or, if later, within 30 days after first becoming eligible to make deferrals under the Director Plan.

Distributions of Deferrals

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Federal Income Tax Consequences

With respect to shares granted under the Director Plan, unless deferred if and when the Board authorizes the deferral feature, the Director will be taxed on the fair market value of such shares at ordinary income rates at the time such

shares vest or, if the Director made an election under Section 83(b), on the grant date.

We will receive a corresponding deduction for the same amount at the same time.

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employees except for a recently hired employee in North Dakota for whom separate benefit arrangements are being put together due to North Dakota laws.

We also sponsor a broad-based 401(k) plan intended to provide eligible U.S.

employees other than our recently hired employee in North Dakota for whom all benefits are being put into place in accordance with North Dakota law, with an opportunity to defer eligible compensation up to certain annual limits.

As a tax- qualified retirement plan, contributions (if any) made by us are deductible by us when made, and contributions and earnings on those amounts are generally not taxable to the employees until withdrawn or distributed from the 401(k) plan.

Our Named Executive Officers are eligible to participate in our employee benefit plans, including our 401(k) plan, on the same basis as our other employees.

We maintain a broad-based 401(k) plan including our Named Executive Officers.

Our Named Executive Officers did not participate in, or otherwise receive any benefits under, any pension or retirement plan sponsored by the Company during the fiscal year ended May 31, 2023.

Our Named Executive Officers did not participate in, or earn any benefits under, a non-qualified deferred compensation plan sponsored by the Company during the fiscal year ended May 31, 2023.

Director Compensation

Non-Employee Director Compensation

The following table presents the compensation for each person who served as a director on our Board during fiscal year ended May 31, 2023.

Fees Earned or Paid in Cash ($)

Chuck Hastings

$33,000 $210,503 $243,503

Kelli McDonald

$38,000 $210,503 $248,503

Douglas Miller

$45,000 $210,503 $255,503

Virginia Moore

$35,000 $210,503 $245,503

Richard Nottenburg

$36,000 $210,503 $246,503

(1) Amounts shown represent the aggregate grant date fair value, computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718, of awards of restricted stock granted during fiscal year ended May 31, 2023.

Each director held 76,191 unvested shares of restricted stock as of May 31, 2023.

The following table shows the annual cash retainer fees for non-employee directors.

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Nominating and Governance Committee Member

Lead Independent Director

Directors serving in multiple leadership roles receive incremental compensation for each role.

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Directors also receive customary reimbursement for reasonable out-of-pocket expenses related to Board service.

In November 2021, each non-employee director was granted 100,000 shares of restricted stock, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

Thereafter, directors will also receive an annual grant of 33,333 shares of restricted stock, which shares will vest on the first anniversary of grant.

In addition to the annual cash retainer fees, directors also receive an annual grant of restricted stock valued at

$160,000, calculated using the closing price of the Common Stock on the Nasdaq Global Select Market on the date

of grant, which is the date of each annual meeting of stockholders, and vesting on the first anniversary of the date of

On April 21, 2023, directors received (i) a grant of 76,191 shares of restricted stock that will vest on November 10,

2023 in order to compensate directors who were elected on November 10, 2022 for the subsequent 12 months, and

(ii) a grant of 18,630 vested shares in light of the fact that the non-employee directors did not receive a grant of

equity on April 21, 2022 as originally contemplated under the Director Plan.

Directors who are employees of the Company do not receive any additional compensation for Board service.

Compensation Committee Interlocks and Insider Participation

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The following table sets forth certain information with respect to the beneficial ownership of our common stock, as of August 25, 2022, by:

each of our Named Executive Officers;

each of our directors;

all of our directors and executive officers as a group;

each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.

The following table sets forth certain information with respect to the beneficial ownership of our common stock, as of July 25, 2023, by:

(a) each of our Named Executive Officers

(b) each of our Directors

(d) each stockholder known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock.

We have determined beneficial ownership in accordance with the rules of the SEC.

Unless otherwise indicated below, to our knowledge, based on information furnished to us, the persons and entities named in the table have sole voting and investment power with respect to all shares that they beneficially own, subject to applicable community property laws.

Shares of common stock issuable upon conversion of our Series C Preferred Stock or Series D Preferred Stock within 60 days of August 25, 2022 are deemed to be outstanding and to be beneficially owned by the person holding the shares of restricted stock for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

Any securities that are exercisable for, or convertible into, shares of Common Stock within 60 days of July 25, 2023 are deemed to be outstanding and to be beneficially owned by the person holding the securities for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

We have based our calculation of the percentage ownership of our common stock on 103,950,005 shares of our common stock.

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Richard Nottenburg 194,821 (h) *

Jason Zhang 3,256,426 (i)

Regina Ingel 107,726 (j)

Officers and Directors as a group (9 people) 27,239,781 (b)-(j)

Michael Maniscalco 47,222(i) *

Officers and Directors as a group (8 people) 25,255,309 (b)-(i)

c/o GMR Limited Trinity Chamber PO BOX 4301 Tortola, British Virgin Islands

7,440,148 (k)

7,440,148 (j)

______________________________

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(b) Includes (i) 17,590,238 shares of common stock held by Cummins Family Ltd, of which Mr.

Cummins is the CEO, (ii) 742,166 shares of common stock held by Wesley Cummins IRA Account, (iii) 500,000 shares of restricted common stock held directly by Mr.

Cummins, of which 250,000 will vest on April 1, 2022, or, if later, the date a registration statement including the resale of such shares is declared effective by the SEC (the “Later Date”), and 62,500 will vest on each of July 1, 2022, October 1, 2022, January 1, 2023 and April 1, 2023, or in each case, if later, the Later Date and 770,686 shares of common stock held by B.

Cummins is the CEO, (ii) 742,166 shares of common stock held by Wesley Cummins IRA Account, (iii) 2,030,686 shares of Common Stock held by B.

Riley Asset Management, LLC, of which Mr.

Cummins is the President.

Rench, of which 83,333 will vest on April 1, 2022 or, if later, the Later Date, 20,833 will vest on each of July 1, 2022, October 1, 2022, January 1, 2023 and 20,834 will vest on April 1, 2023, or in each case, if later, the Later Date.

Cummins is the President and (iv) 83,333 shares of common stock issuable upon vesting of RSUs held by Mr.

Cummins within 60 days of July 25, 2023.

Rench within 60 days of July 25, 2023.

(d) Includes 76,191 shares of restricted Common Stock held directly by Mr.

Hastings, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

Hastings which will vest on November 11, 2023.

(e) Includes 76,191 shares of restricted Common Stock held directly by Ms.

McDonald, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

McDonald which will vest on November 11, 2023.

(f) Includes 76,191 shares of restricted Common Stock held directly by Mr.

Miller, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

(g) Includes (i) 613,617 shares of common stock held by B.

Riley Securities, Inc., of which Andrew Moore, Ms.

Moore’s spouse, is the Chief Executive Officer, (ii) 267,617 shares of common stock, held directly by Mr.

Moore and (iii) 100,000 shares of restricted common stock held directly by Ms.

Moore, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

Miller which will vest on November 11, 2023.

(g) Includes (i) 267,617 shares of common stock, held directly by Mr.

Moore and (ii) 76,191 shares of restricted Common Stock held directly by Ms.

Moore which will vest on November 11, 2023.

(h) Includes 76,191 shares of restricted Common Stock held directly by Dr.

Nottenburg, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

(i) Includes 100,000 shares of restricted common stock held directly by Mr.

Zhang, 50,000 of which will vest on each of (i) April 1, 2022 or, if later, the Later Date and (ii) April 1, 2023.

(j) Includes 100,000 shares of restricted common stock held directly by Ms.

Ingel, of which 50,000 will vest on April 1, 2022 or, if later, the Later Date and 12,500 will vest on each of July 1, 2022, October 1, 2022, January 1, 2023 and April 1, 2023, or in each case, if later, the Later Date.

(k) Guo Chen, as sole director of GMR Limited, has voting and dispositive power over the 7,440,148 shares of our common stock held by GMR Limited.

Chen disclaims beneficial ownership of such shares.

Nottenburg which will vest on November 11, 2023.

(i) Includes 30,556 shares of Common Stock issuable upon vesting of RSUs held by Mr.

Maniscalco within 60 days of July 25, 2023.

(j) Guo Chen, as 50% owner and sole director of GMR Limited, and Bo Dong, as 50% owner of GMR, each have voting and dispositive power over the 7,440,148 shares of our common stock held by GMR Limited.

Dong disclaims beneficial ownership of such shares.

Certain Relationships and Related Transactions, and Director Independence

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any of our directors, executive officers, or holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.

During 2009, we entered into notes payable with Mr.

Wesley Cummins, our chairman of the Board, chief executive officer, president, secretary and treasurer, for $220,000.

The notes had accrued interest of approximately $779,459 as of May 31, 2021.

On April 15, 2021, we entered into an Exchange Agreement, with Mr.

Cummins and the other

holders of notes, pursuant to which we agreed to exchange the Notes for shares of our common stock.

On July 7, 2021, we issued 2,379,664 shares of our common stock to Mr.

Cummins in satisfaction of the Exchange Agreement.

In March 2021, we executed a strategy planning and portfolio advisory services agreement (“Services Agreement”) with GMR Limited, a British Virgin Island limited liability company (“GMR”), Xsquared Holding Limited, a British Virgin Island limited liability company (“SparkPool”) and Valuefinder, a British Virgin Islands limited liability company (“Valuefinder”) and, together with GMR and SparkPool, the “Service Providers”).

Jason Zhang, one of our Board members, is the sole equity holder and manager, of Valuefinder and a related party.

Pursuant to the Services Agreement, the Service Providers agreed to provide cryptoasset mining management and analysis and to assist us in securing difficult to obtain equipment and we agreed to issue 7,440,148 shares of our common stock to GMR or its designees, 7,440,148 shares of our common stock to SparkPool or its designees and 3,156,426 shares of our common stock to Valuefinder or its designees.

Each Service Provider has provided such services to us which services commenced in June 2021.

In July 2021, we issued 7,440,148 shares of our common stock to each of GMR and SparkPool and 3,156,426 shares of our common stock to Jason Zhang, Valuefinder’s designee.

On December 8th, 2021, we entered into a Service Order with Global Operating Infrastructure LLC pursuant to which we provides energized space for mining activities of Global Operating Infrastructure LLC.

Zhang, director of the Company, owns 15% of Global Operating Infrastructure LLC’s outstanding equity.

During fiscal year 2022, Global Operating Infrastructure LLC paid $1,409,193.00 to Company pursuant to the Service Order.

Zhang also currently consults to the Company in addition to his role on the Board.

There is no written agreement governing this arrangement..

Zhang receives $25,000 per month in return for his services providing oversight of the Company's management team and assistance, as necessary, to the Company's CEO.

In fiscal year 2022, the Company paid Mr.

Zhang $270,000 as consideration for his consulting services.

In 2009, certain affiliates of B.

Riley Securities, Inc., including members of senior management, purchased preferred shares of, and funded certain loans to, us.

Such shares and loans have been converted into an aggregate of approximately 3.6 million shares of our common stock.

In April 2021, certain employees of B.

Riley Securities, Inc.

purchased an aggregate of 67,400 shares of our Series C Preferred Stock.

Riley Securities, Inc.

provided investment banking services in connection with the offering of our Series C Preferred Stock.

Additionally, in July 2021, certain employees of B.

Riley Securities, Inc.

purchased an aggregate of 85,960 shares of our Series D Preferred Stock.

Riley Securities, Inc.

provided investment banking services in connection with the offering of our Series D Preferred Stock.

Our Series C Preferred Stock and Series D Preferred Stock are not subject to the Reverse Stock Split except by adjustment to each of their conversion prices.

Cummins, our Chairman of the Board, CEO, President, Secretary and Treasurer founded, and served as CEO of, 272 Capital LP, a registered investment advisor, which he sold to B.

GMR Limited (“GMR”) holds more than 5% of our outstanding Common Stock.

Guo Chen, a 50% owner and sole director of GMR, is also deemed to beneficially own shares of our Common Stock held by GMR.

GMR and subsidiaries made payments to the Company of approximately $9.2 million during the fiscal year ended May 31, 2023

Chen owns 60% of Alternity Fund Ltd., which owns 100% of GOI.

On December 8th, 2021, we entered into a Service Order with GOI pursuant to which we provide energized space for mining activities of GOI.

During fiscal

year 2023, Global Operating Infrastructure LLC paid approximately $6.4 million to Company pursuant to the Service Order.

Bryant Riley, chairman of the board and co-chief executive officer, of B.

Riley Financial, Inc.

RILY) in August 2021.

Following the sale, Mr.

Cummins became President of B.

Riley Asset Management.

Cummins intends to spend at least 40 hours per week on our business.

RILY), directly or indirectly through subsidiaries of RILY, held in excess of 5% of our then outstanding Common Stock beginning in April 2023.

Such shares no longer represent more than 5% of our outstanding Common Stock.

On May 23, 2023, the Company entered into a Loan and Security Agreement with B.

Riley Commercial Capital, LLC and B.

Riley Securities, Inc., each of which is a wholly-owned subsidiary of RILY, with a total possible principal amount up to $50 million.

As of May 31, 2023 the total loan balance was $36.5 million, all of which has been subsequently repaid as of July 17, 2023.

Review, Approval, or Ratification of Transactions with Related Parties

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Audit fees $556 $423

Audit-related fees 552 —

All other fees — —

Total fees $556 $423

For the fiscal years ended May 31, 2023 and 2022, the Audit Committee approved all of the services provided by, and fees paid to, Marcum LLP.

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333-258818), filed with the SEC on August 13, 2021).

Service Framework Agreement, dated July 5, 2021, by and between APLD Hosting, LLC and Bitmain Technologies Limited

Service Framework Agreement, dated July 5, 2021, by and between APLD Hosting, LLC and Bitmain Technologies Limited ( I ncoporated by reference to Exhibit 10.8 to the Company's Annual R ep ort on Form 10-K, fi led with the SEC on August 29, 2022.

Master Hosting Agreement, dated as of September 20, 2021, by and between APLD Hosting, LLC and F2Pool Mining, Inc.

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333-265698), filed with the SEC on June 17, 2022).

First Amendment to the 2022 Non-Employee Director Stock Plan, dated April 4, 2023.

10.13.2 Form of Director Restricted Stock Award Agreement (Incorporated by reference to Exhibit 10.6 to the Company's registration statement on Form S-8 (Registration No.

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333-258818), filed with the SEC on January 24, 2022).

10.17* Ground Lease, effective as of April 13, 2022, by and between EDB, Ltd and APLD - Rattlesnake Den I LLC

Employment Agreement, effective as of November 1, 2021, by and between the Company and Regina Ingel (Incorporated by reference to Exhibit 10.17 to Amendment No.

13 unchanged sentences

333-258818), filed with the SEC on April 12, 2022).

10.21 Letter between Applied Blockchain, Inc.

and Xsquared Holding Limited dated June 6, 2022 (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on June 8, 2022).

10.22 Hosting Agreement, dated as of July 12, 2022, by and between Marathon Digital Holdings, Inc.

and Applied Blockchain, Inc.

(Incorporated by reference to Exhibit 10.6 to the Company’s quarterly report on Form 10-Q (Commission File No.

001-31968), filed with the SEC on October 12, 2022).

10.23 Loan Agreement, dated as of July 25, 2022, by and among APLD Hosting, LLC, Starion Bank, and Applied Blockchain, Inc.

as Guarantor (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on August 12, 2022).

10.24 Security Agreement, dated of July 25, 2022, by and between APLD Hosting, LLC and Starion Bank (Incorporated by reference to Exhibit 10.2 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on August 12, 2022).

10.25 Security Agreement, dated of July 25, 2022, by and among APLD Hosting, LLC, Applied Blockchain, Inc., as Grantor, and Starion Bank(Incorporated by reference to Exhibit 10.3 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on August 12, 2022).

10.26 Unlimited Commercial Corporate Guaranty of Applied Blockchain, Inc.

dated as of July 25, 2022 (Incorporated by reference to Exhibit 10.4 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on August 12, 2022).

10.27 Loan Agreement by and among APLD – Rattlesnake Den I, LLC, as borrower, Vantage Bank Texas, as lender, and the Company, as guarantor, entered into as of November 7, 2022 (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on November 14, 2022).

10.28# Loan Agreement, dated as of February 16, 2023 by and among APLD ELN-01 LLC, Starion Bank, and Applied Digital Corporation as Guarantor (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on February 21, 2023).

10.29# Security Agreement, dated as of February 16, 2023 by and between APLD ELN-01 LLC and Starion Bank (Incorporated by referenced to Exhibit 10.2 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on February 21, 2023).

10.30 Security Agreement, dated as of February 16, 2023 by and among APLD ELN-01 LLC, Applied Digital Corporation and Starion Bank (Incorporated by referenced to Exhibit 10.3 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on February 21, 2023).

10.31 Unlimited Commercial Corporate Guaranty of Applied Digital Corporation dated as of February 16, 2023 (Incorporated by referenced to Exhibit 10.4 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on February 21, 2023).

10.32# Loan and Security Agreement, dated as of May 23, 2023, by and among SAI Computing, LLC as Borrower, B.

Riley Commercial Capital, LLC and B.

Riley Securities, Inc., as Lenders, B.

Riley Commercial Capital, LLC as Collateral Agent, and Applied Digital Corporation as Guarantor (Incorporated by reference to Exhibit 10.1 to the Company’s current report on Form 8-K (Commission File No.

001-31968), filed with the SEC on May 24, 2023).

List of Subsidiaries.

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Dallas, Texas on August 2, 2023.

APPLIED BLOCKCHAIN, INC.

APPLIED DIGITAL CORPORATION

/s/ Wes Cummins

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/s/ David Rench

Chief Financial Officer (Principal Financial and Principal Officer)

Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

POWER OF ATTORNEY

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Chairperson of the Board and Director (Principal Executive Officer) August 2, 2023

/s/ David Rench Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) August 2, 2023

/s/ Chuck Hastings Director August 2, 2023

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Richard Nottenburg

/s/ Jason Zhang Director August 29, 2022

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures