What changed in this filing

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Item 1. Financial Statements

2025-10-09 compared with 2025-04-14 · 503 added, 572 removed, 427 unchanged (72% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

February 28, 2025 May 31, 2024

August 31, 2025 May 31, 2025

Current assets:

20 unchanged sentences

Current portion of debt 382,056 10,331

Current portion of debt, at fair value

Customer deposits 16,752 16,125

Related party customer deposits — 1,549

Deferred revenue 626 —

Related party deferred revenue — 1,692

Due to customer 3,054 4,807

Current liabilities held-for-sale 188,215 216,047

Other current liabilities 26,380 19,432

6 unchanged sentences

Temporary equity

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and outstanding at February 28, 2025, and no shares authorized, issued or outstanding at May 31, 2024

Series E-1 preferred stock, $ 0.001 , 62,500 shares authorized, 39,763 shares issued and outstanding at February 28, 2025, and no shares authorized, issued or outstanding at May 31, 2024

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and outstanding at August 31, 2025, and 301,673 shares issued and outstanding at May 31, 2025

Series E-1 preferred stock, $ 0.001 par value, 62,500 shares authorized, 62,500 shares issued and 62,260 shares outstanding at August 31, 2025, and 62,500 shares issued and 62,485 shares outstanding at May 31, 2025

56,796 57,011

Series G preferred stock, $ 0.001 par value, 156,000 shares authorized, no shares issued and outstanding at August 31, 2025, and 78,000 shares issued and outstanding at May 31, 2025

Stockholders' equity:

Common stock, $ 0.001 par value, 400,000,000 shares authorized, 233,682,359 shares issued and 224,391,160 shares outstanding at February 28, 2025, and 144,083,944 shares issued and 139,051,142 shares outstanding at May 31, 2024

Treasury stock, 9,291,199 shares at February 28, 2025 and 5,032,802 shares at May 31, 2024, at cost

Common stock, $ 0.001 par value, 400,000,000 shares authorized, 278,584,101 shares issued and 269,292,902 shares outstanding at August 31, 2025, and 234,200,868 shares issued and 224,909,669 shares outstanding at May 31, 2025

Treasury stock, 9,291,199 shares at August 31, 2025 and 9,291,199 shares at May 31, 2025, at cost

( 31,400 ) ( 31,400 )

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

Revenue $ 64,216 $ 32,923

5 unchanged sentences

29,152 10,993

Loss/(gain) on classification of held for sale (2)

— 21,723 ( 24,616 ) 21,723

Gain on classification of held for sale (2)

Loss on abandonment of assets 1,751 628

Loss on legal settlement

Total costs and expenses 86,509 9,556

Operating loss ( 18,943 ) ( 55,456 ) ( 28,074 ) ( 70,734 )

Operating (loss) income ( 22,293 ) 25,293

Interest expense, net

8,897 4,770 23,687 9,522

Loss on conversion of debt

Loss on change in fair value of debt — 6,422

Loss on change in fair value of related party debt — 2,612 — 2,612

Loss on extinguishment of debt

1,177 — 1,177 —

Loss on extinguishment of related party debt

Loss on change in fair value of warrants

Net (loss) income from continuing operations before income tax expense

( 26,239 ) 15,912

Net loss before income tax expenses ( 35,438 ) ( 62,838 ) ( 178,410 ) ( 85,221 )

Income tax expense 8 —

Net loss ( 35,555 ) ( 62,838 ) ( 178,528 ) ( 85,221 )

Net loss attributable to noncontrolling interest — — — ( 397 )

Net (loss) income from continuing operations ( 26,247 ) 15,912

Net (loss) income from discontinued operations

9,321 ( 20,159 )

( 16,926 ) ( 4,247 )

Preferred dividends ( 1,576 ) ( 44 )

Net loss attributable to common stockholders $ ( 18,502 ) $ ( 4,291 )

Net loss attributable to common stockholders

Continuing operations $ ( 27,823 ) $ 15,868

Discontinued operations 9,321 ( 20,159 )

Net loss $ ( 18,502 ) $ ( 4,291 )

Basic and diluted net loss per share attributable to common stockholders

Continuing operations $ ( 0.11 ) $ 0.11

Discontinued operations $ 0.04 $ ( 0.14 )

Basic and diluted net loss per share $ ( 0.07 ) $ ( 0.03 )

Basic and diluted weighted average number of shares outstanding 255,892,902 149,099,336

(1) Includes related party selling, general and administrative expense of $ 0.1 million and $ 0.1 million for the three months ended February 28, 2025 and February 29, 2024, respectively, and $ 0.2 million and $ 0.5 million for the nine months ended February 28, 2025 and February 29, 2024, respectively.

(1) Includes related party selling, general and administrative expense of $ 0.1 million for each of the three months ended August 31, 2025 and August 31, 2024, respectively.

See Note 6 - Related Party Transactions for further discussion of related party transactions.

(2) Includes $ 25 million received in connection with the sale of our Garden City facility once conditional approval requirements were met and escrowed funds were released during the nine months ended February 28, 2025.

The three and nine months ended February 29, 2024 includes $ 21.7 million loss on classification of held for sale related to the sale of the Garden City facility.

(3) There was no related party debt outstanding during the three and nine months ended February 28, 2025 and as such, no interest expense was incurred related to related party debt.

For the three and nine months ended February 29, 2024, amounts include related party interest expense of $ 0.2 million and $ 0.8 million, respectively.

See accompanying notes to the unaudited condensed consolidated financial statements

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Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Unaudited)

For the Three Months ended February 28, 2025 and February 29, 2024

For the Three Months ended August 31, 2025 and August 31, 2024

(In thousands, except share data)

Temporary Equity Permanent Equity

Preferred Stock Series F

Preferred Stock Series E-1

Preferred Stock Series G

Preferred Stock Common Stock Treasury Stock Additional

1 unchanged sentence

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Balance, November 30, 2024 301,673 $ 6,932 43,000 $ 43,000 6,359 $ 5,850 225,846,268 $ 222 ( 9,291,199 ) $ ( 31,400 ) $ 858,713 $ ( 392,963 ) $ 434,572

Issuance of common stock from stock plans — — — — — — 641,585 1 — — ( 1 ) — —

Balance, May 31, 2025 301,673 $ 6,932 62,485 $ 57,011 78,000 $ 72,094 234,200,868 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 1,009,913 $ ( 481,055 ) $ 497,688

Issuance of common stock from stock compensation plans — — — — — — 897,022 1 — — ( 1 ) — —

Tax payments for restricted stock upon vesting — — — — — — — — — — ( 4,497 ) — ( 4,497 )

Issuance of warrants, at fair value — — — — — — — — — — 6,471 — 6,471

Issuance of Preferred Stock, net of costs — — — 10 180,000 170,386 — — — — — — —

Shares issued in offering, net of costs

— — — — — — 15,320,373 15 — — 190,406 — 190,421

Conversion of warrants — — — — — — 188 — — — 1 — 1

Preferred Series E-1 Stock, net of issuance costs — — — — 33,404 30,437 — — — — — — —

Issuance of warrants, at fair value — — — — — — — — — — 121,204 — 121,204

Conversion of Series G — — — — ( 258,000 ) ( 242,480 ) 28,165,650 28 — — 242,452 — 242,480

Preferred stock dividends — — — — — — — — — — ( 1,576 ) — ( 1,576 )

Conversion of preferred stock — — ( 43,000 ) ( 43,000 ) — — 6,142,855 6 — — 42,994 — 43,000

Stock-based compensation — — — — — — — — — — 9,691 — 9,691

Common stock issuance costs — — — — — — — — — — ( 21 ) — ( 21 )

Net loss — — — — — — — — — — — ( 35,555 ) ( 35,555 )

Balance, February 28, 2025 301,673 $ 6,932 — $ — 39,763 $ 36,287 233,682,359 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 914,336 $ ( 428,518 ) $ 454,648

Common Stock Treasury Stock Additional

Stockholders’

Shares Amount Shares Amount

Balance, November 30, 2023 122,734,060 $ 123 ( 5,001,728 ) $ ( 62 ) $ 278,299 $ ( 122,702 ) $ 155,658 $ 155,658

Shares issued in offering, net of costs 4,158,243 4 — — 23,076 — 23,080 23,080

Issuance of common stock from stock plans 594,634 — — — — — — —

Tax payments for restricted stock upon vesting — — — — ( 606 ) — ( 606 ) ( 606 )

Share cancellations — — ( 67,370 ) — — — — —

Preferred stock redemption — — ( 225 ) ( 225 ) — — — — — — — — —

Stock-based compensation — — — — — — — — — — 15,465 — 15,465

Net loss — — — — — — — — — — — ( 16,926 ) ( 16,926 )

Balance, February 29, 2024 127,486,937 $ 127 $ ( 5,069,098 ) $ ( 62 ) $ 303,963 $ ( 185,540 ) $ 118,488 $ 118,488

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Changes in Temporary Equity and Stockholders’ Equity (Unaudited)

For the Nine Months ended February 28, 2025 and February 29, 2024

(In thousands, except share data)

Balance, August 31, 2025 301,673 $ 6,932 62,260 $ 56,796 — $ — 278,584,101 $ 274 ( 9,291,199 ) $ ( 31,400 ) $ 1,573,367 $ ( 497,981 ) $ 1,044,260

Temporary Equity Permanent Equity

Preferred Stock Series F

Preferred Stock Series E-1

Preferred Stock Common Stock Treasury Stock Additional

Stockholders’

Shares Amount Shares Amount Shares Amount Shares Amount Shares Amount

Shares Amount Shares Amount Shares Amount Shares Amount

Balance, May 31, 2024 — $ — — $ — 144,083,944 $ 144 ( 5,032,802 ) $ ( 62 ) $ 374,738 $ ( 249,990 ) $ 124,830

Shares issued in offering, net of costs — — — — 6,124,218 6 — — 31,015 — 31,021

Issuance of common stock from stock plans — — — — — — 1,908,764 3 — — ( 3 ) — —

Tax payments for restricted stock upon vesting — — — — — — — — — — ( 2,970 ) — ( 2,970 )

Issuance of common stock from stock compensation plans — — — — 769,908 1 — — ( 1 ) — —

Conversions of debt — — — — 11,392,978 11 — — 56,190 — 56,201

Issuance of shares — — — — — — 628,541 1 — — 518 — 519

Issuance of other common stock — — — — 100,000 — — — 519 — 519

Issuance of warrants, at fair value — — — — — — — — 36,479 — 36,479

Conversion of warrants — — — — — — 4,905,256 5 — — ( 5 ) — —

Preferred Series E Stock, net of issuance costs 301,673 6,932 — — — — — — — — 6 — 6

Preferred Series F Stock, net of issuance costs — — 53,191 48,350 — — — — — — — — —

Preferred Series F Stock issuance costs — — — — — — — — — — ( 4,841 ) — ( 4,841 )

Preferred Series E-1 Stock, net of issuance costs — — — — 39,763 36,287 — — — — — — —

Issuance of Preferred Stock, net of costs 301,673 6,932 53,191 48,350 — — — — 6 — 6

Preferred Stock Dividends — — — — — — — — — ( 44 ) ( 44 )

Conversion of preferred stock — — ( 53,191 ) ( 48,350 ) — — 7,598,712 7 — — 53,184 — 53,191

Stock-based compensation — — — — — — — — ( 2,919 ) — ( 2,919 )

Share repurchase — — — — — — — ( 4 ) ( 4,258,397 ) ( 31,338 ) — — ( 31,342 )

Purchase of capped call options — — — — — — — — — — ( 51,750 ) — ( 51,750 )

Purchase of prepaid forward contract — — — — — — — — — — ( 52,736 ) — ( 52,736 )

Reclass of conversion option — — — — — — — — — — 252,900 — 252,900

Net loss — — — — — — — — — ( 4,247 ) ( 4,247 )

Balance, February 28, 2025 301,673 $ 6,932 — $ — 39,763 $ 36,287 233,682,359 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 914,336 $ ( 428,518 ) $ 454,648

Common Stock Treasury Stock Additional

Stockholders’

Noncontrolling Interest

Shares Amount Shares Amount

Balance, May 31, 2023 100,927,358 $ 101 ( 5,001,728 ) $ ( 62 ) $ 160,194 $ ( 100,716 ) $ 59,517 $ 10,162 $ 69,679

Shares issued in offering, net of costs 18,945,841 20 — — 120,982 — 121,002 — 121,002

Issuance of common stock from stock plans 6,129,471 5 — — ( 5 ) — — — —

Tax payments for restricted stock upon vesting — — — — ( 606 ) — ( 606 ) — ( 606 )

Share cancellations — — ( 67,370 ) — — — — — —

Stock-based compensation — — — — 13,634 — 13,634 — 13,634

Extinguishment of noncontrolling interest 1,484,267 1 — — 9,764 — 9,765 ( 9,765 ) —

Net loss — — — — — ( 84,824 ) ( 84,824 ) ( 397 ) ( 85,221 )

Balance, February 29, 2024 127,486,937 $ 127 ( 5,069,098 ) $ ( 62 ) $ 303,963 $ ( 185,540 ) $ 118,488 $ — $ 118,488

Balance, August 31, 2024 301,673 $ 6,932 53,191 $ 48,350 162,471,048 $ 162 ( 5,032,802 ) $ ( 62 ) $ 496,027 $ ( 254,281 ) $ 241,846

See accompanying notes to the unaudited condensed consolidated financial statements

1 unchanged sentence

Condensed Consolidated Statements of Cash Flows (Unaudited) (In thousands)

Nine Months Ended

February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

CASH FLOW FROM OPERATING ACTIVITIES

Net loss $ ( 16,926 ) $ ( 4,247 )

Adjustments to reconcile net loss to net cash (used in) provided by operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization 4,152 34,316

1 unchanged sentence

Lease expense 5,381 7,659

Loss on extinguishment of debt 1,177 —

Loss on extinguishment of related party debt

Loss on legal settlement — 2,380

Amortization of debt issuance costs 4,851 2,769

Loss/(gain) on classification of held for sale ( 24,616 ) 21,723

Loss on change in fair value of related party debt — 2,612

Loss on conversion of debt 33,612 —

Gain on classification of held for sale

Loss on change in fair value of debt — 6,422

Loss on abandonment of assets 1,751 628

Loss on change in fair value of warrants issued

Changes in operating assets and liabilities:

10 unchanged sentences

Other assets 1,930 —

CASH FLOW (USED IN) PROVIDED BY OPERATING ACTIVITIES ( 122,257 ) 45,338

CASH FLOW USED IN OPERATING ACTIVITIES ( 82,023 ) ( 75,890 )

CASH FLOW FROM INVESTING ACTIVITIES

2 unchanged sentences

Finance lease prepayments

( 4,840 ) ( 35,132 )

Purchases of investments ( 2,498 ) ( 390 )

CASH FLOW USED IN INVESTING ACTIVITIES ( 249,420 ) ( 32,606 )

2 unchanged sentences

Borrowings of long-term debt 65 105,000

Borrowings of related party debt — 23,000

Repayments of long-term debt ( 2,416 ) ( 5,886 )

Repayment of related party debt — ( 45,500 )

Payment of deferred financing costs ( 1 ) ( 8,484 )

4 unchanged sentences

Preferred stock issuance costs ( 4,604 ) ( 5,444 )

Redemption of preferred stock

Dividends issued on preferred stock ( 1,576 ) ( 44 )

Exercise of warrants

Proceeds from issuance of SAFE agreement included in long-term debt — 12,000

Repurchase of shares ( 31,342 )

Proceeds from convertible notes 450,000 —

Purchase of capped call options ( 51,750 ) —

Purchase of prepaid forward contract ( 52,736 ) —

CASH FLOW PROVIDED BY FINANCING ACTIVITIES 322,236 163,365

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 229,536 ( 2,594 )

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD 31,688 43,574

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD $ 261,224 $ 40,980

NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH ( 9,207 ) 54,869

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD, INCLUDING CASH FROM DISCONTINUED OPERATIONS

123,318 31,688

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD, INCLUDING CASH FROM DISCONTINUED OPERATIONS 114,111 86,557

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM DISCONTINUED OPERATIONS 7 9

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM CONTINUING OPERATIONS $ 114,104 $ 86,548

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(In thousands)

Nine Months Ended

February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

1 unchanged sentence

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES

Operating right-of-use assets obtained by lease obligation $ 20,280 $ 95,018

Finance right-of-use assets obtained by lease obligation $ 3,966 $ 13,305

1 unchanged sentence

Conversion of debt to common stock $ — $ 56,201

Extinguishment of non-controlling interest $ — $ 9,765

Loss on legal settlement

Conversion of preferred stock to common stock $ 242,480 $ —

Cashless exercise of warrants $ 5 $ —

Issuance of warrants, at fair value $ 121,204 $ 36,479

2 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

For the Three Months Ended August 31, 2025

Business and Organization

Applied Digital Corporation (the “Company”) is a designer, builder, and operator of digital infrastructure providing cost-competitive solutions to customers.

The Company has three reportable segments.

Applied Digital Corporation (the “Company”) is a designer, builder, and operator of high-performance, sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking, and blockchain workloads.

The Company has two reportable segments.

Financial information for each segment is contained in “Note 15 - Business Segments.”

All references to “Applied Digital Corporation,” “we,” “us,” “our” or the “Company” mean Applied Digital Corporation and its subsidiaries.

Basis of Presentation and Significant Accounting Policies

5 unchanged sentences

The results of operations for such interim periods are not necessarily indicative of the results to be expected for the full year.

For further information, please refer to and read these interim unaudited condensed consolidated financial statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2024 filed with the SEC on August 30, 2024.

Significant Accounting Policies and Use of Estimates

13 unchanged sentences

All advanced service payments are recorded as deferred revenue and are recognized as revenue once the related service is provided.

Cloud Services Revenue

The Company also provides managed cloud infrastructure services to customers, such as artificial intelligence and machine learning developers, to help develop their advanced products.

Customers pay a fixed rate to the Company in exchange for managed cloud services supported by Company-provided equipment.

Revenues are recognized based on the fixed rate, net of any credits for non-performance, over the term of the agreements.

HPC Hosting Revenue

The Company provides certain fit-out services in accordance with the terms of the agreement with the client and recognizes revenues over time as performance obligations are satisfied.

The Company measures its progress to completion using an input measure of total costs incurred divided by total costs expected to be incurred, which it believes to be the best measure of progress towards completion of the performance obligation.

In the course of providing its services, the Company

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

The Company has identified three reportable segments:

data center hosting (“Data Center Hosting Business”), cloud services (“Cloud Services Business”), and high-performance compute hosting (“HPC Hosting Business”).

The Company’s chief operating decision-maker evaluates performance, makes operating decisions and allocates resources on both a consolidated basis and on the basis of these three reportable segments.

Intercompany transactions between segments are excluded for management reporting purposes.

For the Three Months Ended August 31, 2025

routinely subcontracts for services and incurs other direct costs on behalf of its clients.

These costs are passed through to client and, in accordance with GAAP, are included in the Company’s revenue and cost of revenue.

The Company has identified two reportable segments:

data center hosting (“Data Center Hosting Business”) and high-performance compute hosting (“HPC Hosting Business”).

These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker (CODM), which is the Company’s Chief Executive Officer.

The Company's CODM evaluates performance and makes operating decisions primarily based on revenue and segment profit (loss), on a consolidated basis and for each of the Company's reportable segments.

Operating results by segment include costs or expenses directly attributable to each segment, which include selling, general, and administrative expenses, gain on classification of held for sale and loss on abandonment of assets.

The Company does not allocate loss on change in fair value of debt or income tax expense to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance.

The Data Center Hosting Business operates data centers to provide energized space to crypto mining customers.

Customer-owned hardware is installed in the Company’s facilities and the Company provides operational and maintenance services for a fixed fee.

The Cloud Services Business primarily operates through our wholly-owned subsidiary, Applied Digital Cloud Corporation, and provides cloud services to customers at third party colocation centers located in Colorado, Minnesota, Nevada and Utah, such as artificial intelligence and machine learning developers, to develop their advanced products.

Customers pay a fixed rate to the Company in exchange for an energized space supported by Company-provided equipment.

The HPC Hosting Business designs, builds, and operates data centers which are being designed to support high-compute applications using advanced and sophisticated infrastructures to provide services to customers.

The HPC Hosting Business designs, builds, and operates data centers which are designed to support high-compute applications using advanced technologies and sophisticated infrastructures to provide services to customers.

See Note 2 - Basis of Presentation and Significant Accounting Policies to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2025, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes ("Topic 740"):

In December 2023, the FASB issued ASU 2023-09, Income Taxes ("Topic 740"):

Improvements to Income Tax Disclosures.

1 unchanged sentence

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and can be applied either prospectively or retrospectively.

The Company is currently evaluating the impact of adopting this ASU on its disclosures and plans to adopt this pronouncement beginning with our fiscal year beginning June 1, 2025.

The Company has adopted this ASU for the fiscal year beginning June 1, 2025 and will present updated disclosures in its Form 10-K for the fiscal year ended May 31, 2026.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses.

The ASU is intended to enhance transparency of income statement disclosures primarily through additional disaggregation of relevant expense captions.

This ASU is intended to enhance transparency of income statement disclosures primarily through additional disaggregation of relevant expense captions.

The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027, with prospective or retrospective application permitted.

The Company is currently evaluating the impact of this ASU on its financial statement presentation and disclosures and plans to adopt this pronouncement beginning with our fiscal year beginning June 1, 2027.

The Company is currently evaluating the impact of this ASU on its financial statement presentation and disclosures and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2027.

In November 2024, the FASB issued ASU 2024-04, Debt – Debt with Conversion and Other Options (Subtopic 470-20).

The amendments in this ASU clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion.

The amendments in this ASU are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods.

Early adoption is permitted for all entities that have adopted the amendments in ASU 2020-06.

The amendments in this ASU permit an entity to apply the new guidance on either a prospective or a retrospective basis.

The Company is currently evaluating the impact of this ASU on its financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2026.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software.

This ASU is intended to simplify the capitalization guidance by removing all references to software development project stages so that the guidance is neutral to different software development methods.

The amendments in this ASU are effective for annual reporting periods beginning after December 15, 2027, and interim reporting periods within those annual reporting periods, with early adoption permitted.

The amendments in this update permit an entity to apply the new guidance using a prospective, retrospective or modified transition approach.

The Company is currently evaluating the impact of this ASU on its financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2028.

Assets Held For Sale

The Company generally considers assets to be held for sale when the following criteria are met:

(i) management commits to a plan to sell the property, (ii) the property is available for sale immediately, (iii) management has initiated an active program to locate a buyer or buyers and other actions required to complete the plan to sell the disposal group, (iv) the sale of the property within one year is considered probable, (v) the property is actively being marketed for sale at a price that is reasonable in relation to its current fair value and (vi) significant changes to the plan to sell are not expected.

Property classified as held for sale is no longer depreciated and is reported at the lower of its carrying value or its estimated fair value less estimated costs to sell in accordance with ASC 360, Property, Plant and Equipment - Impairment or Disposal of Long-Lived Assets .

During the fiscal quarter ended May 31, 2025, the Company deemed its Cloud Services Business met the held for sale criteria and was classified as such on the unaudited condensed consolidated balance sheet.

Discontinued Operations

The Company deems it appropriate to classify a business as a discontinued operation if the related disposal group meets all the following criteria:

(i) the disposal group is a component of the Company, (ii) the component meets the held-for-sale criteria, and (iii) the disposal of the component represents a strategic shift that has a major effect on the Company's operations and financial results.

During the fiscal quarter ended May 31, 2025, the Company deemed its Cloud Services Business to be discontinued operations due to the disposal group meeting all three criteria.

As such, the results of the Cloud Services Business are presented as discontinued operations in the unaudited condensed consolidated statements of operations and have been excluded from both continuing operations and segment results for all periods presented .

Reclassifications

Income Statement

We have reclassified certain prior period amounts in our unaudited condensed consolidated statements of operations to conform to our current period presentation.

Specifically, we have reclassified certain amounts of “Selling, general and administrative” expenses to “Interest expense, net.” We have also condensed the presentation of segment revenue into a single “Revenue” caption as segment disclosures are presented in Note 11 - Business Segments.

These reclassifications had no impact on reported net loss, cash flows, or total assets and liabilities.

The Company reclassified certain prior period amounts in its unaudited condensed consolidated balance sheets to conform to our current period presentation.

Specifically, we have reclassified certain amounts in “Property and equipment, net” to “Other assets”.

This reclassification has no impact on total assets or cash flows.

Cash, Cash Equivalents, and Restricted Cash

The Company’s restricted cash balances consist of funds for construction and letters of credit.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

The funds for construction are held in a construction reserve account to fund the construction of the Company’s 400 MW Ellendale, North Dakota data center campus (the “Ellendale Campus”), in accordance with the SMBC Credit Agreement (as defined below).

The funds for construction are held in a construction reserve account to fund the construction of the Company’s 400 MW Ellendale, North Dakota data center campus (“Polaris Forge 1”), in accordance with the SMBC Credit Agreement (as defined below).

See further discussion in Note 7 - Debt.

Additionally, the Company has restricted cash related to its letters of credit totaling $ 38.3 million presented on our unaudited condensed consolidated balance sheets within restricted cash and other assets.

Additionally, the Company has letters of credit totaling $ 37.3 million presented on its unaudited condensed consolidated balance sheets within restricted cash.

The Company is required to keep these balances, which are held in money market funds, in separate accounts for the duration of the letter of credit agreements, which have terms of up to two years .

1 unchanged sentence

The Company considers the money market funds to be Level 1 which the Company believes approximates fair value.

Cash, cash equivalents, and restricted cash within the unaudited condensed consolidated balance sheets that are included in the unaudited condensed consolidated statements of cash flows as of February 28, 2025 and May 31, 2024 were as follows (in thousands):

February 28, 2025 May 31, 2024

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Cash, cash equivalents, and restricted cash within the unaudited condensed consolidated balance sheets that are included in the unaudited condensed consolidated statements of cash flows as of August 31, 2025 and May 31, 2025 were as follows (in thousands):

August 31, 2025 May 31, 2025

Cash and cash equivalents $ 73,911 $ 41,552

4 unchanged sentences

Total cash, cash equivalents, and restricted cash $ 114,104 $ 120,920

The Company had a working capital deficit of $ 119.3 million as of February 28, 2025 which raised substantial doubt about the Company's ability to continue as a going concern.

Historically, we have incurred losses and have relied on equity and debt financings to fund our operations.

We have primarily generated cash in the last 12 months from the proceeds of our term loans, issuances of common stock, preferred stock, convertible promissory notes, senior unsecured convertible notes, debt facilities and the receipt of contractual deposits and revenue payments from customers.

The Company has the ability and intent to sell additional shares of Series E-1 Preferred Stock which would generate proceeds of approximately $ 12.0 million.

Also, as disclosed in “Note 13 - Subsequent Events”, the Board of Directors has approved the potential sale of the Cloud Services Business, which will reclassify certain non-current assets and long-term liabilities on the balance sheet to current assets and current liabilities and will result in a net working capital surplus of $ 117.6 million.

Finally, the Company has the ability to modify the timing of its capital spending and extend its payment terms with vendors, if necessary.

Based on the above analysis, the Company believes the substantial doubt to continue as a going concern for at least 12 months from the date these financial statements were issued is reasonably alleviated.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

Property and Equipment

Property and equipment consisted of the following as of February 28, 2025 and May 31, 2024 (in thousands):

Estimated Useful Life February 28,

Property and equipment consisted of the following as of August 31, 2025 and May 31, 2025 (in thousands):

Estimated Useful Life August 31,

Networking equipment, electrical equipment, and software

5 years $ 33,624 $ 32,517

3 years - 5 years

$ 34,741 $ 32,938

Electric generation and transformers 15 years 9,916 9,914

9 unchanged sentences

Property and equipment, net $ 1,461,775 $ 1,206,341

Depreciation expense totaled $ 3.2 million and $ 9.3 million for the three and nine months ended February 28, 2025, respectively, and $ 7.9 million and $ 12.9 million for the three and nine months ended February 29, 2024, respectively.

Depreciation expense totaled $ 2.7 million and $ 2.6 million for the three months ended August 31, 2025 and 2024, respectively .

Revenue from Contracts with Customers

Below is a summary of the Company’s revenue concentration by major customers for the three and nine months ended February 28, 2025 and February 29, 2024, respectively.

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

Below is a summary of the Company’s revenue concentration by major customers for the three months ended August 31, 2025 and August 31, 2024, respectively.

Three Months Ended

August 31, 2025 August 31, 2024

Customer A 59 % — %

— % 10 % 11 % — %

34 % — % 29 % — %

Customer B 41 % 48 %

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Deferred Revenue

Changes in the Company's deferred revenue balances for the nine months ended February 28, 2025 and February 29, 2024, respectively, are shown in the following table (in thousands):

Nine Months Ended

February 28, 2025 February 29, 2024

Changes in the Company's deferred revenue balances for the three months ended August 31, 2025 and August 31, 2024, respectively, are shown in the following table (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Balance, beginning of period $ — $ 8,188

2 unchanged sentences

Other adjustments ( 1,037 ) 3,275

Related party balances — ( 1,287 )

Balance, end of period $ 626 $ 3,780

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

Customer Deposits

Changes in the Company's customer deposits balances for the nine months ended February 28, 2025 and February 29, 2024, respectively, are shown in the following table (in thousands):

Nine Months Ended

February 28, 2025 February 29, 2024

Changes in the Company's customer deposits balances for the three months ended August 31, 2025 and August 31, 2024, respectively, are shown in the following table (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Balance, beginning of period $ 16,125 $ 15,367

2 unchanged sentences

Customer deposits applied

Other adjustments — ( 8,547 )

Related party balances — ( 3,810 )

Balance, end of period $ 16,752 $ 13,676

Discontinued Operations

During the fiscal quarter ended May 31, 2025, the Company determined that the Cloud Services Business met the criteria to be classified as “held for sale,” as the Board of Directors approved plans for the sale of the segment.

The potential sale of the Cloud Services Business represents a strategic shift in the Company’s operations and financial results.

As such, the Company reported the Cloud Services Business as discontinued operations for the three months ended August 31, 2025 in accordance with ASC 205-20, Discontinued Operations.

The Company expects the sale of the Cloud Services Business to occur within 12 months from the date it met the held for sale criteria.

The financial results of the Cloud Services Business are presented as net loss from discontinued operations on the unaudited condensed consolidated statements of operations.

The following table presents the major components of the financial results of the Cloud Services Business for the periods presented (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Revenue $ 16,718 $ 25,855

Cost of revenues 3,365 38,317

Selling, general and administrative 330 3,348

Loss on abandonment of assets

Operating income (loss) from discontinued operations

12,531 ( 15,810 )

Interest expense 3,210 4,349

Net income (loss) from discontinued operations before income tax expense

9,321 ( 20,159 )

Income tax expense — —

Net income (loss) from discontinued operations

$ 9,321 $ ( 20,159 )

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

As of August 31, 2025, the assets and liabilities of the Cloud Services Business are classified as current in the unaudited condensed consolidated balance sheets, as it is probable that the sale will occur within one year.

The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as held for sale on the unaudited condensed consolidated balance sheets for the periods presented (in thousands):

August 31, 2025 May 31, 2025

Cash and cash equivalents $ 7 $ 2,398

Accounts receivable 7,222 3,788

Prepaid expenses and other current assets 647 223

Property and equipment, net 11,899 10,922

Operating lease right of use asset, net 92,721 91,374

Finance lease right of use asset, net 197,502 195,495

Other assets 8 —

Total current assets held for sale $ 310,006 $ 304,200

Accounts payable $ 1,932 $ 3,962

Accrued liabilities 3,289 572

Current portion of operating lease liability 16,586 16,093

Current portion of finance lease liability 99,568 133,406

Current deferred revenue 652 3,594

Long-term portion of operating lease liability 54,080 58,420

Long-term portion of finance lease liability 12,108 —

Total current liabilities held for sale $ 188,215 $ 216,047

The following table presents significant non-cash items and capital expenditures of discontinued operations for the periods presented (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Depreciation and amortization $ — $ 30,218

Stock-based compensation $ 90 $ ( 810 )

Purchases of property and equipment and other assets $ ( 977 ) $ ( 27 )

Finance lease prepayments $ — $ 1,190

Operating right-of-use assets obtained by lease obligation $ — $ —

Finance right-of-use assets obtained by lease obligation $ 3,479 $ ( 688 )

Property and equipment in AP and accrued liabilities $ — $ 49

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Related Party Transactions

Related Party Revenue

The following table illustrates related party revenue for the three and nine months ended February 28, 2025 and February 29, 2024 (in thousands):

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

The following table illustrates related party revenue for the three months ended August 31, 2025 and August 31, 2024 (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Customer D* $ — $ 1,244

4 unchanged sentences

As of July 25, 2024, the individual filed a Schedule 13G to report the fact that as of the date thereof, the individual had ceased to be a beneficial owner of more than 5 % of such class of securities.

The following table illustrates related party deferred revenue and deposits balances as of February 28, 2025 and May 31, 2024 (in thousands):

Customer D balances as of Customer E balances as of

February 28, 2025 May 31, 2024 February 28, 2025 May 31, 2024

Deferred revenue $ — $ 993 $ — $ 699

Customer deposits

$ — $ 895 $ — $ 654

Related Party Sublease Income

During the three and nine months ended February 29, 2024, the Company received sublease income from B.

Riley Asset Management, which is a wholly-owned subsidiary of B.

Riley Financial, Inc.

As previously disclosed, the Company’s Chairman and Chief Executive Officer served as the President of B.

Riley Asset Management.

Effective February 5, 2024, he resigned from that position and as such, B.

Riley Asset Management ceased being a related party.

Sublease income of

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

$ 22,800 and $ 69,900 is included in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations for the three and nine months ended February 29, 2024, respectively.

Other Related Party Transactions

Related party transactions included within selling, general and administrative expense on the unaudited condensed consolidated statement of operations include the following:

• construction and consulting costs of $ 44.4 thousand and $ 0.3 million during the three and nine months ended February 29, 2024 were incurred with a company owned by a family member of the Company’s former Chief Administrative Officer.

There were no transactions with this related party during the three and nine months ended February 28, 2025.

• software license fees of $ 0.1 million and $ 0.2 million during the three and nine months ended February 29, 2024, respectively, and $ 0.1 million and $ 0.2 million during the three and nine months ended February 28, 2025, respectively, were incurred with a company whose chairman is also a member of the Company’s Board of Directors.

• consulting fees of $ 23 thousand during the three and nine months ended February 29, 2024 were incurred with a former member of the Company’s Board of Directors for sales consulting work.

There were no transactions with this related party during the three and nine months ended February 28, 2025.

Long-term debt consisted of the following components (in thousands):

Interest Rate Maturity Date February 28, 2025 May 31, 2024

Senior Unsecured Convertible Notes

Related party transactions included within selling, general and administrative expense on the unaudited condensed consolidated statement of operations include software license fees of $ 0.1 million during each of the three months ended August 31, 2025 and August 31, 2024, respectively, were incurred with a company whose chairman is also a member of the Company’s Board of Directors.

The Company’s outstanding debt consisted of the following components (in thousands):

Interest Rate Maturity Date August 31, 2025 May 31, 2025

Convertible Notes, senior unsecured (1)

2.75 % June 2030

1 unchanged sentence

SMBC Loan (2)

See below August 2026

375,000 375,000

Starion Ellendale Loan (3)

7.48 % February 2028 11,268 12,283

Vantage Transformer Loan 6.50 % February 2029 — 3,609

Cornerstone Bank Loan (4)

8.59 % March 2029 12,153 12,866

Yorkville Convertible Debt

— % April and June 2025

Starion Term Loan (5)

1 unchanged sentence

Other long-term debt (6)

12,310 12,275

Deferred financing costs, net of amortization

3 unchanged sentences

Long-term debt, net $ 305,283 $ 677,825

(1) The net carrying amount of the Convertible Notes was $ 274.0 million and $ 273.3 million and the remaining unamortized deferred financing costs related to the issuance was $ 176.0 million and $ 176.7 million, each as of August 31, 2025 and May 31, 2025, respectively.

(2) The SMBC Loan is guaranteed by APLD HPC TopCo LLC, a wholly-owned subsidiary of the Company, and is secured by a continuing security interest in all of the membership interests of the borrower, APLD HPC Holdings LLC, including a mortgage on certain properties as defined in the collateral agency, security and depositary agreement.

(2) The Starion Ellendale Loan is guaranteed by APLD ELN-01 LLC, a wholly-owned subsidiary of the Company, and is secured by the first 100 MW HPC facility in Ellendale, North Dakota (the “Ellendale HPC Facility”), a security interest in substantially all of the assets of APLD ELN-01 LLC, and a security interest in the form of a collateral assignment of the Company’s rights and interests in all master hosting agreements related to the Ellendale HPC Facility.

(3) The Cornerstone Bank Loan is guaranteed by APLD GPU-01, LLC, a wholly-owned subsidiary of the Company, and is secured by a security interest in multiple Terms of Service Agreements for HPC based systems related to AI Cloud Computing Services, which are to be serviced at the Jamestown hosting facility.

(4) The Starion Term Loan is guaranteed by APLD Hosting, LLC, a wholly-owned subsidiary of the Company, and is secured by the Jamestown hosting facility, a security interest in substantially all of the assets of APLD Hosting LLC, and interests in all master hosting agreements related to the Jamestown hosting facility.

The remaining unamortized deferred financing costs as of August 31, 2025 and May 31, 2025 were $ 3.4 million and $ 4.4 million, respectively.

The average SOFR plus the applicable margin for the three months ended August 31, 2025 and fiscal year ended May 31, 2025 was 8.07 % and 7.82 %, respectively.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

For the Three Months Ended August 31, 2025

(3) The Starion Ellendale Loan is guaranteed by APLD ELN-01 LLC, a wholly-owned subsidiary of the Company, and is secured by a security interest in substantially all of the assets of the Ellendale Data Center Hosting facility (as defined in the Starion Ellendale Loan), and a security interest in the form of a collateral assignment of the Company’s rights and interests in all master hosting agreements related to APLD ELN-01 LLC.

(4) The Cornerstone Bank Loan is guaranteed by APLD GPU-01, LLC, a wholly-owned subsidiary of the Company, and is secured by a security interest in multiple Terms of Service Agreements for HPC based systems related to AI Cloud Computing Services, which are to be serviced at the Jamestown hosting facility.

(5) The Starion Term Loan is guaranteed by APLD Hosting, LLC, a wholly-owned subsidiary of the Company, and is secured by the Jamestown hosting facility, a security interest in substantially all of the assets of APLD Hosting LLC, and interests in all master hosting agreements related to the Jamestown hosting facility.

The Starion Term Loan Agreement contains customary covenants, representations and warranties and events of default.

The Company is subject to a debt service coverage ratio and is in compliance as of August 31, 2025.

(6) Inclusive in this number is $ 12.0 million of proceeds from the issuance of two SAFE agreements which were accounted for as liabilities.

See further discussion below.

Remaining Principal Payments

Below is a summary of the remaining principal payments due over the life of the term loans as of February 28, 2025 (in thousands):

Remainder of FY25 $ 2,492

Below is a summary of the remaining principal payments due over the life of the term loans as of August 31, 2025 (in thousands):

Thereafter (1)

1 unchanged sentence

(1) Includes $ 12.0 million of proceeds from the issuance of two SAFE agreements which were accounted for as liabilities.

See further discussion below.

Letters of Credit

As of February 28, 2025, the Company had letters of credit totaling $ 38.3 million.

As of August 31, 2025, the Company had letters of credit totaling $ 37.3 million.

The Company has restricted cash related to its letters of credit and is required to keep these balances in separate accounts for the duration of the letter of credit agreements.

The Company presents all restricted cash amounts with letter of credit terms of 12 months or less within the Restricted Cash caption within current assets and any amounts with related letter of credit terms of over 12 months in Other Assets.

Yorkville Convertible Debt

During the fiscal year ended May 31, 2024, the Company entered into two prepaid advance agreements with YA II PN, LTD.

(“YA Fund”) for promissory notes totaling $ 92.1 million (collectively the “YA Notes”), issued on March 27, 2024 (the “March Note”), April 24, 2024, and May 24, 2024 (the “May PPA”).

The YA Notes were convertible into shares of the Company’s common stock.

For the nine months ended February 28, 2025, the Company recognized a gain on fair value of debt of $ 4.1 million associated with the YA Notes which is included on the unaudited condensed consolidated statements of operations.

During the nine months ended February 28, 2025, $ 71.3 million of the YA Notes were converted into approximately 19.1 million shares of common stock.

The Company recorded a loss on conversion of debt of $ 33.6 million during the nine months ended February 28, 2025, in its unaudited condensed consolidated statements of operations.

The fair value of the YA Notes was calculated on an as-converted basis using quoted market prices of the Company's outstanding common stock;

however, YA Fund had converted the maximum amount of shares allowable under Nasdaq rules and regulations and as such, the remaining balance of $ 4.8 million under the March Note was payable in cash.

During the quarter ended February 28, 2025, the Company repaid the $ 4.8 million in full, including all outstanding and unpaid principal, accrued interest, fees, and expenses, as well as the $ 2.1 million Commitment Fee under SEPA (as defined below).

CIM Arrangement & Warrants

On June 7, 2024, APLD Holdings 2 LLC (the “Borrower”), a subsidiary of the Company, entered into a promissory note (the “CIM Promissory Note”) with CIM APLD Lender Holdings, LLC, a Delaware limited liability company (the “Lender”).

The CIM Promissory Note provided for borrowings up to $ 125 million.

The total amount borrowed under the CIM Promissory Note was $ 125 million.

On November 27, 2024, in connection with the issuance of the Macquarie Promissory Note and receipt by the Company of the proceeds related thereto (as described below), the Company repaid the CIM Promissory Note in full, including all outstanding and unpaid principal, accrued interest, fees, and expenses.

The associated extinguishment costs were capitalized directly into Construction in Progress (CIP), as the CIM Promissory Note were tied to the ELN-02 Project and

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

were therefore considered part of the construction cost.

As of February 28, 2025, the CIP balance includes $ 9.4 million related to the extinguishment of the CIM Promissory Note.

Pursuant to the CIM Promissory Note, the Company issued warrants to purchase up to 9,265,366 shares of common stock (the “CIM Warrants”).

The CIM Warrants were issued in two tranches:

for the purchase of up to 6,300,449 Common Shares (the “Initial Warrants”), issued on June 17, 2024, and 2,964,917 Common Shares (the “Additional Warrants”), issued on August 11, 2024.

The CIM Warrants were exercisable upon issuance and had a five-year term and an exercise price of $ 4.8005 per share.

The CIM Warrants were measured at fair value using a Black-Scholes Option Pricing model.

Inherent in pricing models are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield, which are considered Level 3 inputs.

The estimated fair value of the CIM Warrants was based on the following significant inputs:

Initial Warrants

Additional Warrants

Warrant issue date

June 17, 2024 August 11, 2024

Contractual term

Volatility 105 % 110 %

Risk-free rate 4.25 % 3.76 %

Dividend yield — % — %

The fair value of the Initial Warrants and Additional Warrants was $ 4.36 and $ 3.04 per warrant, respectively.

The total fair value of the CIM Warrants was $ 36.5 million and was recorded in the unaudited condensed consolidated statements of changes in temporary equity and stockholders’ equity.

The Company deferred the recognition of the fair value of the Initial and Additional Warrants as a reduction in the net carrying amount of the CIM Promissory Note.

After the repayment of the CIM Promissory Note, the remaining value of the CIM Warrants recorded as a reduction of the CIM Promissory Note was capitalized to CIP.

During the nine months ended February 28, 2025, all 9,265,366 of the CIM Warrants were exercised on a cashless basis for approximately 4.9 million shares of the Company’s common stock in a net settlement transaction.

As of February 28, 2025, there are no CIM Warrants outstanding.

Yorkville Amendments

In connection with the CIM Promissory Note, the Company also entered into a Consent, Waiver and First Amendment to the Prepaid Advance Agreements (the “Consent”) with YA Fund.

In exchange for giving its consent to the transaction with the CIM Lender, the Company agreed to issue an aggregate of 100,000 shares of common stock to YA Fund and to conditionally lower the floor price from $ 3.00 to $ 2.00 so long as the daily Volume Weighted Average Price (“VWAP”) is less than $ 3.00 per share of common stock for five out of seven trading days.

The Company further agreed to deliver a security agreement whereby its subsidiary, Applied Digital Cloud Corporation, would grant a springing lien on substantially all of its assets subject to customary carve-outs to secure the YA notes issued in favor of YA Fund.

Pursuant to the Consent, YA Fund also consented to future project-level financing at the Ellendale HPC Facility.

In addition, pursuant to the terms of the Consent, certain provisions of the March PPA and the May PPA were amended.

Upon issuance of the 100,000 shares, the Company recorded the value of the shares at their grant date fair value as an increase in the loss on change in fair value of debt caption on the unaudited condensed consolidated statements of operations.

On October 16, 2024, the Company entered into a letter agreement with YA Fund, whereby the Company agreed to satisfy its obligations with respect to the Commitment Fee (as defined below) in cash by increasing the principal amount due under the March Note in an equivalent amount, instead of issuing the Commitment Shares (as defined below).

The Commitment Fee was paid in full during the quarter ended February 28, 2025 as part of the repayment by the Company of the March Note.

On October 29, 2024, the Company entered into certain amendments to the March prepaid advance agreement and the March Note.

The amendments (i) provided consent to the Convertible Notes (as defined below) offering and share

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

repurchase transactions (as described below) and (ii) removed certain prior restrictions on redemption of the March Note before January 1, 2025.

In the first fiscal quarter of 2025, Applied Digital Cloud Corporation (“ADCC”), a wholly-owned subsidiary of the Company, entered into two SAFE agreements totaling $ 12.0 million with an investor (the “Investor”).

Under the terms of the SAFE agreements, the Investor has the right to certain shares of ADCC’s preferred stock.

If an equity financing transaction is completed by ADCC before the termination of the SAFE agreements, the SAFE agreements will automatically convert into the number of shares of preferred stock equal to the purchase amount divided by the discount price, which will be the lowest price per share of the preferred stock sold in the equity financing transaction multiplied by the discount rate ( 90 %).

If there is a liquidity event before the termination of the SAFE agreements, the Investor will automatically be entitled to receive a portion of proceeds, due and payable to the Investor immediately prior to, or concurrent with, the occurrence of such liquidity event, equal to the greater of (i) the purchase amount or (ii) the amount payable on the number of shares of common stock equal to the purchase amount divided by the liquidity price (the price per share equal to the fair market value of the common stock at the time of the liquidity event, as determined by reference to the purchase price payable in connection with such liquidity event, multiplied by the discount rate).

If there is a dissolution event before the termination of the SAFE agreements, the Investor will automatically be entitled to receive a portion of proceeds equal to the purchase amount, due and payable to the Investor immediately prior to the occurrence of the dissolution event.

In a liquidity or dissolution event, the SAFE agreements are intended to operate like standard non-participating preferred stock.

The Investor’s right to receive the purchase amount is junior to payments for outstanding indebtedness and creditor claims, on par with payments for other SAFE agreements and preferred stock, and senior to payments for common stock.

The SAFE agreements will automatically terminate immediately following the earliest to occur of:

(i) the issuance of capital stock to the Investor pursuant to the automatic conversion of the SAFE agreements;

or (ii) the payment, or setting aside for payment, of amounts due the Investor.

The Investor shall have the right, but not the obligation, to purchase up to its Pro Rata Share (the ratio of (i) the purchase amount of the SAFE agreements to (ii) the aggregate purchase amounts of all SAFE agreements issued by ADCC prior to the equity financing transaction) of the securities issued in the equity financing transaction, on the same terms, conditions and pricing afforded to the other investors participating in the equity financing transaction.

The SAFE agreements were accounted in accordance with ASC 480:

Distinguishing Liabilities from Equity.

Per the SAFE agreements, as the underlying share class has not been issued yet and as such, equity classification cannot be determined based on redemption rights, these agreements were classified as liabilities and included in long-term debt at their face value on the Company’s unaudited condensed consolidated balance sheets.

Senior Unsecured Convertible Notes

On November 4, 2024, the Company issued $ 450.0 million aggregate principal amount of 2.75 % Senior Unsecured Convertible Notes due June 2030 (the “Convertible Notes”).

The net proceeds from the sale of the Convertible Notes was approximately $ 435.2 million after deducting the initial purchasers’ discounts and commissions and estimated offering expenses payable by the Company.

The Company used approximately $ 84 million of the net proceeds from the offering to fund share repurchases of common stock in connection with the offering including (i) $ 52.7 million to fund the cost of entering into a prepaid forward repurchase transaction (as described below) and (ii) $ 31.3 million to repurchase shares of common stock with which the Company repurchased approximately 4.3 million shares at $ 7.36 a share, the stock price on October 30, 2024, the trading day preceding the transaction close.

In addition, approximately $ 51.8 million of the net proceeds from the offering were used to pay the cost of the capped call transactions (as described below) and the remainder of the net proceeds were used for general corporate purposes.

Also on November 4, 2024, the Company entered into an indenture with respect to the Convertible Notes with Wilmington Trust, National Association, as trustee (the “Indenture”).

The Convertible Notes are senior unsecured obligations of the Company and bear interest at a rate of 2.75 % per year payable semiannually in arrears on June 1 and December 1 of each

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

year, beginning on June 1, 2025.

The Convertible Notes will mature on June 1, 2030, unless earlier converted, redeemed or repurchased in accordance with terms described below.

Prior to March 1, 2030, the Convertible Notes are convertible only upon the occurrence of certain events.

On or after March 1, 2030 until the close of business on the second scheduled trading day immediately preceding the maturity date of the Convertible Notes, holders may convert the Convertible Notes at any time (the “Conversion Option”).

The Convertible Notes are convertible into cash, shares of the Company’s common stock or a combination of cash and shares of common stock, at the Company’s election, subject to certain restrictions.

The initial conversion rate is 102.5431 shares per $1,000 principal amount of Convertible Notes (equivalent to an initial conversion price of approximately $ 9.75 per share of common stock).

The conversion rate is subject to customary anti-dilution adjustments.

In addition, following certain events that occur prior to the maturity date or if the Company delivers a notice of redemption, the Company will increase the conversion rate for a holder who elects to convert its Convertible Notes in connection with such corporate event or notice of redemption.

Prior to December 1, 2027, the Company may not redeem the Convertible Notes.

On or after December 1, 2027, the Company may redeem for cash all or any portion of the Convertible Notes, at its option, if the last reported sale price of the Company’s common stock has been at least 130 % of the conversion price then in effect for at least 20 trading days (whether or not consecutive), including the trading day immediately preceding the date on which the Company provides a notice of redemption, during any 30 consecutive trading day period ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption.

The redemption price will be equal to 100 % of the principal amount of the Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If the Company undergoes a “fundamental change,” as defined in the Indenture, prior to maturity, subject to certain conditions, holders may require the Company to repurchase for cash all or any portion of their Convertible Notes at a fundamental change repurchase price equal to 100 % of the principal amount of the Convertible Notes to be repurchased, plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

The Indenture contains customary terms and covenants, including certain events of default.

In accounting for the issuance of the Convertible Notes, the Conversion Option of the Convertible Notes was deemed an embedded derivative requiring bifurcation from the Convertible Notes (the “host contract”) and separate accounting as an embedded derivative liability, resulting from the Company not having the necessary number of authorized but unissued shares of its common stock available to settle the Conversion Option of the Convertible Notes in shares on the date of issuance.

The proceeds from the Convertible Notes were first allocated to the embedded derivative liability and the remaining proceeds were then allocated to the host contract.

On November 4, 2024, the issuance date, the fair value of the embedded derivative liability representing the Conversion Option was $ 149.9 million and the remaining $ 286.6 million was allocated to the host contract.

As such, the Company recognized a $ 13.5 million gain on change in fair value of debt at issuance.

Subsequently, on November 20, 2024, the stockholders of the Company approved an increase to the number of authorized shares of common stock to an amount sufficient to settle the Conversion Option of the Convertible Notes fully in shares.

As a result of the increase to the number of authorized shares of common stock, the Company revalued the Conversion Option to its fair value as of November 20, 2024 of $ 252.9 million and reclassified the embedded derivative to additional paid-in capital on its unaudited condensed consolidated balance sheets.

In doing so, the Company recognized a $ 103.0 million loss on change in fair value of debt as of November 20, 2024.

This loss combined with the gain recognized at issuance resulted in a total loss on fair value of debt of $ 89.6 million which is included on the unaudited condensed consolidated statements of operations.

As of February 28, 2025, the embedded Conversion Option derivative is included in additional paid-in capital in the unaudited condensed consolidated balance sheets and is not required to be remeasured provided the requirements to qualify for the scope exception in ASC 815-10-15-74(a) continue to be met.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

Prepaid Forward Repurchase Transaction

In connection with the offering of the Convertible Notes, the Company entered into a privately negotiated prepaid forward repurchase transaction (the “Prepaid Forward”) with one of the initial purchasers (the “Forward Counterparty”).

Pursuant to the Prepaid Forward and the Indenture, the Company used approximately $ 52.7 million of the net proceeds from the offering of the Convertible Notes to fund the Prepaid Forward.

The initial aggregate number of shares of common stock underlying the Prepaid Forward was approximately 7.2 million shares of common stock.

The maturity date for the Prepaid Forward is November 3, 2025, although it may be settled earlier in whole or in part.

As of February 28, 2025, the purchase price of the Prepaid Forward is included in additional paid-in capital in the unaudited condensed consolidated balance sheets and is not required to be remeasured provided the requirements to qualify for the scope exception in ASC 815-10-15-74(a) continue to be met.

Capped Call Transaction

In connection with the offering of the Convertible Notes, the Company entered into privately negotiated capped call transactions (the “Base Capped Call Transactions”) with certain financial institutions (the “Option Counterparties”).

In addition, in connection with the initial purchasers’ exercise of their option to purchase additional Convertible Notes, the Company entered into additional capped call transactions (the “Additional Capped Call Transactions,” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with each of the Option Counterparties.

The Company used approximately $ 51.8 million of the net proceeds from the offering of the Convertible Notes to pay the cost of the Capped Call Transactions.

The Capped Call Transactions cover, subject to customary anti-dilution adjustments, the aggregate number of shares of common stock that initially underlie the Convertible Notes, and are expected generally to reduce potential dilution to the common stock upon any conversion of the Convertible Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Convertible Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions, which is defined as $ 14.72 .

The Capped Call Transactions are separate transactions entered into by the Company and are not part of the terms of the Convertible Notes.

As of February 28, 2025, the purchase price of the Capped Call Transaction is included in additional paid-in capital in the unaudited condensed consolidated balance sheets and is not required to be remeasured provided the requirements to qualify for the scope exception in ASC 815-10-15-74(a) continue to be met.

Macquarie Promissory Note

On November 27, 2024, APLD ELN-02 Holdings LLC, a wholly-owned subsidiary of the Company, entered into a promissory note with Macquarie Equipment Capital, Inc.

(the “Macquarie Promissory Note”).

The Macquarie Promissory Note provided for a loan of $ 150 million and matures on the earlier of (i) the date of acceleration of the loan or (ii) May 27, 2026.

However, to the extent that the ELN-02 Project (as defined therein) was not completed by December 6, 2025, the Company must repay the full outstanding principal balance of the Macquarie Promissory Note together with accrued interest and any other amounts then due and payable.

Additionally, the Macquarie Promissory Note had a multiple on invested capital (“MOIC”) of (i) 1.11 to 1.00 if such prepayment occured on or prior to the date that is four months after the closing date, (ii) 1.20 to 1.00 if such prepayment occured after the date that is four months after the closing date but on or prior to the date that is seven months after the closing date, or (iii) 1.35 to 1.00 if such prepayment occured after the date that is seven months after the closing date.

The same 1.35 x return hurdle applied to repayment at maturity.

The Company recorded a MOIC liability of $ 16.5 million, representing the value of the MOIC liability the day after the closing date.

Proceeds of the loan under the Macquarie Promissory Note were used, in part, to repay in full and terminate the CIM Promissory Note.

Commensurate with the use of proceeds associated with construction from the Macquarie Promissory Note, the Company will capitalize approximately 90 % of the interest expense recognized each period.

Additionally, proceeds were used to satisfy remaining obligations of the Company under the March Note.

As partial consideration for the Macquarie Promissory Note, the Company issued warrants (the “Macquarie Warrants”) to purchase up to 1,035,197 shares of the Company’s common stock.

The Macquarie Warrants will be exercisable from and

For the Three Months Ended August 31, 2025

Balance Sheet Components

Certain balance sheet components are as follows (in thousands):

August 31, 2025 May 31, 2025

Prepaid expenses and other current assets

Short term equipment deposit $ 172,523 $ —

Deferred issuance costs 7,176 5,443

Short term lease incentive 2,390 1,290

Prepaid expenses 2,766 1,225

Other current assets 3,636 1,472

Total Prepaid expenses and other current assets

$ 188,491 $ 9,430

August 31, 2025 May 31, 2025

Long term lease incentive

$ 204,520 $ 84,416

Deposits on assets & construction

26,825 69,500

Deferred construction costs 26,151 33,600

Restricted cash:

letters of credit — 7,000

Deferred lease costs 10,738 8,811

Investments in other companies 6,073 6,073

Other 3,475 4,976

Total Other assets $ 277,782 $ 214,376

August 31, 2025 May 31, 2025

Accrued liabilities

Accrued construction payables $ 158,458 $ —

Accrued expenses 16,938 26,293

Accrued interest 6,010 2,694

Other accrued liabilities

Total Accrued liabilities

$ 182,948 $ 29,549

August 31, 2025 May 31, 2025

Other current liabilities

Construction retainer $ 26,278 $ 19,338

Total Other current liabilities $ 26,380 $ 19,432

Stockholders' Equity

June 2025 At-the-Market Sales Agreement

On June 2, 2025, the Company entered into a Sales Agreement with Northland Securities, Inc.

and Wells Fargo Securities, LLC (the “June 2025 Sales Agreement”), pursuant to which, up to $ 200,000,000 of shares of the Company's common stock

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

after the date that is six months following the date of issuance thereof and will have a five and one-half-year term and an exercise price of $ 9.66 per share, which exercise price must be paid in cash.

The Macquarie Warrants were measured at fair value using a Black-Scholes Option Pricing model.

Inherent in pricing models are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield, which are considered Level 3 inputs.

The estimated fair value of the Macquarie Warrants was based on the following significant inputs:

For the Three Months Ended August 31, 2025

may be issued if and when sold.

As of the date of this report, the Company has issued and sold approximately 15.3 million shares under the June 2025 Sales Agreement for gross proceeds of approximately $ 196.4 million.

A summary of warrant activity for the three months ended August 31, 2025 is presented below:

Warrants Weighted-Average Exercise Price Weighted-Average Remaining Contractual Life (Years)

Outstanding at May 31, 2025

18,097,718 $ 7.63 8.52

Granted 8,393,611 10.75 9.99

Forfeited — — —

Exercised ( 300 ) 7.19 —

Outstanding at August 31, 2025

26,491,029 $ 8.62 8.81

The Company issued warrants to purchase up to 3,000,000 shares of Common Stock related to the AI Bridge Loan during the fiscal year ended May 31, 2024 (the “AI Warrants”).

The AI Warrants are exercisable upon payment of the applicable exercise price in cash or through cashless exercise for a period of five years .

1,500,000 AI Warrants have an exercise price of $ 10.00 per share of Common Stock and 1,500,000 AI Warrants have an exercise price of $ 7.50 per share of Common Stock.

As of August 31, 2025, all of the AI Warrants were outstanding.

Macquarie Warrants

Contractual term

Volatility 95 %

Risk-free rate 4.08 %

Dividend yield — %

The fair value of the Macquarie Warrants was $ 7.38 per warrant, totaling $ 7.6 million which was recorded as additional paid-in capital on the Company’s unaudited condensed consolidated balance sheets.

The Company deferred the recognition of the fair value of the Macquarie Warrants as a reduction in the net carrying amount of the Macquarie Promissory Note and subsequently amortized this balance into interest expense or CIP, as noted above, using the effective interest rate method.

On February 11, 2025, in connection with the Company’s entry into the SMBC Credit Agreement (as defined below) and receipt by the Company of the proceeds related thereto (as described below), the Company repaid the Macquarie Promissory Note in full, including all outstanding and unpaid principal, accrued interest, and multiple on invested capital.

As a result, there was a loss on the extinguishment of the Macquarie Promissory Note of $ 11.8 million.

Commensurate with the use of proceeds associated with construction from the Macquarie Promissory Note, the Company capitalized approximately 90 %, or $ 10.6 million, to CIP and the remainder, 10 %, or $ 1.2 million, was recorded to loss on extinguishment of debt on the unaudited condensed consolidated statements of operations.

The Macquarie Warrants survived the termination of the Macquarie Promissory Note and remain outstanding as of February 28, 2025.

SMBC Credit Agreement

On February 11, 2025, APLD HPC Holdings LLC, a wholly-owned subsidiary of the Company, entered into a credit and guaranty agreement (the “SMBC Credit Agreement”) with Sumitomo Mitsui Banking Corporation (“SMBC”).

The SMBC Credit Agreement provides for an aggregate of $ 375 million of term loans, which includes base rate loans and SOFR loans, and matures 18 months after the closing date.

Base rate loans bear interest at the base rate plus (i) 2.50 % from the closing date until the six month anniversary of the closing date, (ii) 3.50 % after the six month anniversary of the closing date until the one year anniversary of the closing date, and (iii) 4.50 % after the one year anniversary of the closing date while SOFR loans bear interest at the daily simple SOFR plus (i) 3.50 % from the closing date until the six month anniversary of the closing date, (ii) 4.50 % after the six month anniversary of the closing date until the one year anniversary of the closing date, and (iii) 5.50 % after the one year anniversary of the closing date.

The Company may voluntarily prepay all or any part of the loans at any time or from time to time without premium or penalty with no less than three business days’ notice.

Additionally, as more particularly described in the credit agreement and the certain collateral agency, security and depositary agreement, the Company is required to prepay all or a part of the loans under certain circumstances.

Amounts repaid under the Loans will not be available to be re-borrowed.

The Company used the proceeds of the loans to (i) prepay in full the Macquarie Promissory Note, (ii) pay for certain data center project development costs at the Ellendale Campus, and (iii) fund the Interest Reserve Account as defined in the SMBC Credit Agreement.

Remaining proceeds have been deposited into a separate bank account for future construction costs at the Ellendale Campus.

Commensurate with the use of proceeds associated with construction, the Company will capitalize 100 % of the interest expense recognized each period.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

Stockholders' Equity

Increases In Authorized Shares

On June 11, 2024, the Company filed a Certificate of Amendment (the “Certificate of Amendment”) to its Second Amended and Restated Articles of Incorporation, as amended (the “Articles of Incorporation”).

Pursuant to the Certificate of Amendment, the number of authorized shares of common stock was increased to 300,000,000 .

The Certificate of Amendment became effective upon filing on June 11, 2024.

Additionally, on November 20, 2024, the Company filed an amendment to its Articles of Incorporation, increasing the number of shares of common stock authorized for issuance to 400,000,000 shares and the number of shares of preferred stock authorized for issuance to 10,000,000 shares.

Roth Capital Partners LLC

On May 6, 2024, the Company began sales of common stock under an "at the market" sale agreement with Roth Capital Partners, LLC pursuant to which the Company could sell up to $ 25 million in aggregate proceeds of common stock.

During the quarter ended August 31, 2024, the Company sold approximately 3.1 million shares for net proceeds of approximately $ 14.6 million with commission and legal fees related to the issuance of approximately $ 0.5 million.

As of August 31, 2024, this offering was completed.

At-the-Market Sales Agreement

On July 9, 2024, the Company entered into a Sales Agreement (the “Sales Agreement”) with B.

Riley Securities, Inc., BTIG, LLC, Lake Street Capital Markets, LLC, Northland Securities, Inc.

and Roth Capital Partners, LLC (collectively, the “Agents”), pursuant to which the Company may offer and sell, from time to time, through the Agents, up to $ 125.0 million in shares of the Company’s common stock.

During the fiscal quarter ended August 31, 2024, approximately 3.0 million shares of the Company’s common stock has been issued and sold under the Sales Agreement for proceeds of $ 16.4 million net of issuance costs of $ 0.5 million.

On October 30, 2024, the Company terminated its Sales Agreement with the Agents.

Standby Equity Purchase Agreement ("SEPA")

On August 28, 2024, the Company entered into the SEPA with YA Fund, which was amended on August 29, 2024.

Pursuant to the SEPA, subject to certain conditions and limitations, the Company has the option, but not the obligation, to sell to YA Fund, and YA Fund must subscribe for, an aggregate amount of up to $ 250.0 million of common stock, at the Company’s request any time during the commitment period commencing on September 30, 2024, and terminating on October 1, 2027.

In connection with the execution of the SEPA, the Company agreed to pay a structuring fee (in cash) to YA Fund in the amount of $ 25,000 .

Additionally, the Company agreed to pay a commitment fee of $ 2,125,000 to YA Fund, (the Commitment Fee”), in the form of 456,287 shares of common stock (the “Commitment Shares”), representing $ 2,125,000 divided by the average of the daily VWAPs of the common stock during the three trading days immediately prior to the date of the SEPA.

On October 16, 2024, the Company entered into a letter agreement with YA Fund, whereby the Company agreed to satisfy its obligations with respect to the Commitment Fee in cash by increasing the principal amount due under the March Note in an equivalent amount, instead of issuing the Commitment Shares.

The Commitment Fee was paid in full during the quarter ended February 28, 2025 as part of the repayment by the Company of the March Note.

Pursuant to the SEPA, the Company agreed to file a registration statement with the SEC for the resale under the Securities Act by YA Fund of the common stock issued under the SEPA.

The Company shall not have the ability to request any advances under the SEPA until such resale registration statement is declared effective by the SEC.

As of the date of this report, the Company has not filed such a registration statement.

Private Placement

On September 5, 2024, the Company entered into a securities purchase agreement with a group of institutional and accredited investors, NVIDIA and Related Companies, for the private placement (the “Private Placement”) of 49,382,720

On November 27, 2024, as partial consideration for the Macquarie Promissory Note, the Company issued warrants to purchase up to 1,035,197 shares of the Company’s common stock.

The Macquarie Warrants are exercisable from and after the date that is six months following the date of issuance thereof and will have a five and one-half-year term and an exercise price of $ 9.66 per share, which exercise price must be paid in cash.

The Macquarie Warrants survived the termination of the Macquarie Promissory Note and remain outstanding as of August 31, 2025.

On February 27, 2025, the Company issued a warrant to STB Applied Holdings LLC to purchase 1,000,000 shares of the Company’s common stock at the exercise price of $ 7.83 per share (the “STB Warrant”) for consideration of $ 50,000 .

The warrant is exercisable beginning on February 27, 2027 (the “Initial Exercise Date”), upon payment of the applicable exercise price in cash or through cashless exercise for a period of five years from the Initial Exercise Date.

As of August 31, 2025, all of the STB Warrants were outstanding.

CoreWeave Warrants

On May 28, 2025, in connection with the entry into the data center leases with CoreWeave (the "CoreWeave Leases"), the Company issued to CoreWeave a warrant (the “CoreWeave Warrant”) to acquire up to 13,062,521 shares of the Company's common stock at an exercise price of $ 7.19 per share, subject to adjustment in accordance with the terms and conditions set forth in the CoreWeave Warrant.

The CoreWeave Warrant is exercisable upon issuance, upon payment of the applicable exercise price in cash or through cashless exercise for a period of 10 years.

During the quarter ended August 31, 2025, 300 warrant shares were exercised.

Additionally, on August 28, 2025, in connection with the entry into the Building 4 Lease, the Company issued to CoreWeave a warrant (the “Building 4 Warrant”) to acquire up to 8,393,611 shares of the Company’s common stock at an exercise price of $ 10.75 per share, subject to adjustment in accordance with the terms and conditions set forth in the Building 4 Warrant.

The Building 4 Warrant is on the same Form of Warrant as the initial warrant issued to CoreWeave on May 28, 2025, in connection with the data center leases entered into for Building 2 and Building 3.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

shares of the Company’s common stock, par value $ 0.001 per share, at a purchase price of $ 3.24 per share, representing the last closing price of the common stock on the Nasdaq Global Select Market on September 4, 2024.

The Private Placement closed during the three months ended November 30, 2024, with aggregate gross proceeds to the Company of approximately $ 160 million, before deducting offering expenses.

Warrant Issuance

The STB Warrant was measured at fair value using a Black-Scholes Option Pricing model.

Inherent in pricing models are assumptions related to expected share-price volatility, expected life, risk-free interest rate and dividend yield, which are considered Level 3 inputs.

The estimated fair value of the STB Warrant was based on the following significant inputs:

Contractual term

For the Three Months Ended August 31, 2025

The Building 4 Warrant was measured at fair value using the Black-Scholes Option Pricing model.

Inherent in pricing models are assumptions related to expected share-price volatility, contractual term, risk-free interest rate and dividend yield, which are considered Level 3 inputs.

The estimated fair value of the Building 4 Warrant was based on the following significant inputs:

Building 4 Warrant

Contractual term 10 years

Volatility 80 %

1 unchanged sentence

Dividend yield — %

The resulting fair value of the STB Warrant was $ 6.42 per warrant, totaling $ 6.4 million and was recorded in the unaudited condensed consolidated statements of changes in temporary equity and stockholders’ equity with a commensurate loss of $ 6.4 million on change in fair value of warrants on the unaudited condensed consolidated statements of operations.

The resulting fair value of the Building 4 Warrant was $ 14.44 per share, totaling $ 121.2 million, which was recorded to lease incentive asset and additional paid in capital on the Company's unaudited condensed consolidated balance sheets, and will be amortized over the life of the Building 4 Lease once it commences.

Stock-Based Compensation Plans

On October 8, 2024, the Company’s Board of Directors approved the Applied Digital Corporation 2024 Omnibus Equity Incentive Plan (the “2024 Plan”), which the Company’s stockholders approved on November 20, 2024.

4 unchanged sentences

The two plans consist of the 2022 Incentive Plan, previously referred to in the Company’s SEC filings as the 2021 Incentive Plan (the “Incentive Plan”), which provides for grants of various equity awards to the Company’s employees and consultants, and the 2022 Non-Employee Director Stock Plan previously referred to in the Company’s SEC filings as the 2021 Non-Employee Director Stock Plan (the “Director Plan” and, together with the Incentive Plan, the “2022 Plans”), which provides for grants of restricted stock to non-employee directors and for deferral of cash and stock compensation if such deferral provisions are activated at a future date.

As of February 28, 2025, the Company had issued awards of approximately 22.0 million shares of common stock of the Company under the 2022 Plans and 3.0 million under the 2024 Plan.

The Company recognized stock-based compensation associated with the 2022 and 2024 Plans of $ 9.7 million and $ 10.2 million during the three and nine months ended February 28, 2025, respectively, and stock-based compensation associated with the 2022 Plans of $ 3.2 million and $ 13.6 million during the three and nine months ended February 29, 2024, respectively.

As of August 31, 2025, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 7.8 million under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award.

As of August 31, 2025, there are approximately 2.4 million shares of common stock available for issuance under the 2024 Plan .

The Company capitalizes a portion of stock-based compensation costs for employees who work directly on construction and development of the Company's data centers.

The Company recognized stock-based compensation associated with the 2022 and 2024 Plans as follows (in thousands):

August 31, 2025 August 31, 2024

Cost of revenue $ 691 $ 425

Selling, general, and administrative 13,755 ( 2,808 )

Capitalized (1)

Total stock-based compensation $ 15,375 $ ( 2,281 )

(1) Capitalized to CIP in the unaudited condensed consolidated balance sheets.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

For the Three Months Ended August 31, 2025

Restricted Stock Awards

The following is a summary of the activity and balances for unvested restricted stock awards granted for the nine months ended February 28, 2025:

Number of Shares Weighted Average Grant Date Fair Value Per Share

Outstanding as of May 31, 2024

638,895 $ 4.01

Vested ( 190,990 ) 4.80

Forfeited ( 15,650 ) 8.52

Outstanding as of February 28, 2025

432,255 $ 3.49

As of February 28, 2025, total remaining expense to be recognized related to these awards was $ 1.1 million and the weighted average remaining recognition period for the unvested awards was 2.0 years.

As of May 31, 2025 and August 31, 2025, there were 271,444 shares outstanding with a weighted average grant date fair value per share of $ 3.55 as there were no restricted stock awards granted, vested, or forfeited during the three months ended August 31, 2025.

As of August 31, 2025, total remaining expense to be recognized related to these awards was $ 0.8 million and the weighted average remaining recognition period for the unvested awards was 1.7 years.

Restricted Stock Units

The following is a summary of the activity and balances for unvested restricted stock units granted during the nine months ended February 28, 2025:

The following is a summary of the activity and balances for unvested restricted stock units granted during the three months ended August 31, 2025:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 150,391 ) 7.55

Outstanding as of February 28, 2025

Outstanding as of August 31, 2025

7,163,970 $ 8.68

As of February 28, 2025, total remaining expense to be recognized related to these awards was $ 42.5 million and the weighted average remaining recognition period for the unvested awards was 2.1 years.

As of August 31, 2025, total remaining expense to be recognized related to these awards was $ 56.5 million and the weighted average remaining recognition period for the unvested awards was 2.1 years.

Performance Stock Units

Performance stock units (“PSUs”) represent a right to receive a certain number of shares of common stock based on the achievement of company performance goals and continued employment during the vesting period.

Performance stock units cliff-vest at the end of a service period of three years depending on the achievement of performance measures at the end of each vesting period.

Such performance measures are based on the Company entering into data center leases with a hyperscaler, the consummation of project financing, and receipt of sustainable revenue with respect to the data center leases that implies positive net operating income.

Performance stock units (“PSUs”) represent a right to receive a certain number of shares of common stock based on the achievement of company performance goals, individual performance measures, and continued employment during the vesting period.

Performance stock units cliff-vest depending on the achievement of Company and individual performance measures the achievement of which must occur on or prior to December 31, 2027 for all awards currently outstanding.

Such performance measures are based on the Company entering into data center leases with a hyperscaler, the consummation of project financing, receipt of sustainable revenue with respect to the data center leases that implies positive net operating income, and data center buildings achieving "ready for service" dates.

The fair value of PSUs is based on the closing price on the date of grant.

1 unchanged sentence

The total compensation cost for the PSUs is determined based on the most likely outcome of the performance condition and the number of awards expected to vest.

During the three months ended August 31, 2024, the Board determined that the performance criteria associated with certain performance stock units granted to certain executives in the third fiscal quarter of 2024 were not met.

As such, 2.8 million performance stock unit awards were cancelled and the Company recognized a reversal of the expense previously recognized for the awards of approximately $ 6.0 million during the nine-months ended February 28, 2025.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

Number of Shares

Weighted Average Grant Date Fair Value Per Share

Outstanding as of May 31, 2024

3,110,011 $ 2.69

2,827,500 7.23

( 272,511 ) 6.80

( 2,800,000 ) 2.22

Outstanding as of February 28, 2025

2,865,000 $ 7.24

As of February 28, 2025, total remaining expense to be recognized related to these awards was $ 20.9 million and the weighted average remaining recognition period for the unvested awards was 2.8 years.

As of May 31, 2025 and August 31, 2025, there were 7,207,500 performance stock units outstanding with a weighted average grant date fair value per share of $ 6.59 as there were no performance stock units granted, vested, or forfeited during the three months ended August 31, 2025.

As of August 31, 2025, total remaining expense to be recognized related to these awards was $ 29.8 million and the weighted average remaining recognition period for the unvested awards was 2.0 years.

Temporary Equity

1 unchanged sentence

Series E Redeemable Preferred Stock

During the nine months ended February 28, 2025, the Company closed on four offerings of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”).

During the fiscal year ended May 31, 2025, the Company closed on four offerings of the Series E Redeemable Preferred Stock (the “Series E Preferred Stock”).

The Company sold total shares of 301,673 for proceeds of $ 6.9 million net of issuance costs of $ 0.6 million.

The Series E Preferred Stock offering was terminated on August 9, 2024.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The shares of Series E Preferred Stock have no voting or conversion rights.

2 unchanged sentences

Dividends must be fully paid for all past periods before any distributions can be made to common stockholders or any junior series of equity securities.

During the three and nine months ended February 28, 2025, the Company declared and paid approximately $ 0.2 million and $ 0.4 million, respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

During the three months ended August 31, 2025 and August 31, 2024, the Company declared and paid approximately $ 170,000 and $ 44,000 , respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

The Series E Preferred Stock ranks senior to all classes of common stock and junior to all existing and future debt of the Company.

8 unchanged sentences

The Settlement Amount can be settled in cash or shares of common stock, subject to a share cap, which limits the total shares deliverable upon redemption to 19.99 % of the common stock outstanding prior to the Series E Preferred Stock offering ( 25,475,751 shares, the “Share Cap”).

Any portion of the Settlement Amount exceeding this cap will be settled in cash.

Any portion of the Settlement Amount exceeding the Share Cap will be settled in cash.

The Company may also redeem shares of Series E Preferred Stock after the second anniversary of the original issuance date, with a minimum notice of 10 days, at the Company Optional Redemption Settlement Amount, which is equal to the Series E Stated Value per share plus any unpaid and accrued dividends.

If the Company elects to pay the redemption amount in shares, then the number of shares to be delivered will be calculated as the Company Optional Redemption Settlement Amount divided by the closing price per share of the common stock on the date of the Company Optional Redemption exercise, subject to the Share Cap.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

Series F Convertible Preferred Stock

On August 29, 2024, the Company entered into a securities purchase agreement for the private placement of 53,191 shares of Series F Convertible Preferred Stock, par value $ 0.001 per share (the “Series F Convertible Preferred Stock”), including 3,191 shares representing an original issue discount of 6 %.

The transaction closed on August 30, 2024, for total proceeds of $ 50.0 million, prior to fees paid to Northland Securities, Inc.

for their role as placement agent in an amount equal to 3.5 % of the total proceeds.

The shares of Series F Convertible Preferred Stock are convertible into shares of common stock only upon the receipt of shareholder approval, which was received on November 20, 2024.

Holders of the Series F Convertible Preferred Stock are entitled to cumulative dividends at an annual rate of 8.0 % of the stated value of $ 1,000 per share (the “Series F Stated Value”), payable quarterly in arrears.

Dividends are calculated based on a 360-day year, declared and accrued quarterly, and payable at the discretion of the Board of Directors out of legally available funds.

Dividends must be fully paid for all past periods before any distributions can be made to common stockholders or any junior series of equity securities.

During the three months ended February 28, 2025, the Company did not declare nor pay any dividends related to the Series F Convertible Preferred Stock;

however, for the nine months ended February 28, 2025, the Company declared and paid approximately $ 0.4 million of dividends related to the Series F Convertible Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

The Series F Convertible Preferred Stock ranks senior to all classes of common stock and junior to all existing and future debt of the Company.

In the event of liquidation, holders are entitled to receive the Series F Stated Value plus any accrued but unpaid dividends before any distributions are made to common stockholders.

Series F Convertible Preferred Stock is on parity with the Series E Preferred Stock, Series E-1 Preferred Stock and any future series of preferred stock with substantially identical terms.

Upon the receipt of shareholder approval on November 20, 2024, the Series F Convertible Preferred Stock votes on an as-converted basis, subject to a cap equal to the greater of (x) the conversion price then in effect or (y) $ 4.0638 .

Holders have the right to require the Company to redeem the Series F Convertible Preferred Stock under certain conditions, including a Change of Control or Trading Failure, each as defined in the Series F Convertible Preferred Stock certificate of designation.

If there is a Change of Control, the redemption price is the greater of the Series F Stated Value or the amount that would have been received if the Series F Convertible Preferred Stock had been converted into common stock immediately prior to the redemption event.

If there is a Trading Failure, the redemption price is the greater of the Series F Stated Value or the product of the lowest conversion price during the period beginning on the date immediately preceding the Trading Failure and ending on the date the holder delivers a Redemption Notice, multiplied by the number of shares of common stock into which the preferred stock is convertible at the then-effective conversion price.

Additionally, holders have a one-time right to require the Company to redeem their shares between December 31, 2024, and January 10, 2025 in which case the redemption price is the Series F Stated Value.

Further, upon receipt of shareholder approval of the conversion feature of the Series F Convertible Preferred Stock, which approval was received on November 20, 2024, if the VWAP for any 20 Trading Days during any 30 consecutive trading day period, beginning with the original issuance date of the applicable preferred stock, exceeds two hundred percent ( 200 %) of the conversion price then in effect, the Company may, at any time cause the holder to convert all or part of the holder’s preferred stock.

During the three months ended February 28, 2025, 43,000 shares of Series F Convertible Preferred Stock were converted into approximately 6.1 million shares of the Company’s common stock.

During the nine months ended February 28, 2025, all 53,191 shares of Series F Convertible Preferred Stock were converted into approximately 7.6 million shares of the Company’s common stock.

As of February 28, 2025, there is no outstanding Series F Convertible Preferred Stock.

Series E-1 Redeemable Preferred Stock

On September 23, 2024, the Company entered into a dealer manager agreement for the offering of up to 62,500 shares of Series E-1 Redeemable Preferred Stock, par value $ 0.001 per share (“Series E-1 Preferred Stock”), at a price per share of $ 1,000 (the “Series E-1 Stated Value”).

During the three months ended February 28, 2025, the Company closed on four offerings of the Series E-1 Preferred Stock, in which the Company issued and sold 33,404 shares for gross proceeds of

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

$ 33.4 million for a total of six offerings during the nine months ended February 28, 2025, in which the Company issued 39,763 shares for gross proceeds of $ 39.8 million.

The Series E-1 Preferred Stock offering remains ongoing as of the date of this report.

During the fiscal year ended May 31, 2025, the Company closed on eight offerings in which the Company issued 62,500 shares for gross proceeds of $ 62.5 million.

The Series E-1 Preferred Stock offering was completed as of May 31, 2025.

The shares of Series E-1 Preferred Stock have no voting or conversion rights.

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Dividends on the shares of Series E-1 Preferred Stock must be fully paid for all past periods before any distributions can be made to common stockholders or any junior series of equity securities.

During the three and nine months ended February 28, 2025, the Company declared and paid approximately $ 0.4 million and $ 0.4 million, respectively, of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

During the three months ended August 31, 2025, the Company declared and paid approximately $ 1.4 million of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

The Series E-1 Preferred Stock ranks senior to all classes or series of common stock and junior to all existing and future debt of the Company.

Additionally, the Series E-1 Preferred Stock is on parity with the Series E Preferred Stock, the Series F Convertible Preferred Stock and any future series of preferred stock with substantially identical terms but may rank junior to any future series of preferred stock if the holders of such series are entitled to rights and preferences with priority over the holders of the Series E-1 Preferred Stock.

In the event of liquidation, holders of the Series E-1 Preferred Stock and holders of shares of any other class or series of capital stock ranking senior to or on a parity with the Series E-1 Preferred Stock, are entitled to receive an amount per share equal to the Series E-1 Stated Value plus an amount per share that is issuable as a result of any accrued but unpaid dividends before any distributions are made to common stockholders.

Additionally, the Series E-1 Preferred Stock is on parity with the Series E Preferred Stock and any future series of preferred stock with substantially identical terms but may rank junior to any future series of preferred stock if the holders of such series are entitled to rights and preferences with priority over the holders of the Series E-1 Preferred Stock.

In the event of liquidation, holders of the Series E-1 Preferred Stock and holders of shares of any other class or

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

series of capital stock ranking senior to or on a parity with the Series E-1 Preferred Stock, are entitled to receive an amount per share equal to the Series E-1 Stated Value plus an amount per share that is issuable as a result of any accrued but unpaid dividends before any distributions are made to common stockholders.

The Series E-1 Preferred Stock has no stated maturity and remains outstanding indefinitely unless redeemed or repurchased by the Company.

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If the Company elects to pay the redemption amount in shares, then the number of shares to be delivered will be calculated as the Settlement Amount divided by the closing price per share of the common stock on the last trading day prior to the date upon which notice was provided to the holder, subject to the Share Cap, if applicable.

From time to time, the Company enters into leases for equipment, office space and co-location space.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company presents operating and finance lease right of use assets and liabilities separately on the unaudited condensed consolidated balance sheets as their own captions, with the liabilities split between current and long-term.

During the three months ended August 31, 2025, 225 of shares were redeemed.

Series G Convertible Preferred Stock

On April 30, 2025, the Company entered into the Preferred Equity Purchase Agreement (the “PEPA”) with certain investors for the issuance and sale of up to 156,000 shares of Series G Convertible Preferred Stock (the “Series G Preferred Stock”) in a transaction (the “Private Placement”) pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).

The shares of the Series G Preferred Stock may be put to the investors from time to time at the Company’s discretion during the period commencing on April 30, 2025 (the “Commitment Date”) and terminating on the earlier of (i) the 36-month anniversary of the Commitment Date or (ii) such date as there ceases to be a sufficient number of authorized but unissued shares of common stock remaining under the Exchange Cap (as defined in the PEPA).

The Series G Preferred Stock became convertible on June 3, 2025, the Registration Effective Date (as defined in the PEPA).

Pursuant to the PEPA, the Company filed a registration statement with the SEC, registering the resale of the shares of common stock issuable upon the conversion of the shares of Series G Preferred Stock, on June 3, 2025, as amended the post-effective amendment filed with the SEC on September 23, 2025, each of which was automatically effective upon filing.

Conversion of the Series G Preferred Stock is subject to a customary 4.99% beneficial ownership limitation, as well as a 19.99% conversion limitation pursuant to the applicable Nasdaq Listing Rules, representing 44,931,523 shares of the Company’s common stock (the “Exchange Cap”).

The Series G Preferred Stock ranks senior to all classes of common stock and junior to all existing and future debt of the Company.

Upon any dissolution, liquidation or winding up, whether voluntary or involuntary, holders of the Series G Preferred Stock will be entitled to receive distributions out of the assets of the Company in an amount per share equal to the then-current Series G Preferred Stock stated value, whether capital or surplus, before any distributions are made on any shares of our common stock.

The Series G Preferred Stock is on parity with the Series E Preferred Stock, Series E-1 Preferred Stock and any future series of preferred stock with substantially identical terms.

Holders have the right to require the Company to redeem the Series G Preferred Stock under certain conditions, such as a Trading Failure, as defined in the Series G Preferred Stock certificate of designation.

If there is a Trading Failure, the redemption price is the greater of the Series G Preferred Stock stated value or the product of the lowest conversion price during the period beginning on the date immediately preceding the Trading Failure and ending on the date the holder

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

For the Three Months Ended August 31, 2025

delivers a Redemption Notice, multiplied by the number of shares of common stock into which the preferred stock is convertible at the then-effective conversion price.

If any Investor is prevented from converting any portion of its Series G Preferred Stock because of the Exchange Cap, and such limitation continues for 18 months following the date that is 18 months following the issuance of such Series G Preferred Stock, or, if earlier, the date that is 36 months following the Commitment Date, then the portion of the Series G Preferred Stock held by such Investor at such time shall be redeemed by the Company, within 10 trading days after such earlier date, at a price equal to 110 % of the stated value of such Series G Preferred Stock.

On each conversion date, the conversion price for the Series G Preferred Stock being converted (the “Conversion Price”) will equal the greater of (i) 95 % of the lowest daily Volume Weighted Average Price for each of the five trading days immediately preceding the conversion date and (ii) the initial floor price of $ 4.25 , which may be reduced by the Company at any time in its sole discretion, but in no event below $ 1.34 (as may be adjusted from time to time, the “Floor Price”).

Based on its initial stated value of $ 1,000 per share and the $ 4.25 initial Floor Price, each share of Series G Preferred Stock would be convertible into an aggregate of 236 shares of common stock.

No right of conversion may be exercised by the Investors in excess of $ 30 million of stated value, in the aggregate, per month, unless otherwise mutually agreed in writing by the Company and the holders holding a majority of the voting power of the Series G Preferred Stock outstanding at the time.

On August 14, 2025, the Company entered into the first amendment (the “First Amendment”) to the PEPA to, among other things, (i) increase the aggregate commitment amount of the shares of Series G Preferred Stock from $ 150 million to $ 300 million, and (ii) increase its access to capital by removing the Put Limitation (as defined in the PEPA) that had previously limited the aggregate purchase price for any Put Issuance (as defined in the PEPA) to no more than $ 75 million.

In connection with the First Amendment, on August 14, 2025, the Company filed an amendment (the “First CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025.

The First CoD Amendment amends the Series G Certificate of Designation to, among other things, (i) increase the initial Floor Price (as set forth in Section 1.5(c)(i) of the Series G Certificate of Designation) to $ 12.50 from $ 4.25 , and (ii) change the limit below which the Floor Price may not be reduced (as set forth in Section 1.5(c)(ii) of the Series G Certificate of Designation) to $ 4.33 from $ 1.34 .

The Floor Price sets the minimum floor for the conversion price of the Series G Preferred Stock, which price may not be reduced unless the Company determines to do so in its discretion.

The First CoD Amendment further amended the status of converted or repurchased preferred stock such that any shares of Series G Preferred Stock that have been or will be converted will be retired and resume the status of authorized but unissued shares.

As Series G Preferred Stock may be reissued, during the three months ended August 31, 2025, the Company issued and sold 180,000 shares of Series G Preferred Stock for aggregate gross proceeds of $ 175.0 million, with a total of 258,000 shares of Series G Preferred Stock, inclusive of the 78,000 shares outstanding as of May 31, 2025, being converted into approximately 28.2 million shares of the Company’s common stock.

As of August 31, 2025, no Series G Preferred Stock was issued and outstanding.

Lessor Accounting

On May 28, 2025, APLD ELN-02 LLC and APLD ELN-03 LLC, the Company's subsidiaries, each entered into a data center lease with CoreWeave, Inc.

(together, the "CoreWeave Leases") to deliver up to an aggregate of 250 MW of infrastructure to host CoreWeave’s HPC operations at Polaris Forge 1.

The first lease is for the full capacity of Building 2, our 100 MW data center that is currently under construction and expected to become operational during the calendar year 2025.

The second lease is for the full capacity of Building 3, a 150 MW data center that is also under construction and is expected to become operational during the calendar year 2026.

On August 28, 2025, APLD ELN-02 C LLC, a subsidiary of the Company, entered into a third data center lease with CoreWeave to deliver an additional 150MW at Polaris Forge 1, bringing the total capacity under contract at Polaris Forge 1 to 400 MW.

The Company has guaranteed the obligations of APLD ELN-02 C LLC under the data center lease.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

lease is for the full capacity of Building 4, which is currently in the design phase and is expected to be service-ready in middle of calendar year 2027.

A summary of minimum lease payments due from these leases is shown below.

These amounts do not reflect future rental revenues from renewal or replacement of existing leases unless the Company is reasonably certain it will exercise the option or the lessee has the sole ability to exercise the option.

Reimbursements of operating expenses and variable rent increases are excluded from the table below (in thousands):

Minimum Contracted Payments

FY26 $ 81,000

Thereafter 8,596,727

Total $ 10,851,517

Lessee Accounting

From time to time, the Company enters into leases for equipment and office space.

The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Components of lease expense were as follows (in thousands):

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

Operating lease cost:

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Amortization of right-of-use assets (1)

15,792 18,350 70,443 34,840

Interest on lease liabilities 297 215

1 unchanged sentence

Variable lease cost 65 55

Sublease Income — ( 23 ) — ( 70 )

Total net lease cost $ 2,156 $ 1,943

(1) Amortization of right-of-use assets is included within cost of revenues and selling, general and administrative expense in the unaudited condensed consolidated statements of operations.

The following table represents the Company’s future minimum lease payments as of February 28, 2025:

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The following table represents the Company’s future minimum lease payments as of August 31, 2025:

Operating Leases Finance Leases Total

Remainder of FY25 $ 8,978 $ 37,498 $ 46,476

FY26 $ 573 $ 12,101 $ 12,674

FY27 365 14 379

FY28 38,597 1 38,598

FY29 28,355 — 28,355

Thereafter — — —

5 unchanged sentences

Supplemental cash flow and other information related to leases is as follows:

Nine Months Ended

February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

Weighted-average years remaining (in years):

5 unchanged sentences

The Company has entered into leases which are executed but not yet commenced with total minimum payments of approximately $ 16.6 million.

The payments are for various leases with terms of 2 years.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

The payments are for various leases with terms of 1.5 years to 2.0 years.

Commitments and Contingencies

Energy Contracts

As of February 28, 2025, the Company had a minimum commitment of approximately $ 54.2 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 1.9 years.

As of August 31, 2025, the Company had a minimum commitment of approximately $ 40.1 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 1.4 years.

Construction Contracts

4 unchanged sentences

Claims and Litigation

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the normal course of business.

From time to time, the Company may be involved in litigation relating to claims arising out of operations in the ordinary course of business.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Securities Lawsuit

4 unchanged sentences

Specifically, the complaint asserts claims pursuant to Section 10(b) and 20(a) of the Securities and Exchange Act of 1934 based on allegedly false or misleading statements regarding the company’s business, operations, and compliance policies, including claims that the Company overstated the profitability of its Data Center Hosting Business and its ability to successfully transition into a low-cost cloud services provider and that the Company’s board of directors was not “independent” within the meaning of Nasdaq listing rules.

On May 22, 2024, the court appointed lead plaintiff and approved lead counsel, and on July 22, 2024, Lead Plaintiff filed an amended complaint which asserts the same claims based on similar allegations in the original complaint.

On May 22, 2024, the court appointed lead plaintiff and approved lead counsel, and on July 22, 2024, l ead p laintiff filed an amended complaint which asserts the same claims based on similar allegations in the original complaint.

On September 20, 2024, the defendants filed a motion to dismiss the amended complaint.

On November 20, 2024, Lead Plaintiff filed his opposition to the Motion to Dismiss.

On November 19, 2024, l ead p laintiff filed his opposition to the Motion to Dismiss.

On January 3, 2025, the defendants filed their reply in further support of the Motion to Dismiss.

On September 8, 2025, the Court issued an order staying the Securities Lawsuit and administratively closing it pending resolution of the Motion to Dismiss.

The Company is unable to estimate a range of loss, if any, that could result were there to be an adverse final decision in the Securities Lawsuit.

8 unchanged sentences

On February 27, 2024, the derivative plaintiff filed an amended complaint asserting the same claims as the original complaint.

On June 5, 2024, following briefing and argument on the defendants’ motion to dismiss the Derivative Lawsuit, the Court entered an order granting the defendants’ motion without prejudice and dismissing all claims against all defendants, including the Company, on the grounds that the plaintiff failed to plead (1) demand futility as to each of plaintiff’s claims

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

or (2) a claim for breach of fiduciary duty.

The order dismissed all claims against all defendants, including the Company.

2 unchanged sentences

If an unfavorable action were to occur, it is possible that the impact could be material to the Company’s results of operations in the period(s) in which any such outcome becomes probable and estimable.

As of February 28, 2025, there were no other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated operations.

As of August 31, 2025, there were no other pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of the Company’s consolidated operations.

There are also no legal proceedings in which any of the Company’s management or affiliates is an adverse party or has a material interest adverse to the Company’s interest.

Business Segments

Revenue by segment (excluding the HPC Hosting Business as that segment has no revenue) was as follows (in thousands):

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

The Company's business is made up of two operating segments:

the Data Center Hosting Business and the HPC Hosting Business.

These segments represent management's view of the business for which separate financial information is

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

available and evaluated regularly by the Chief Operating Decision Maker ("CODM"), which is the Company’s Chief Executive Officer.

The Company's CODM evaluates performance and makes operating decisions primarily based on revenue and segment profit (loss) on a consolidated basis and for each of the Company's reportable segments.

The Company derives the segment results from its internal management reporting system.

The accounting policies the Company uses to derive reportable segment results are the same as those used for external reporting purposes.

Segment revenues and segment profit are regularly reviewed by the CODM and compared against historical results, forecast and budget information in order to make decisions about how to allocate capital and other resources to each segment.

The "Other" includes corporate related items not allocated to reportable segments for purposes of making operating decisions or assessing financial performance.

In accordance with applicable accounting guidance, the results of the Cloud Services Business are presented as discontinued operations in the unaudited condensed consolidated statements of operations and, as such, have been excluded from both continuing operations and segment results for all periods presented.

See "Note 5 - Discontinued Operations" for operations and segment results for the Cloud Services Business.

The following tables present segment information, including revenue by segment and segment profit (loss) for the three months ended August 31, 2025 and August 31, 2024 (in thousands):

Three Months Ended August 31, 2025

Data Center Hosting Business

$ 35,167 $ 37,795 $ 106,180 $ 109,720

Cloud Services Business

17,754 5,553 71,313 12,156

Total revenue $ 52,921 $ 43,348 $ 177,493 $ 121,876

Segment profit (loss) and a reconciliation to net loss before income tax expenses is as follows (in thousands):

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

HPC Hosting Business

Revenue $ 37,921 $ 26,296

Related party revenue — —

Total segment revenue 37,921 26,296

Costs and expenses

Cost of revenues 30,409 25,184

Selling, general and administrative 965 1,894

Loss on abandonment of assets

Total costs and expenses 31,886 28,318

Segment profit (loss) $ 6,035 $ ( 2,022 )

Three Months Ended August 31, 2024

Data Center Hosting Business

$ 8,780 $ ( 24,443 ) $ 57,181 $ ( 4,647 )

Cloud Services Business

HPC Hosting Business

Revenue $ 32,923 $ —

Related party revenue 1,926 —

Total segment revenue 34,849 —

Costs and expenses

Cost of revenues 22,406 23

Selling, general and administrative 772 2,926

Gain on classification of held for sale

Loss on abandonment of assets

Total costs and expenses ( 1,002 ) 2,949

Segment profit (loss) $ 35,851 $ ( 2,949 )

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

The following table presents a reconciliation to net (loss) income from continuing operations before income tax expense (in thousands):

Three Months Ended

August 31, 2025 August 31, 2024

Segment profit

Data Center Hosting Business

$ 6,035 $ 35,851

HPC Hosting Business ( 2,022 ) ( 2,949 )

Total segment profit

( 26,306 ) ( 7,609 )

Total segment (loss) profit ( 1,750 ) ( 47,453 ) 16,231 ( 48,447 )

Operating (loss) income

( 22,293 ) 25,293

Operating loss ( 18,943 ) ( 55,456 ) ( 28,074 ) ( 70,734 )

Interest expense, net 3,946 2,959

Loss on conversion of debt

Loss on change in fair value of debt — 6,422

Loss on change in fair value of related party debt — 2,612 — 2,612

Loss on extinguishment of debt

1,177 — 1,177 —

Loss on extinguishment of related party debt

Net (loss) income from continuing operations before income tax expense

$ ( 26,239 ) $ 15,912

Loss on change in fair value of warrants $ 6,421 $ — $ 6,421 $ —

Net loss before income tax expenses $ ( 35,438 ) $ ( 62,838 ) $ ( 178,410 ) $ ( 85,221 )

(1) The nine months ended February 28, 2025 includes $ 25 million received in connection with the sale of our Garden City facility once conditional approval requirements were met and escrowed funds were released.

The three and nine months ended February 29, 2024 includes $ 21.7 million loss on held for sale classification related to the sale of the Garden City facility.

(1) Other includes corporate related items not allocated to reportable segments .

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

We also provide the following additional segment disclosures (in thousands):

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

Depreciation and amortization:

1 unchanged sentence

$ 3,391 $ 3,359

Cloud Services Business

14,403 16,534 66,355 29,824

HPC Hosting Business

982 407 3,056 717

60 102 183 221

Total depreciation and amortization (2)

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Information on segment assets and a reconciliation to consolidated assets are as follows (in thousands):

February 28, 2025 May 31, 2024

August 31, 2025 May 31, 2025

Data Center Hosting Business

$ 132,357 $ 141,764

Cloud Services Business

386,608 374,216

HPC Hosting Business

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Total segment assets 1,994,404 1,505,105

Cloud Services Business (Discontinued operations)

310,006 304,466

94,585 60,519

Total assets $ 2,398,995 $ 1,870,090

(1) Other includes corporate related items not allocated to reportable segments.

Earnings Per Share

Loss Per Share

Basic net income (loss) per share (“EPS”) of common stock is computed by dividing a company’s net earnings (loss) by the weighted average number of shares of common stock outstanding during the period.

Diluted EPS reflects the potential dilution that could occur if the securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive.

The table below shows the calculation for earnings per share:

Three Months Ended Nine Months Ended

February 28, 2025 February 29, 2024 February 28, 2025 February 29, 2024

Three Months Ended

August 31, 2025 August 31, 2024

Net loss $ ( 16,926 ) $ ( 4,247 )

Net loss attributable to noncontrolling interest — — — ( 397 )

Preferred dividends ( 1,576 ) ( 44 )

( 540 ) — ( 1,213 ) —

Net loss attributable to common stockholders $ ( 18,502 ) $ ( 4,291 )

Basic and diluted net loss per share attributable to common stockholders $ ( 0.16 ) $ ( 0.52 ) $ ( 0.93 ) $ ( 0.77 )

Net (loss) income attributable to common stockholders:

Continuing operations $ ( 27,823 ) $ 15,868

Discontinued operations 9,321 ( 20,159 )

Net loss $ ( 18,502 ) $ ( 4,291 )

Basic and diluted net (loss) income per share attributable to common stockholders:

Continuing operations $ ( 0.11 ) $ 0.11

Discontinued operations 0.04 ( 0.14 )

Basic and diluted net loss per share $ ( 0.07 ) $ ( 0.03 )

Basic and diluted weighted average number of shares outstanding 255,892,902 149,099,336

As of August 31, 2025 and August 31, 2024, the Company had approximately 14.6 million and 6.4 million shares, respectively, of granted but unvested restricted stock awards, performance stock units, and restricted stock units that would have a potentially dilutive effect on earnings per share.

As of August 31, 2025 and August 31, 2024, the Company had approximately 4.4 million and 9.7 million shares, respectively, associated with the Company’s preferred stock which have been excluded from the calculation of earnings per share because the effect of those shares would be antidilutive.

As of August 31, 2024, the Company had approximately 8.3 million shares associated with the Yorkville Convertible Debt which have been excluded from the calculation of earnings per share because the effect of those shares would be antidilutive.

Additionally, the Company had approximately 25.5 million and 12.3 million warrants outstanding as of August 31, 2025 and August 31, 2024, respectively, which have been excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

Lastly, if the Company's Convertible Notes were converted into shares of the Company's common stock as of August 31, 2025, approximately 46.1 million shares were excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

Subsequent Events

Promissory Note

On September 9, 2025, APLD FAR-01 LLC, a subsidiary of the Company, entered into a promissory note (the “Promissory Note”) with Macquarie Equipment Capital, Inc., a Delaware corporation (the “Lender”).

The Promissory Note provides for a principal sum of (a) $ 50 million (the “Initial Loan”), which was drawn on the Closing Date, plus (b) subject to the mutual consent of the Company and the Lender, additional loans in an aggregate principal amount not to exceed $ 25 million (the “Additional Loans” and together with the Initial Loan, the “Loan”).

The Loan shall bear interest at 8.0 % per annum, unless an Event of Default (as defined therein) has occurred and is continuing, in which case, the Secured Obligations (as defined therein) shall bear interest at the sum of 8.0 % per annum plus an additional 1.50 % per month (the “Post-Default Rate”).

From the Closing Date until the date that is twelve months following the Closing Date (the “PIK Period”), accrued interest will be paid in kind, with such payment in kind being capitalized to principal monthly and at such other times as may be specified in the Promissory Note.

After the PIK Period, accrued interest will be paid in cash, provided that (i) the Post-Default Rate interest is payable in cash on demand and (ii)

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2025

As of February 28, 2025 and February 29, 2024, the Company had approximately 10.9 million and 11.9 million shares, respectively, of granted but unvested restricted stock, performance stock, and restricted stock units that would have a potentially dilutive effect on earnings per share.

As of February 28, 2025, the Company had approximately 5.9 million shares associated with the Company’s preferred stock which have been excluded from the calculation of earnings per share because the effect of those shares would be antidilutive.

Additionally, the Company had approximately 4.0 million warrants outstanding as of February 28, 2025, which have been excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

Subsequent Events

Potential Sale of Cloud Services Business

During the quarter ended February 28, 2025, the Company began discussions for the possible sale of the Cloud Services Business and on February 26, 2025, the Board of Directors approved the negotiation of a potential transaction.

As of April 10, 2025, the Company determined that the Cloud Services Business met the criteria to be classified as “held for sale,” as the Board of Directors approved further plans for the sale of the segment.

The potential sale of the Cloud Services Business represents a strategic shift in the Company’s operations and financial results.

As such, beginning in the fourth quarter of fiscal 2025, the Company will report the Cloud Services Business as discontinued operations.

On March 27, 2025, the compensation committee of the Board of Directors of the Company approved the following grants, under the Company’s 2024 Omnibus Equity Incentive Plan, of performance stock units, subject to time- and performance-based vesting conditions:

(i) 1,600,000 to Wes Cummins, the Company’s Chief Executive Officer and Chairman of the Board of Directors, (ii) 245,000 to Saidal Mohmand, the Company’s Chief Financial Officer, and (iii) 600,000 to Laura Laltrello, the Company’s Chief Operating Officer.

Withdrawal of Designation

On April 11, 2025, the Company filed a Withdrawal of Designation relating to the Series F Convertible Preferred Stock with the Secretary of State of the State of Nevada and terminated the designation of the Series F Convertible Preferred Stock.

At the time of the filing of the Withdrawal of Designation, no shares of Series F Convertible Preferred Stock were outstanding.

Other than the events described above, there are no additional subsequent events through the date of issuance of these unaudited condensed consolidated financial statements which require adjustment or disclosure.

For the Three Months Ended August 31, 2025

accrued interest on any principal amount repaid or prepaid is payable on the date of such repayment or prepayment.

The Promissory Note matures on the earliest of (i) the date of acceleration of the Loan, (ii) February 1, 2026, if the 200 MW Lease Execution (as defined therein) has not occurred on or before October 31, 2025, or (iii) September 9, 2027.

The Loan will accelerate and the Company must mandatorily prepay the full outstanding principal balance of the Promissory Note, together with accrued interest to the date of prepayment on the principal amount prepaid and any other amounts then due and payable, upon the occurrence of any of the following conditions:

(a) a Change of Control (as defined therein), (b) within ninety ( 90 ) days following the occurrence of the 200 MW Lease Execution, and (c) within thirty ( 30 ) days following a Qualifying Preference Share Issuance (as defined therein).

The Company may voluntarily prepay all or part of the Promissory Note at any time with no less than three ( 3 ) business days’ notice with accrued interest to the date of prepayment on the principal amount prepaid, so long as, with respect to the portion of the Loan then being prepaid, in each case, such prepayment is accompanied by the payment of amounts sufficient to achieve a rate of return that equals or exceeds 1.10 to 1.00.

The same 1.10 x return hurdle applies to repayment at maturity.

Amounts repaid under the Promissory Note will not be available to be re-borrowed.

Proceeds of the Loan under the Promissory Note will be used, in part, to (i) pay transaction costs, (ii) pay transaction expenses in connection with the Note Documents (as defined therein), (iii) fund the purchase of the financed properties located on the Company’s campus in Harwood, ND (“Polaris Forge 2”), including all associated closing costs, title fees, and legal expenses, (iv) finance improvements to the Polaris Forge 2 properties, (v) fund the purchase of the Transformers (as defined therein) and other equipment expected to be installed and used for the improvements of the Polaris Forge 2 properties, (v) to pay any other costs, fees, expenses, or amounts related to or in connection with the development and construction of Polaris Forge 2, and (vi) for general corporate working capital purposes.

In connection with the Loan, (i) APLD FAR-01 LLC, APLD FAR Holdings LLC (“Intermediate Holdings”), a Delaware limited liability company, as parent of the APLD FAR-01 LLC, and APLD FAR-02 LLC (“FAR-02”), a Delaware limited liability company, as a subsidiary of Intermediate Holdings, have entered into a guarantee and collateral agreement, as grantors thereunder, in favor of the Lender (the “Guarantee and Collateral Agreement”) pursuant to which the APLD FAR-01 LLC, Intermediate Holdings, and FAR-02 pledged a continuing security interest in substantially all of their respective assets except for Excluded Assets (as defined in the Guarantee and Collateral Agreement) and (ii) the Company provided a guarantee (the “Parent Guarantee”) in favor of the Lender that includes certain covenants that limit the Company’s ability to (a) transfer or dispose of any Collateral (as defined in the Guarantee and Collateral Agreement) without the prior written consent of the Lender, (b) grant certain liens upon or with respect to the Collateral, and (c) allow APLD FAR-01 LLC and its subsidiaries to sell or otherwise transfer assets to their affiliates, subject to certain specified exceptions in each case.

APLD FAR-01 LLC will also grant mortgages to the Lender over certain properties.

Series G Preferred Stock Offering

On September 11, 2025, the Company entered into the second amendment (the “Second Amendment”) to the PEPA, dated April 30, 2025, by and between the Company and the investors signatory thereto, as amended by the First Amendment, dated August 14, 2025, in order to increase its access to capital to fund the continued construction and development of its Polaris Forge 1 data center campus in Ellendale, North Dakota and other general corporate purposes.

The Second Amendment amends the PEPA to, among other things, increase the aggregate commitment amount of the shares of Series G Convertible Preferred Stock from $ 300 million to $ 450 million.

In connection with the Second Amendment, on September 11, 2025, the Company filed an amendment (the “Second CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025, as amended by the First CoD Amendment.

The Second CoD Amendment amended the Series G Certificate of Designation, as amended, to increase the number of shares authorized for issuance as Series G Preferred Stock from 156,000 to 204,000 shares.

On September 25, 2025, the Company filed an amendment (the “Third CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025, as amended.

The Third CoD Amendment amended the Series G Certificate of Designation, as amended, to increase the Floor Price (as set forth in Section 1.5(c)(i) of the Certificate of Designation) to $ 22.00 from $ 12.50 .

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2025

Since the execution of the Second Amendment, 204,000 shares of Series G Preferred Stock have been issued for aggregate gross proceeds of $ 200.0 million, of which all 204,000 shares of Series G Preferred Stock have been converted into an aggregate of approximately 10.2 million shares of common stock.

On October 7, 2025, the Company entered into the third amendment (the “Third Amendment”) to the PEPA, dated April 30, 2025, by and between the Company and the investors signatory thereto, as amended by the First Amendment and the Second Amendment, in order to increase its access to capital to fund the continued construction and development of its Polaris Forge I data center in Ellendale, North Dakota.

The Third Amendment amends the PEPA to, among other things, increase the aggregate commitment amount of the shares of the Series G Preferred Stock from $ 450.0 million to $ 590.0 million.

Amended and Restated Unit Purchase Agreement

As previously disclosed, on January 13, 2025, APLD HPC Holdings LLC (formerly, APLD ELN-02 Holdings LLC), an indirect wholly owned subsidiary of the Company, entered into a Unit Purchase Agreement (the “Unit Purchase Agreement” or “UPA”) for its HPC Hosting Business with MIP VI HPC Holdings, LLC, which is an affiliate of funds and investment vehicles managed by entities within Macquarie Asset Management (“MAM”).

On February 11, 2025, APLD ELN-02 Holdings LLC novated and assigned its rights, title and interests and duties, liabilities and obligations under the UPA to APLD HPC TopCo LLC, an indirect wholly-owned subsidiary of the Company (“TopCo 1”).

On October 3, 2025, the Company, TopCo 1, APLD HPC TopCo 2 LLC, an indirect wholly-owned subsidiary of the Company (the “Subsidiary Issuer”), and MIP HPC Holdings, LLC (formerly, MIP VI HPC Holdings, LLC) (the “Purchaser”) entered into an Amended and Restated Unit Purchase Agreement (the “A&R UPA”).

On October 6, 2025, all conditions to the Initial Closing (as defined in the A&R UPA) were satisfied and the Initial Closing occurred.

At the Initial Closing, the Subsidiary Issuer sold to the Purchaser 112,500 Preferred Units in the Subsidiary Issuer at a price per Preferred Unit of $ 1,000 , for an aggregate purchase price of $ 112.5 million, and for no additional consideration, the Subsidiary Issuer agreed to issue to the Purchaser such number of Common Units of the Subsidiary Issuer representing, in the aggregate, seven and a half percent ( 7.5 %) of the fully diluted common equity of the Subsidiary Issuer as of immediately following the Initial Closing.

The proceeds of the Initial Closing will be used to pay, among other things, construction and development costs of Polaris Forge 1 and transaction expenses.

MAM has the right to invest up to an additional $ 4.9 billion under the A&R UPA.

In addition, pursuant to the A&R UPA, on October 6, 2025, the Company issued to the designated affiliates of the Purchaser, warrants to purchase an aggregate of 2.4 million shares of the Company’s common stock.

The warrants will become exercisable upon the Purchaser funding the full $ 450 million in Polaris Forge 1.

Also on October 6, 2025, the Company entered into a registration rights agreement with the Purchaser, pursuant to which the Company agreed to file with the SEC a registration statement registering the resale of the shares of common stock issuable upon exercise of the warrants within 60 days of the execution of the registration rights agreement.

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-Q

Item 1. Financial Statements