What changed in this filing

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Item 1. Financial Statements

2026-04-08 compared with 2026-01-08 · 546 added, 461 removed, 905 unchanged (53% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

November 30, 2025 May 31, 2025

February 28, 2026 May 31, 2025

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets 478,705 9,652

Current assets held for sale 313,403 304,200

Total current assets 2,428,321 132,800

14 unchanged sentences

Due to customer 2,658 4,807

Current liabilities held-for-sale 161,318 216,047

Other current liabilities 65,518 19,431

6 unchanged sentences

Temporary equity

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and 281,673 shares outstanding at November 30, 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 November 30, 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, 1,030,000 shares authorized, 43,250 shares issued and outstanding at November 30, 2025, and 78,000 shares issued and outstanding at May 31, 2025

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and 281,673 shares outstanding at February 28, 2026, 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 62,189 shares outstanding at February 28, 2026, and 62,500 shares issued and 62,485 shares outstanding at May 31, 2025

56,728 57,011

Series G preferred stock, $ 0.001 par value, 1,030,000 shares authorized, no shares issued and outstanding at February 28, 2026, and 78,000 shares issued and outstanding at May 31, 2025

Redeemable noncontrolling interest

Stockholders' equity:

Common stock, $ 0.001 par value, 600,000,000 shares authorized, 286,248,510 shares issued and 279,083,210 shares outstanding at November 30, 2025, and 234,200,868 shares issued and 224,909,669 shares outstanding at May 31, 2025

Treasury stock, 7,165,300 shares at November 30, 2025 and 9,291,199 shares at May 31, 2025, at cost

Common stock, $ 0.001 par value, 600,000,000 shares authorized, 292,549,415 shares issued and 285,384,115 shares outstanding at February 28, 2026, and 234,200,868 shares issued and 224,909,669 shares outstanding at May 31, 2025

Treasury stock, 7,165,300 shares at February 28, 2026 and 9,291,199 shares at May 31, 2025, at cost

( 52,737 ) ( 31,400 )

8 unchanged sentences

(In thousands, except share and per share data)

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Three Months Ended Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Revenue $ 126,637 $ 52,921 $ 352,562 $ 175,567

3 unchanged sentences

Cost of revenues (1)

72,832 49,141 235,398 162,562

Selling, general and administrative (2) (3)

4 unchanged sentences

Total costs and expenses 212,304 71,864 464,205 205,567

Operating (loss) income ( 30,957 ) ( 12,805 ) ( 53,249 ) 12,489

Interest expense, net 11,484 2,929 15,431 5,888

Gain on change in fair value of derivative

( 13,126 ) — ( 13,126 ) —

Operating loss ( 85,667 ) ( 18,943 ) ( 111,643 ) ( 28,074 )

Interest (income) expense, net ( 2,387 ) 8,897 18,883 23,687

Gain on change in fair value of derivatives ( 9,417 ) — ( 22,543 ) —

Gain on change in fair value of investment (5)

2 unchanged sentences

Loss on change in fair value of debt — — — 85,439

Net loss from continuing operations before income tax expense

( 26,548 ) ( 128,362 ) ( 52,787 ) ( 112,450 )

Income tax expense 15 1 23 1

Net loss from continuing operations ( 26,563 ) ( 128,363 ) ( 52,810 ) ( 112,451 )

Net (loss) income from discontinued operations 12,113 ( 10,363 ) 21,434 ( 30,522 )

Loss on extinguishment of debt — 1,177 — 1,177

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

Net loss before income tax expense ( 70,558 ) ( 35,438 ) ( 101,911 ) ( 178,410 )

Income tax (benefit) expense ( 2 ) 117 21 118

Net loss ( 70,556 ) ( 35,555 ) ( 101,932 ) ( 178,528 )

Net loss attributable to noncontrolling interest ( 3,061 ) — ( 3,061 ) —

Net loss attributable to redeemable noncontrolling interest ( 28,747 ) — ( 31,910 ) —

Preferred dividends ( 1,558 ) ( 540 ) ( 4,705 ) ( 1,213 )

Net loss attributable to common stockholders $ ( 100,861 ) $ ( 36,095 ) $ ( 138,547 ) $ ( 179,741 )

Net (loss) income attributable to common stockholders

Continuing operations $ ( 31,195 ) $ ( 128,992 ) $ ( 59,017 ) $ ( 113,124 )

Discontinued operations 12,113 ( 10,363 ) 21,434 ( 30,522 )

Net loss $ ( 19,082 ) $ ( 139,355 ) $ ( 37,583 ) $ ( 143,646 )

Basic and diluted net loss per share attributable to common stockholders $ ( 0.36 ) $ ( 0.16 ) $ ( 0.51 ) $ ( 0.93 )

Continuing operations $ ( 0.11 ) $ ( 0.61 ) $ ( 0.22 ) $ ( 0.63 )

Discontinued operations 0.04 ( 0.05 ) 0.08 ( 0.17 )

Basic and diluted net loss per share $ ( 0.07 ) $ ( 0.66 ) $ ( 0.14 ) $ ( 0.80 )

Basic and diluted weighted average number of shares outstanding 281,982,553 222,454,578 271,670,830 193,405,721

(1) Includes related party selling, general and administrative expense of $ 0.1 million for each of the three months ended November 30, 2025 and November 30, 2024, and for each of the six months ended November 30, 2025 and November 30, 2024, respectively.

(1) Includes depreciation and amortization of $ 19.5 million and $ 17.5 million for the three months ended February 28, 2026 and February 28, 2025, and $ 30.4 million and $ 75.4 million for the nine months ended February 28, 2026 and February 28, 2025, respectively.

(2) Includes depreciation and amortization of $ 1.3 million and $ 1.2 million for the three months ended February 28, 2026 and February 28, 2025, and $ 3.1 million and $ 4.1 million for the nine months ended February 28, 2026 and February 28, 2025, respectively.

(3) Includes related party selling, general and administrative expense of $ 0.1 million for each of the three months ended February 28, 2026 and February 28, 2025, and $ 0.2 million for each of the nine months ended February 28, 2026 and February 28, 2025, respectively.

See Note 5 - 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 six months ended November 30, 2024.

(4) Includes $ 25 million received in connection with the sale of the Company’s Garden City facility upon the achievement of conditional approval requirements and escrowed funds were released during the nine months ended February 28, 2025.

(5) Includes related party gain on change in fair value of investment of $ 2.0 million for each of the three and nine months ended February 28, 2026.

See Note 5 - Related Party Transactions for further discussion of related party transactions.

See accompanying notes to the unaudited condensed consolidated financial statements

1 unchanged sentence

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

For the Three Months ended November 30, 2025

For the Three Months ended February 28, 2026

(In thousands, except share data)

7 unchanged sentences

Shares Amount Shares Amount Shares Amount

Balance, August 31, 2025 363,933 $ 63,728 $ — 278,584,101 $ 274 ( 9,291,199 ) $ ( 31,400 ) $ 1,573,367 $ ( 497,981 ) $ 1,044,260

Balance, November 30, 2025 387,183 $ 105,218 $ 516,972 286,248,510 $ 287 ( 7,165,300 ) $ ( 52,737 ) $ 2,014,459 $ ( 512,380 ) $ 1,449,629

Issuance of common stock from stock compensation plans — — — 651,935 1 — — ( 1 ) — —

7 unchanged sentences

— — — — — — — ( 1,558 ) — ( 1,558 )

Shares issued in offering, net of costs

— — — — — — — ( 4 ) — ( 4 )

Issuance of warrants, at fair value, net of costs

— — — — — — — 34,217 — 34,217

Exercise of warrants

— — — 800,000 1 — — 6,263 — 6,264

Treasury Stock repurchase

— — — — — ( 7,165,300 ) ( 52,737 ) 52,737 — —

Treasury Stock retirement

— — — ( 9,291,199 ) ( 4 ) 9,291,199 31,400 ( 31,396 ) — —

Contributions from noncontrolling interest, net of costs

3 unchanged sentences

Stock-based compensation — — — — — — — 50,149 — 50,149

Net loss — — ( 51 ) — — — — — ( 14,399 ) ( 14,399 )

Balance, November 30, 2025 387,183 $ 105,218 $ 516,972 286,248,510 $ 287 ( 7,165,300 ) $ ( 52,737 ) $ 2,014,459 $ ( 512,380 ) $ 1,449,629

Net income (loss) — — 121 — — — — — ( 70,677 ) ( 70,677 )

Balance, February 28, 2026 343,862 $ 63,160 $ 923,065 292,549,415 $ 293 ( 7,165,300 ) $ ( 52,737 ) $ 2,216,722 $ ( 583,057 ) $ 1,581,221

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

2 unchanged sentences

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

For the Three Months ended November 30, 2024

For the Three Months ended February 28, 2025

(In thousands, except share data)

Temporary Equity

Permanent Equity

Temporary Equity Permanent Equity

Preferred Stock (1)

3 unchanged sentences

Shares Amount Shares Amount Shares Amount

Balance, August 31, 2024 354,864 $ 55,282 162,471,048 $ 162 ( 5,032,802 ) $ ( 62 ) $ 496,027 $ ( 254,281 ) $ 241,846

Shares issued in offering, net of costs — — 49,382,720 49 — — 149,768 — 149,817

Balance, November 30, 2024 351,032 $ 55,782 225,846,268 $ 222 ( 9,291,199 ) $ ( 31,400 ) $ 858,713 $ ( 392,963 ) $ 434,572

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

Conversions of debt — — 7,657,226 8 — — 48,736 — 48,744

Issuance of other common stock — — 528,541 1 — — ( 1 ) — —

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

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

Conversion of warrants — — 1,051,651 1 — — ( 1 ) — —

— — 3,853,605 4 — — ( 4 ) — —

Issuance of Preferred Stock, net of costs 33,404 30,437 — — — — — — —

Conversion of Preferred Stock ( 43,000 ) ( 43,000 ) 6,142,855 6 — — 42,994 — 43,000

( 10,191 ) ( 5,350 ) 1,455,857 1 — — 10,190 — 10,191

Preferred Stock Dividends — — — — — — ( 540 ) — ( 540 )

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

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 debt conversion option

— — — — — — 252,900 — 252,900

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

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

Balance, November 30, 2024 351,032 $ 55,782 225,846,268 $ 222 ( 9,291,199 ) $ ( 31,400 ) $ 858,713 $ ( 392,963 ) $ 434,572

Balance, February 28, 2025 341,436 $ 43,219 233,682,359 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 914,336 $ ( 428,518 ) $ 454,648

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

2 unchanged sentences

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

For the Six Months ended November 30, 2025

For the Nine Months ended February 28, 2026

(In thousands, except share data)

20 unchanged sentences

Stock-based compensation — — — — — — — 94,741 — 94,741

Net loss — — ( 51 ) — — — — — ( 31,325 ) ( 31,325 )

Balance, November 30, 2025 387,183 $ 105,218 $ 516,972 286,248,510 $ 287 ( 7,165,300 ) $ ( 52,737 ) $ 2,014,459 $ ( 512,380 ) $ 1,449,629

Net income (loss) — — 70 — — — — — ( 102,002 ) ( 102,002 )

Balance, February 28, 2026 343,862 $ 63,160 $ 923,065 292,549,415 $ 293 ( 7,165,300 ) $ ( 52,737 ) $ 2,216,722 $ ( 583,057 ) $ 1,581,221

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

2 unchanged sentences

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

For the Six Months ended November 30, 2024

For the Nine Months ended February 28, 2025

(In thousands, except share data)

7 unchanged sentences

Shares issued in offering, net of costs — — 55,506,938 55 — — 180,762 — 180,818

Issuance of common stock from stock plans — — 1,267,179 2 — — ( 2 ) — —

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

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

Conversions of debt — — 19,050,204 19 — — 104,926 — 104,945

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

Issuance of other common stock — — 628,541 1 — — 518 — 519

Issuance of warrants, at fair value — — — — — — 50,586 — 50,586

7 unchanged sentences

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

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

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

Net loss — — — — — — — ( 178,528 ) ( 178,528 )

Balance, November 30, 2024 351,032 $ 55,782 225,846,268 $ 222 ( 9,291,199 ) $ ( 31,400 ) $ 858,713 $ ( 392,963 ) $ 434,572

Balance, February 28, 2025 341,436 $ 43,219 233,682,359 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 914,336 $ ( 428,518 ) $ 454,648

(1) See Note 13 - Temporary Equity for further discussion of preferred stock activity.

2 unchanged sentences

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

Six Months Ended

November 30, 2025 November 30, 2024

For the Nine Months ended February 28, 2026 and February 28, 2025

Nine Months Ended

February 28, 2026 February 28, 2025

CASH FLOW FROM OPERATING ACTIVITIES

4 unchanged sentences

Lease expense 16,310 23,911

Gain on change in fair value of derivative ( 13,126 ) —

Gain on change in fair value of derivatives ( 22,543 ) —

Gain on change in fair value of investment ( 6,072 ) —

Amortization of debt issuance costs 11,700 2,424

Gain on classification of held for sale

Loss on extinguishment of related party debt

Non-cash interest expense 74,989 11,515

Loss (gain) on classification of held for sale 59,650 ( 24,616 )

Loss on conversion of debt — 33,612

1 unchanged sentence

Loss on abandonment of assets 2,343 769

Loss on change in fair value of warrants issued

Changes in operating assets and liabilities:

42 unchanged sentences

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

Six Months Ended

November 30, 2025 November 30, 2024

For the Nine Months ended February 28, 2026 and February 28, 2025

Nine Months Ended

February 28, 2026 February 28, 2025

NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH 1,984,355 229,536

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 2,295,766 314,579

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM DISCONTINUED OPERATIONS 2 14

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM CONTINUING OPERATIONS $ 2,295,764 $ 314,565

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD 123,318 31,688

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD 2,107,673 261,224

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

Finance right-of-use assets obtained by lease obligation $ 25,214 $ 106,754

1 unchanged sentence

Conversion of debt to common stock $ — $ 104,945

Consideration for guarantee of an affiliate's obligations

Conversion of preferred stock to common stock $ 800,214 $ 53,191

2 unchanged sentences

Non-cash dividends paid in-kind

$ ( 31,980 ) $ —

See accompanying notes to the unaudited condensed consolidated financial statements

1 unchanged sentence

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Business and Organization

For the Three and Nine Months Ended February 28, 2026

Business and Basis of Presentation

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.

The Company has three reportable segments.

Financial information for each segment is contained in Note 16 - 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

In the fourth quarter of fiscal year 2025, management determined that the Cloud Services Business, which operates primarily through our wholly-owned subsidiary, Applied Digital Cloud Corporation, met the criteria to be classified as “held for sale.” As a sale would represent a strategic shift for the Company, the Cloud Services Business was classified as discontinued operations.

On December 30, 2025, the Company announced it had entered into a non-binding term sheet for a proposed business combination of the Cloud Services Business with EKSO Bionics Holdings, Inc.

EKSO) (“EKSO”), which, once closed, will go forward as ChronoScale Corporation (“ChronoScale”), an accelerated compute platform purpose-built to support AI workloads (the “Proposed Transaction”).

On February 15, 2026, APLD Intermediate HoldCo LLC, a Delaware limited liability company (“APLD Intermediate”), APLD ChronoScale HoldCo LLC, a Delaware limited liability company and a wholly owned subsidiary of APLD Intermediate (“Contributor”), each a wholly owned direct or indirect subsidiary of the Company, and Applied Digital Cloud Corporation, which at the time of the closing of the Proposed Transaction, will be a wholly owned subsidiary of Contributor, entered into a Contribution and Exchange Agreement with EKSO (the “Contribution and Exchange Agreement”) for purposes of consummating the Proposed Transaction (the “Business Combination”), as a result of which (i) Applied Digital Cloud Corporation will become a wholly owned subsidiary of Ekso, (ii) Ekso will, immediately after the consummation of the Business Combination, continue as the parent of the combined company, and (iii) Ekso will change its name to ChronoScale.

Upon closing of the Proposed Transaction, the Company expects to initially own approximately 97 % of the combined company.

The Applied Digital Cloud and EKSO businesses would continue to operate upon consummation of the Proposed Transaction.

Closing of the Proposed Transaction is subject to customary regulatory approval and satisfaction of closing conditions.

During the quarter ended February 28, 2026, the Company determined that the Cloud Services Business, which had previously been classified and reported as held for sale in accordance with ASC 360-10 and discontinued operations in accordance with ASC 205-20, no longer met the criteria for classification as held for sale and discontinued operations due to the Company entering into the Contribution and Exchange Agreement.

As a result, effective February 15, 2026, the assets and liabilities of the Cloud Services Business have been reclassified from held for sale to held and used in their respective financial statement lines on the Company’s unaudited condensed consolidated balance sheets for all periods presented.

Similarly, the results of the Cloud Services Business have been reclassified from discontinued operations to continuing operations in the Company’s unaudited condensed consolidated statements of operations for all periods presented.

In connection with this change in classification, the long‑lived assets of the Cloud Services Business were remeasured in accordance with ASC 360‑10‑35‑44 at the lower of (i) their carrying amounts immediately before classification as held for sale, adjusted for depreciation and amortization that would have been recognized had the assets been continuously classified as held and used, and (ii) their fair values at the date the Company determined that the held‑for‑sale criteria were no longer met.

Management determined that as of February 15, 2026, when the Cloud Services Business no longer met the criteria for held for sale and discontinued operations, the carrying value of the long-lived assets of the Cloud Business was less than the fair value.

As such, the Company recorded a loss on classification of held for sale of $ 59.7 million for the three and nine months ended February 28, 2026 representing the write down of the Cloud Services Business assets to their carrying value as of February 15, 2026 when it no longer qualified as held for sale.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

The Company has restated its comparative financial statements for prior periods to reflect this change in classification.

The statements of operations, cash flows, and segment information for prior periods have been adjusted to include the results of the Cloud Services Business within continuing operations rather than within discontinued operations, and previously classified assets and liabilities of the Cloud Services Business are presented within the respective held‑and‑used asset and liability line items as of each balance sheet date.

Revenues, income (loss) before income taxes, net income (loss), total assets and liabilities, and cash flows previously reported as related to discontinued operations and asset and liabilities held for sale of the Cloud Services Business are now reported in the corresponding line items within continuing operations and held‑and‑used asset and liability categories for all periods presented.

There was no material impact on the Company’s previously reported net income, total assets, or equity as a result of this reclassification.

The reclassification was necessary because the Cloud Services Business no longer met the requirements for held for sale presentation and discontinued operations presentation as set forth in ASC 360-10 and ASC 205-20, respectively, as the planned sale did not occur and the segment remains part of the Company’s ongoing operations as of February 28, 2026.

Principles of Consolidation

7 unchanged sentences

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, 2025 filed with the SEC on July 30, 2025.

Significant Accounting Policies

Significant Accounting Policies and Use of Estimates

4 unchanged sentences

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification 606, Revenue from Contracts with Customers.

Data Center Hosting Revenue

The Company recognizes revenue associated with our data center hosting in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers.

The Company provides energized space to customers who locate their hardware within the Company’s co-hosting facility.

2 unchanged sentences

Revenue is recognized based on the contractual fixed rate, net of any credits for non-performance, over the term of the agreements.

Any ancillary revenue for other services is generally recognized at a point in time when the services are complete.

Any ancillary revenue

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

for other services is generally recognized at a point in time when the services are complete.

Customer contracts include advance payment terms.

1 unchanged sentence

HPC Hosting Revenue

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

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 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.

During the quarter ended November 30, 2025, the Company began recognizing revenue associated with certain of its data center leases as accounted for under ASC 842.

We generate the majority of our HPC hosting revenue by leasing our properties to customers under operating lease agreements, which are accounted for under ASC 842, Leases (“ASC 842”).

We recognize the total minimum lease payments provided for under the leases on a straight-line basis over the lease term if we determine it is probable that substantially all of the lease payments will be collected over the lease term.

We commence recognition of revenue from rentals at the date the property is ready for its intended use by the tenant and the tenant takes possession or controls the physical use of the leased asset.

The excess of rents recognized as revenue over amounts contractually due pursuant to the underlying leases is included in Accounts receivable and Other assets on the unaudited condensed consolidated balance sheets.

Rental payments received in excess of revenue recognized are classified as Deferred revenue on the unaudited condensed consolidated balance sheets.

Generally, under the terms of our leases, the majority of our rental expenses, including power and security cost, are recovered from our customers.

We record amounts reimbursable by customers (“tenant recoveries”) as revenue in the period the applicable expenses are incurred – which is generally on a ratable basis through the term of the lease.

We account for and present rental revenue and tenant recoveries as a single component under rental and other services as the timing of recognition is the same, the pattern with which we transfer the right of use of the property and related services to the lessee are both on a straight-line basis and our leases qualify as operating leases.

Interconnection services include port and cross-connect services generally provided on terms that align with the respective lease term.

We bill for these services on a monthly basis and recognize the revenue over the period the service is provided.

Revenue for cross-connect installations is generally recognized in the period the cross-connect is installed.

Tenant fit-out services include the procurement and installation of customer equipment provided in accordance with the terms of the agreement with the customer.

In the course of providing its services, the Company routinely subcontracts for services and incurs other direct costs on behalf of its clients which costs are passed through to the client and is recognized as revenue.

The Company recognizes revenue using the percentage of completion model where by total costs incurred are divided by total costs expected to be incurred, which it believes to be the best measure of progress towards completion of the performance obligation.

We utilize the practical expedient in ASC 842 that allows us to account for lease and non-lease components associated with each lease as a single lease component recorded within revenue, instead of accounting for such items separately under Accounting Standards Codification 606, Revenue (“ASC 606”).

The Company began recognizing revenue associated with certain of its data center leases as accounted for under ASC 842 in the second quarter of the current fiscal year.

See Note 14 - Leases for further information.

The Company has identified two reportable segments:

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

Cloud Services Revenue

The Company recognizes revenue associated with its cloud services business in accordance with ASC 606, Revenue from Contracts with Customers.

The Company 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.

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”).

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.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

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 Company does not allocate interest (income) expense, net, gain on change in fair value of derivatives, gain on change in fair value of investment, loss on conversion of debt, loss on change in fair value of debt, loss on extinguishment of debt, loss on change in fair value of warrants 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 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 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.

Babcock & Wilcox Enterprises, Inc.

(“B&W”) Investment

The Company accounted for the warrants received from B&W under Accounting Standard Codification (“ASC”) 815 and concluded that the warrants met the definition of a derivative asset that needs to be fair valued at inception and each reporting period.

Corintis Investment

The Company accounted for the investment at cost under Accounting Standard Codification (“ASC”) 321, adjusted for impairment since the investment did not have a readily determinable fair value.

See Note 2 - 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.

Investments in equity securities

The Company’s long-term investments include equity securities without readily determinable fair values and equity securities with readily determinable fair values.

Equity securities without readily determinable fair values

The Company invests in equity securities, which are accounted for in accordance with ASC 321, Investments - Equity Securities.

Equity securities are measured at fair value, with changes in fair value recognized within gain (loss) on change in fair value of investments on the unaudited condensed consolidated statement of operations.

For equity securities without readily determinable fair values, the Company has elected the measurement alternative, recording these investments at cost minus impairment, adjusted for observable price changes.

Quarterly, the Company performs a qualitative assessment for impairment of equity securities without readily determinable fair values.

If impairment is indicated, the investment is written down to fair value through earnings.

Equity investments with readily determinable fair values

The Company accounts for certain of its investments in equity securities in accordance with ASU 2016-01 Financial Instruments-Overall (Subtopic 825- 10):

Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”).

In accordance with ASU 2016-01, the Company records all equity investments with readily determinable fair values at fair value calculated by the publicly traded stock price at the close of the reporting period within gain (loss) on change in fair value of investments on the unaudited condensed consolidated statement of operations.

For further discussion of the Company’s investments in equity securities, see Note 5 - Related Party Transactions, Note 7 - Balance Sheet Components , and Note 8 - Derivative Assets .

Variable Interest Entity

The Company consolidates a VIE where it has been determined that the Company is the primary beneficiary of the entity's operation in accordance with ASC Topic 810, Consolidations.

The primary beneficiary is the party that has both the power to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE by considering the purpose and design of the entity and the risks the entity was designed to create and pass through to its

The primary beneficiary is the party that has both the power

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

variable interest holders.

For the Three and Nine Months Ended February 28, 2026

to direct the activities that most significantly impact the VIE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE that could potentially be significant to the VIE.

The Company also evaluates its economic interests in the VIE.

7 unchanged sentences

However, the noncontrolling interest balance will be adjusted for the attribution of net income or loss of the Subsidiary to the noncontrolling interest holder as prescribed by ASC 810.

Reclassifications

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 debt service reserves and letters of credit.

The debt service reserves are held in separate accounts and are to be used to fund interest and principal on the Senior Secured Notes (as defined below) during construction.

See further discussion in Note 6 - Debt.

Additionally, the Company has letters of credit totaling $ 16.5 million and $ 38.3 million, as of February 28, 2026 and May 31, 2025, respectively, 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 .

The letters of credit were issued in lieu of security deposits.

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, 2026 and May 31, 2025 were as follows (in thousands):

February 28, 2026 May 31, 2025

Cash and cash equivalents $ 1,730,440 $ 43,950

Restricted cash

198,423 72,368

Restricted cash included in other assets 178,810 7,000

Total cash, cash equivalents, and restricted cash $ 2,107,673 $ 123,318

Recent Accounting Pronouncements

In August 2023, the FASB issued ASU No.

Accounting Pronouncements Adopted

In August 2023, the FASB issued Accounting Standards Update (“ASU”) No.

2023-05, Business Combinations-Joint Venture Formations (Subtopic 805-60):

Recognition and Initial Measurement, which is intended to provide guidance for the formation of a joint venture, including the initial measurement of assets and liabilities, the formation date, and basis of accounting.

This new standard became effective for annual reporting periods beginning on or after January 1, 2025, with early adoption permitted.

This new standard became effective for annual reporting periods beginning on or after January 1, 2025, with

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

early adoption permitted.

The Company adopted the ASU with the execution of the Unit Purchase Agreement (as defined and described below).

4 unchanged sentences

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.

Accounting Pronouncements Not Yet Adopted

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

15 unchanged sentences

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

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

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.

6 unchanged sentences

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

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 debt service reserves and letters of credit.

The debt service reserves are held in separate accounts and are to be used to fund interest and principal on the Senior Secured Notes (as defined below) during construction.

See further discussion in Note 7 - Debt.

Additionally, the Company has letters of credit totaling $ 23.5 million and $ 31.3 million, as of November 30, 2025 and May 31, 2025, respectively, 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 .

The letters of credit were issued in lieu of security deposits.

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

In December 2025, the FASB issued ASU 2025-12, Codification Improvements.

The amendments in this update are to make other incremental improvements to GAAP and facilitate codification updates for a broad range of Topics arising from technical corrections, unintended application of the codification, clarifications, and other minor improvements.

The resulting amendments are collectively referred to as Codification improvements.

ASU 2025-12 is effective for all entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 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 November 30, 2025 and May 31, 2025 were as follows (in thousands):

November 30, 2025 May 31, 2025

Cash and cash equivalents $ 1,913,436 $ 41,552

Restricted cash

205,121 72,368

Restricted cash included in other assets 177,207 7,000

Total cash, cash equivalents, and restricted cash $ 2,295,764 $ 120,920

For the Three and Nine Months Ended February 28, 2026

reporting periods.

The Company is currently evaluating the impact the adoption of ASU 2025-12 may have on the Company’s consolidated financial statements.

Property and Equipment

Property and equipment consisted of the following as of November 30, 2025 and May 31, 2025 (in thousands):

Estimated Useful Life November 30,

Property and equipment consisted of the following as of February 28, 2026 and May 31, 2025 (in thousands):

Estimated Useful Life February 28,

Networking equipment, electrical equipment, and software

16 unchanged sentences

Other equipment and fixtures 5 years - 10 years

55,616 12,447

Total cost of property and equipment 3,068,554 1,278,843

1 unchanged sentence

Property and equipment, net $ 3,011,751 $ 1,252,287

Depreciation expense totaled $ 7.4 million and $ 10.1 million for the three and six months ended November 30, 2025, respectively, and $ 2.6 million and $ 5.2 million for the three and six months ended November 30, 2024, respectively.

Depreciation expense totaled $ 17.6 million and $ 27.7 million for the three and nine months ended February 28, 2026, respectively, and $ 3.2 million and $ 9.3 million for the three and nine months ended February 28, 2025, respectively.

Revenue from Contracts with Customers

Below is a summary of the Company’s revenue concentration by major customers for the three and six months ended November 30, 2025 and November 30, 2024, respectively.

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Below is a summary of the Company’s revenue concentration by major customers for the three and nine months ended February 28, 2026 and February 28, 2025, respectively.

Three Months Ended Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Customer A 56 % — % 52 % — %

Customer B 30 % 66 % 33 % 54 %

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Customer C 14 % 34 % 15 % 29 %

Customer D — % — % — % 11 %

Deferred Revenue

Changes in the Company's deferred revenue balances for the six months ended November 30, 2025 and November 30, 2024, respectively, are shown in the following table (in thousands):

Six Months Ended

November 30, 2025 November 30, 2024

Changes in the Company's deferred revenue balances for the nine months ended February 28, 2026 and February 28, 2025, respectively, are shown in the following table (in thousands):

Nine Months Ended

February 28, 2026 February 28, 2025

Balance, beginning of period $ 3,593 $ 39,366

3 unchanged sentences

Balance, end of period $ 12,550 $ 4,879

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

Unbilled Revenue

Changes in the Company's unbilled revenue balances, which are captured in the unaudited condensed consolidated balance sheets in accounts receivable and other assets for the nine months ended February 28, 2026 and February 28, 2025, respectively, are shown in the following table (in thousands):

Nine Months Ended

February 28, 2026 February 28, 2025

Balance, beginning of period $ — $ —

Revenue recognized ( 57,352 ) —

Balance, end of period $ ( 12,625 ) $ —

Customer Deposits

Changes in the Company's customer deposits balances for the six months ended November 30, 2025 and November 30, 2024, respectively, are shown in the following table (in thousands):

Six Months Ended

November 30, 2025 November 30, 2024

Changes in the Company's customer deposits balances for the nine months ended February 28, 2026 and February 28, 2025, respectively, are shown in the following table (in thousands):

Nine Months Ended

February 28, 2026 February 28, 2025

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

3 unchanged sentences

Balance, end of period $ 16,752 $ 16,125

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 and six months ended November 30, 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

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

financial results of the Cloud Services Business for the periods presented (in thousands):

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Revenue $ 18,402 $ 27,705 $ 35,120 $ 53,560

Cost of revenues 3,044 29,700 6,409 68,017

Selling, general and administrative 616 3,815 946 7,163

Loss on abandonment of assets

Operating income (loss) from discontinued operations

14,742 ( 5,810 ) 27,273 ( 21,620 )

Interest expense 2,629 4,553 5,839 8,902

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

12,113 ( 10,363 ) 21,434 ( 30,522 )

Income tax expense — — — —

Net income (loss) from discontinued operations

$ 12,113 $ ( 10,363 ) $ 21,434 $ ( 30,522 )

As of November 30, 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):

November 30, 2025 May 31, 2025

Cash and cash equivalents $ 2 $ 2,398

Accounts receivable 9,031 3,788

Prepaid expenses and other current assets 560 223

Property and equipment, net 16,741 10,922

Operating lease right of use asset, net 93,995 91,374

Finance lease right of use asset, net 193,067 195,495

Other assets 8 —

Total current assets held for sale $ 313,404 $ 304,200

Accounts payable $ 3,182 $ 3,962

Accrued liabilities 1,534 572

Current portion of operating lease liability 17,090 16,093

Current portion of finance lease liability 74,794 133,406

Current deferred revenue 152 3,594

Long-term portion of operating lease liability 49,594 58,420

Long-term portion of finance lease liability 14,972 —

Total current liabilities held for sale $ 161,318 $ 216,047

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

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

Six Months Ended

November 30, 2025 November 30, 2024

Depreciation and amortization $ — $ 51,951

Stock-based compensation $ 167 $ ( 1,664 )

Purchases of property and equipment and other assets $ ( 6,311 ) $ 657

Finance lease prepayments $ — $ —

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

Finance right-of-use assets obtained by lease obligation $ 4,973 $ 68,329

Property and equipment in AP and accrued liabilities $ — $ 1,931

Related Party Transactions

Related Party Revenue

Related party revenue consisted of revenue from two customers, Customer D and Customer E.

During the three months ended November 30, 2025 and 2024, there was no related party revenue.

Similarly, during the six months ended November 30, 2025, there was no related party revenue.

During the six months ended November 30, 2024, there was approximately $ 1.2 million of related party revenue from Customer D and approximately $ 0.7 million of related party revenue from Customer E.

Customer D is a subsidiary of an entity which, during the first quarter of fiscal year 2025, was deemed to beneficially own over 5 % of the Company's outstanding common stock.

Previously, related party revenue consisted of revenue from two customers, Customer E and Customer F.

During the three months ended February 28, 2026 and 2025, there was no related party revenue.

Similarly, during the nine months ended February 28, 2026, there was no related party revenue.

During the nine months ended February 28, 2025, there was approximately $ 1.2 million of related party revenue from Customer E and approximately $ 0.7 million of related party revenue from Customer F, neither of which is currently a customer of the Company.

Customer E is a subsidiary of an entity which, during the first quarter of fiscal year 2025, was deemed to beneficially own over 5 % of the Company's outstanding common stock.

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

Customer E is 60 % owned by an individual who, during the first quarter of fiscal year 2025, was deemed to beneficially own over 5 % of the Company's outstanding common stock.

Customer F is 60 % owned by an individual who, during the first quarter of fiscal year 2025, was deemed to beneficially own over 5 % of the Company's outstanding common stock.

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.

Other Related Party Transactions

Related party transactions included within selling, general and administrative expense on the unaudited condensed consolidated statement of operations include software license fees of $ 74,250 and $ 72,000 during the three months ended November 30, 2025 and 2024, respectively, and $ 148,500 and $ 142,875 during the six months ended November 30, 2025 and 2024, respectively, were incurred with a company whose chairman is also a member of the Company’s Board of Directors.

Base Electron

Base Electron, Inc., a Nevada corporation, (“Base Electron”) is an independent power producer owned and managed by a combination of third parties, as well as certain officers and directors of the Company acting in their individual capacities, for the purpose of developing stabilized power generation and infrastructure to support the broader AI industry.

The Company is party to a Guarantee (the “Guarantee”) in favor of The Babcock & Wilcox Company (“B&W”), pursuant to which it has agreed to unconditionally and irrevocably guarantee the full and timely performance by Base Electron, of its obligations under a Design-Build Agreement, dated February 26, 2026, by and between Base Electron and B&W (the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

“Design-Build Agreement”).

The Design-Build Agreement contemplates the engineering, procurement, construction and commissioning of a power generation facility with an expected nameplate capacity of approximately 1.2 GW anticipated to expand power and capacity supplied to the grid and utility customers in the Midcontinent Independent System Operator (“MISO”) region.

The Company may, in its sole discretion, terminate the Guarantee and all of its existing and future obligations thereunder upon the occurrence of any one of the following events, (i) the listing of Base Electron’s equity securities on a national securities exchange, (ii) the consummation by Base Electron of a financing transaction resulting in gross proceeds of at least $ 50 million (provided that Base Electron is current in its payments to B&W), or (iii) the payment by the Company of a termination fee equal to either $ 50 million (if paid by August 1, 2026 and Base Electron is current in its payments to B&W) or $ 100 million.

As of February 28, 2026, no liability has been recognized in the unaudited condensed consolidated financial statements, as the Company has determined that the likelihood of Base Electron failing to perform or the Company terminating the Guarantee is not probable.

In connection with and as partial consideration for the Company’s entry into the Guarantee, Base Electron issued to the Company approximately 10 % of Base Electron’s outstanding equity.

The investment in Base Electron will be accounted for at cost under ASC 321 as it is an equity security without a readily determinable fair value and will be evaluated quarterly for impairment indicators.

There were no impairment indicators during the quarter.

As of February 28, 2026, the Company determined the fair value of the investment was $ 2.0 million, which was recorded as an other asset on the unaudited condensed consolidated balance sheets and a gain on change in fair value of investment on the unaudited condensed consolidated statements of operations.

Other Related Party Transactions

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 the three months ended February 28, 2026 and 2025, each, respectively, and $ 0.2 million during the nine months ended February 28, 2026 and 2025, each, respectively, which 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 November 30, 2025 May 31, 2025

Senior Secured Notes

9.25 % December 2030

Interest Rate Maturity Date February 28, 2026 May 31, 2025

2030 Senior Secured Notes 9.25 % December 2030

$ 2,350,000 $ —

2 unchanged sentences

450,000 450,000

DevCo Facility 8.00 % December 2027 87,104 —

SMBC Loan (2)

12 unchanged sentences

Long-term debt, net $ 2,594,501 $ 677,825

(1) The net carrying amount of the Convertible Notes was $ 274.6 million and $ 273.3 million and the remaining unamortized deferred financing costs related to the issuance was $ 175.4 million and $ 176.7 million, each as of November 30, 2025 and May 31, 2025, respectively.

(1) The net carrying amount of the Convertible Notes was $ 275.3 million and $ 273.3 million and the remaining unamortized deferred financing costs related to the issuance was $ 174.7 million and $ 176.7 million, each as of February 28, 2026 and May 31, 2025, respectively.

(2) The SMBC Loan was guaranteed by APLD HPC TopCo LLC, a wholly-owned subsidiary of the Company, and was 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.

During the quarter ended November 30, 2025, concurrent with the closing of the Senior Secured Notes offering (see below), the Company repaid in full the aggregate principal balance plus accrued interest.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

During the quarter ended February 28, 2026, concurrent with the closing of the 2030 Senior Secured Notes offering (see below), the Company repaid in full the aggregate principal balance plus accrued interest.

As of May 31, 2025, there were $ 4.4 million of unamortized deferred financing costs.

4 unchanged sentences

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 November 30, 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 as well as two promissory notes the Company entered into during the three months ended November 30, 2025 for a total of approximately $ 19.5 million.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

The Company is subject to a debt service coverage ratio and is in compliance as of February 28, 2026.

(6) Inclusive in this number is $ 12.0 million of proceeds from the issuance of two SAFE agreements which were accounted for as liabilities as well as two promissory notes the Company entered into during the second fiscal quarter for a total of approximately $ 19.0 million.

Remaining Principal Payments

Below is a summary of the remaining principal payments due over the life of the term loans as of November 30, 2025 (in thousands):

Below is a summary of the remaining principal payments due over the life of the term loans as of February 28, 2026 (in thousands):

FY26 $ 90,283

Thereafter (1)

2 unchanged sentences

Letters of Credit

As of November 30, 2025, the Company had letters of credit totaling $ 23.5 million.

As of February 28, 2026, the Company had letters of credit secured by cash totaling $ 16.5 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.

6 unchanged sentences

The loan is secured by all of the Company’s (but none of its subsidiaries’) assets.

As of November 30, 2025, there have been no draws on the facility.

As of February 28, 2026, approximately $ 61.9 million of letters of credit were issued under the revolving credit facility.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

Promissory Note

9 unchanged sentences

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

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Proceeds of the Loan under the Promissory Note were 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.

9 unchanged sentences

The Issuer intends to use the net proceeds from the offering to fund a portion of the construction and associated expenses of its 100 MW and 150 MW data centers, ELN-02 and ELN-03, respectively (the “Facilities”), at the Company’s 400MW Ellendale, North Dakota campus (“Polaris Forge 1”), repay the aggregate principal balance plus any accrued and unpaid interest under the SMBC Loan, fund debt service reserves, and pay transaction expenses.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

Also on November 20, 2025, the Issuer, APLD HPC Holdings 2 LLC (the direct parent of the Issuer) and the Subsidiary Guarantors entered into an indenture (the “Indenture”) with respect to the 2030 Notes with Wilmington Trust, National Association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”).

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(viii) engage in certain transactions with its affiliates;

and (ix) merge, consolidate or transfer or

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

sell all or substantially all of its assets.

and (ix) merge, consolidate or transfer or sell all or substantially all of its assets.

These covenants are subject to a number of important qualifications and exceptions as set forth in the Indenture.

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The Indenture also provides for customary events of default.

The Company will provide a customary completion guarantee with respect to each Project (as defined in the Indenture) related to the Facilities, which will require the Company to provide the Issuer funds as necessary to ensure the achievement of the applicable Commencement Date (as defined in the Indenture) under the respective datacenter lease in the event that the proceeds of the Notes and the available funds (including previous equity contributions from the Company) are insufficient to do so.

As of November 30, 2025, remaining unamortized deferred financing costs related to the issuance of the loan was $ 6.2 million.

The Company will provide a customary completion guarantee with respect to each Project (as defined in the Indenture) related to the Facilities, which will require the Company to provide the Issuer funds as necessary to ensure the achievement of the applicable Commencement Date (as defined in the Indenture) under the respective data center lease in the event that the proceeds of the 2030 Notes and the available funds (including previous equity contributions from the Company) are insufficient to do so.

As of February 28, 2026, remaining unamortized deferred financing costs related to the issuance of the loan was $ 6.4 million.

DevCo Facility

On December 18, 2025, APLD DevCo LLC (the “Borrower”), a subsidiary of the Company, entered into an ongoing credit arrangement with MEC (as defined above), for the purposes of funding the initial sourcing, planning, development and construction costs associated with a new data center project (the “DevCo Facility”) and other potential projects.

The DevCo Facility is evidenced by, among other documents, that certain Promissory Note (as amended, the “Promissory Note”) executed by the Borrower in favor of MEC.

The Promissory Note provides for a principal sum of (a) $ 45 million (the “First Draw”), which was drawn on the Initial Closing Date, plus (b) $ 40 million (the “Second Draw”) which was drawn on February 24, 2026, plus (c) $ 15 million (the “Third Draw,”, and, together with the First Draw and the Second Draw, collectively, the “Initial Loan” and each, individually, a “Draw”), with the Third Draw to be funded upon the Borrower’s request at any time after the Initial Closing Date subject to satisfaction of or waiver by MEC of certain conditions precedent on or prior to the Third Draw, plus (d) the principal sum of any Additional Loans (as defined below, and, together with the Initial Loan, the “Loan”), if applicable, made by MEC (at the mutual consent of the Borrower and MEC).

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

for one or more new projects (such rollovers, the “Rollover Loans”), or (b) increasing the size of the existing Loan by advancing new loans to the Borrower (such loans, the “Additional Loans”), in either case, for the purpose of financing development activities at new or existing data center projects at direct or indirect, wholly owned domestic subsidiaries of the Borrower, each of which shall become a guarantor with respect to such Additional Loans or Rollover Loans, as applicable, subject to the prior written approval of MEC (in its sole discretion) and the satisfaction of the conditions specified by MEC.

Each Draw is fully committed, but any Additional Loans or Rollover Loans made by MEC under the Promissory Note would be on an uncommitted, discretionary basis (with no specified maximum borrowing limit for any Additional Loans or Rollover Loans).

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”).

The Borrower 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, (a) with respect to the amount outstanding under the First Draw, such prepayment is accompanied by the payment of amounts sufficient to achieve a rate of return that equals 1.25 to 1.00;

provided that, such rate of return shall be reduced to (i) on or prior to the date that is four (4) months after the date on which the First Draw is funded, 1.06 :1.00 or (ii) after the date that is four (4) months after the date on which the First Draw is funded but prior to the date that is twelve (12) months after the date on which the First Draw is funded, 1.10 :1.00;

(b) with respect to the amount outstanding under the Second Draw, such prepayment is accompanied by the payment of amounts sufficient to achieve a rate of return that equals 1.25 to 1.00;

provided that, (x) if the Second Draw is funded within six (6) months of the date on which the First Draw is funded, and the prepayment occurs at any time thereafter, such rate of return shall be reduced to (i) on or prior to the date that is four (4) months after the date on which the Second Draw is funded, 1.06 :1.00 or (ii) after the date that is four (4) months after the date on which the Second Draw is funded but prior to the date that is twelve (12) months after the date on which the Second Draw is funded, 1.10 :1.00 and (y) if the Second Draw is funded more than within six (6) months after the date on which the First Draw is funded, and such prepayment occurs at any time thereafter, such rate of return shall be reduced to, after the date that is six (6) months after the date on which the First Draw is funded but prior to the date that is twelve (12) months after the date on which the First Draw is funded, 1.10 :1.00;

and (c) with respect to the amount outstanding under the Rollover Loans (as defined below) or any Additional Loans, such prepayment is accompanied by the payment of amounts sufficient to achieve a rate of return on capital as determined by mutual agreement of MEC and the Borrower.

The same return hurdles apply to repayment at maturity.

The Loan matures on the earliest of (i) the date of acceleration of the Loan, (ii) July 18, 2026, if the Initial Lease Execution (as defined therein) has not occurred on or before April 18, 2026, or (iii) December 18, 2027 (the “Maturity Date”).

As such, as of February 28, 2026, the Promissory Note is classified as current portion of debt on the unaudited condensed consolidated balance sheet.

Proceeds from the Loan will be used, in part, to (i) pay transaction expenses, and (ii) fund the purchase, development and improvement of, and the purchase of equipment for, the Company’s latest new project under development.

In connection with the Loan, (i) APLD Intermediate HoldCo LLC, a Delaware limited liability company, as direct parent of the Borrower (“Intermediate Holdings”), the Borrower, and the Borrower’s subsidiaries have entered into a guarantee and collateral agreement, as grantors thereunder, in favor of MEC (the “Guarantee and Collateral Agreement”), and (ii) the Company has entered into a parent guarantee in favor of MEC to guarantee the obligations of the Note Parties under the Promissory Note.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

Balance Sheet Components

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

November 30, 2025 May 31, 2025

February 28, 2026 May 31, 2025

Prepaid expenses and other current assets

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$ 478,705 $ 9,652

November 30, 2025 May 31, 2025

February 28, 2026 May 31, 2025

Long term lease incentive

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40,424 69,500

Deferred construction costs 12 45

Deferred lease costs 12,566 7,342

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Investments in other companies (2)

Investment in related party (3)

Other 15,633 4,977

Total Other assets $ 593,708 $ 179,353

(1) Balance as of November 30, 2025 consists of the fair value of derivative assets related to the preferred units and corresponding common units held by APLD HPC TopCo 2’s noncontrolling interest.

See Note 13 - Temporary Equity for further discussion.

(1) Balance as of February 28, 2026 consists of the fair value of derivative assets related to the preferred units and corresponding common units held by APLD HPC TopCo 2’s noncontrolling interest.

See Note 13 - Temporary Equity and Note 8 - Derivative Assets for further discussion.

(2) Includes $ 20.9 million of warrants and $ 4.4 million of common shares issued by B&W to the Company in association with the Company’s investment in B&W.

See further discussion of the transaction in Note 8 - Derivative Assets .

The balance also includes a $ 15.0 million investment by the Company in Corintis SA (“Corintis”) in exchange for Series A1 preferred shares, approximating 6 % of Corintis’s outstanding equity.

The Series A1 preferred shares are convertible preferred shares with no redemption rights.

The investment in Corintis will be accounted for at cost under ASC 321 as it is an equity security without a readily determinable fair value and will be evaluated quarterly for impairment indicators.

There were no impairment indicators during the quarter.

(3) Includes a $ 2.0 million investment in Base Electron.

See further discussion of the transaction in Note 5 - Related Party Transactions.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

(2) Balance as of November 30, 2025 includes two investments that occurred during the three months ended November 30, 2025:

Babcock & Wilcox Enterprises, Inc.

(“B&W”), a publicly traded company, and Corintis SA (“Corintis”), a private company.

On November 4, 2025, the Company and B&W entered into an agreement under which the Company contributed $ 2.0 million to B&W in exchange of 500,000 shares of B&W’s common stock and a warrant to purchase 2.6 million shares of common stock with an exercise price of $ 4.11 .

The warrant was determined to be a derivative asset and was required to be measured at fair value at issuance.

It will be remeasured at fair value at each reporting date with changes in fair value reported on the unaudited condensed consolidated statement of operations.

To allocate the contribution between the common stock and the warrant, the Company determined the fair value of each and utilized the relative fair value allocation method.

During the three months ended November 30, 2025, the Company recorded $ 2.8 million gain on change in fair value of investment and $ 13.1 million gain on change in fair value of derivatives on the unaudited condensed consolidated statement of operations.

On November 28, 2025, the Company invested in Corintis for approximately $ 15.0 million in exchange for Series A1 preferred shares.

The investment in Corintis will be carried at cost as it is an equity security without a readily determinable fair value and evaluated annually for impairment indicators.

November 30, 2025 May 31, 2025

For the Three and Nine Months Ended February 28, 2026

February 28, 2026 May 31, 2025

Accrued liabilities

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$ 376,985 $ 30,121

November 30, 2025 May 31, 2025

February 28, 2026 May 31, 2025

Other current liabilities

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Total Other current liabilities $ 65,518 $ 19,431

Derivative Assets

APLD HPC TopCo 2’s Noncontrolling Interest

The preferred units and corresponding common units associated with APLD HPC TopCo 2’s noncontrolling interest were determined to have embedded derivative features, the Redemption features and the Contingent Dividend Rate Increase feature, requiring bifurcation and remeasurement at fair value at each reporting date, with the changes in fair value recorded through earnings.

The Redemption features are inclusive of the Investor put option upon a Sale, APLD Holdings call option, and the Distribution Redemptions (all as defined within the A&R UPA).

Due to these redemption rights, at each balance sheet date, the Company is required to adjust the carrying value of the derivatives to fair value and record any changes in fair value within earnings.

The Company engaged a third party valuation specialist in determining the value of the embedded derivatives using a binomial lattice model, which includes Level 3 unobservable inputs.

The key inputs used were the estimated credit spread of the associated preferred stock and corresponding common units, volatility, and risk-free rate of the derivative assets:

October 6, 2025 December 9, 2025 February 28, 2026

Expected maturity date October 6, 2032 October 6, 2032 October 6, 2032

Credit spread (annual) 9.00 % 9.50 % 9.62 %

Yield volatility 35.00 % 35.00 % 35.00 %

Put right/trigger event de minimus de minimus de minimus

Risk-free rate USD Yield Curve USD Yield Curve USD Yield Curve

Number of time-steps 100 100 100

As of February 28, 2026, the derivative assets were fair valued at $ 98.8 million.

During the three and nine months ended February 28, 2026, the Company recorded a gain on change in fair value of derivatives of $ 3.3 million for each of the periods on the unaudited condensed consolidated statement of operations.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

On November 4, 2025, the Company and B&W entered into an agreement under which the Company contributed $ 2.0 million to B&W in exchange for 500,000 shares of B&W’s common stock and a warrant to purchase 2.6 million shares of B&W’s common stock with an exercise price of $ 4.11 (the “Initial Warrant”).

Additionally, under the agreement, to incentivize the Company to execute a definitive agreement with B&W related to B&W designing and installing natural gas technology that will provide one gigawatt of efficient energy for an APLD AI data center, B&W agreed to issue an additional warrant to purchase 7,860,000 shares of common stock for $ 4.11 per share (the “Additional Warrant”) to the Company upon execution of such a definitive agreement.

During the quarter ended February 28, 2026, a definitive agreement was executed between Base Electron and B&W, with the Company as the guarantor.

See Note 5 - Related Party Transactions.

The warrants were determined to be derivative assets and were required to be measured at fair value at issuance under ASC 815.

They will be remeasured at fair value at each reporting date with changes in fair value reported on the unaudited condensed consolidated statement of operations.

To allocate the initial contribution between the common stock and the warrants, the Company determined the fair value of each and utilized the relative fair value allocation method.

The B&W warrants are 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 B&W Warrants are based on the following significant inputs:

November 4, 2025 February 28, 2026

Time to expiry 7 years 6.68 years

Stock price $ 3.74 $ 8.86

Volatility 115.0 % 107.5 %

Risk-free rate 3.84 % 3.65 %

Dividend yield — % — %

During the three and nine months ended February 28, 2026, the Company recorded gains of $ 6.1 million and $ 19.2 million, related to the change in fair value of derivatives, respectively, on the unaudited condensed consolidated statement of operations.

Variable Interest Entity

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On February 11, 2025, APLD HPC 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

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

On October 6, 2025, TopCo 2, completed the initial closing under its A&R UPA, selling 112,500 preferred units for $ 112.5 million and issuing 75,000 common units representing 7.5 % of its fully diluted common equity.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Company, and MIP HPC Holdings, LLC (formerly, MIP VI HPC Holdings, LLC) entered into an Amended and Restated Unit Purchase Agreement (the “A&R UPA”).

In addition, pursuant to the A&R UPA, on October 6, 2025, the Company issued warrants to purchase an aggregate of 2.4 million shares of the Company’s common stock as described in Note 11 - Warrants .

For the Three and Nine Months Ended February 28, 2026

pursuant to the A&R UPA, on October 6, 2025, the Company issued warrants to purchase an aggregate of 2.4 million shares of the Company’s common stock as described in Note 11 - Warrants .

On November 25, 2025, TopCo 2 completed a second closing under its A&R UPA, selling 450,000 preferred units for $ 450.0 million.

On December 9, 2025, TopCo 2 completed a third closing under its A&R UPA, selling 337,500 preferred units for $ 337.5 million and issuing an additional 27,778 common units.

This brought the total amount funded to date under the A&R UPA to $ 900.0 million as of quarter-end and MIP HPC Holdings, LLC holdings to 10 % of TopCo 2’s fully diluted common equity.

The issuance of the preferred units at closing resulted in a redeemable noncontrolling interest - see Note 13 - Temporary Equity for further discussion.

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The creditors of TopCo2 have recourse to the Company’s assets and general credits.

The following table presents the assets and liabilities held by TopCo 2 as of November 30, 2025, which are included in the unaudited condensed consolidated balance sheets (in thousands):

November 30, 2025

The following table presents the assets and liabilities held by TopCo 2 as of February 28, 2026, which are included in the unaudited condensed consolidated balance sheets (in thousands):

February 28, 2026

Cash and cash equivalents $ 1,364,118

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Third-party equity ownership interests in APLD HPC TopCo 2 LLC represents a noncontrolling interest and is presented as temporary equity in the unaudited condensed consolidated balance sheets separate from the Company’s stockholders’ equity.

The amount of net income attributable to noncontrolling interests is disclosed in the unaudited condensed consolidated statement of operations.

The amount of net income (loss) attributable to noncontrolling interests is disclosed in the unaudited condensed consolidated statement of operations.

Stockholders' Equity

5 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

Increase In Authorized Shares

3 unchanged sentences

Settlement of Prepaid Forward Transaction

On November 3, 2025, the Company’s Prepaid Forward Transaction associated with the Convertible Notes matured and the Company received 7,165,300 shares of common stock which are now held in treasury stock as of November 30, 2025.

A summary of warrant activity for the six months ended November 30, 2025 is presented below:

A summary of warrant activity for the nine months ended February 28, 2026 is presented below:

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

4 unchanged sentences

Exercised ( 800,300 ) 7.83 —

Outstanding at November 30, 2025

Outstanding at February 28, 2026

28,091,029 $ 8.61 8.11

2 unchanged sentences

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 November 30, 2025, all of the AI Warrants were outstanding.

As of February 28, 2026, all of the AI Warrants were outstanding.

Macquarie Warrants

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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 November 30, 2025.

The Macquarie Warrants survived the termination of the Macquarie Promissory Note and remain outstanding as of February 28, 2026.

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 upon payment of the applicable exercise price in cash or through cashless exercise for a period of five years from the Initial Exercise Date.

During the quarter ended November 30, 2025, 800,000 of the STB Warrants were exercised for $ 6.3 million.

As of February 28, 2026, 800,000 of the STB Warrants have been exercised for $ 6.3 million.

CoreWeave Warrants

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

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 November 30, 2025, 300 warrant shares were exercised.

As of February 28, 2026, 300 warrant shares have been exercised through cashless exercise.

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.

26 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

Upon stockholder approval of the 2024 Plan, the 2022 Plans (as defined below) were terminated;

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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 November 30, 2025, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 9.3 million under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award.

As of November 30, 2025, there are approximately 16.0 million shares of common stock available for issuance under the 2024 Plan.

As of February 28, 2026, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 18.9 million under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award.

As of February 28, 2026, there are approximately 6.6 million shares of common stock available for issuance under the 2024 Plan.

During the three months ended February 28, 2026, under the 2024 Plan, the Company issued 100,000 shares to certain consultants as settlement for work performed.

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):

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Three Months Ended Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Cost of revenue $ 1,089 $ 502 $ 2,724 $ 1,990

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Restricted Stock Awards

As of May 31, 2025 and November 30, 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 six months ended November 30, 2025.

As of November 30, 2025, total remaining expense to be recognized related to these awards was $ 0.7 million and the weighted average remaining recognition period for the unvested awards was 1.4 years.

The following is a summary of the activity and balances for unvested restricted stock awards granted during the nine months ended February 28, 2026:

Number of Shares Weighted Average Grant Date Fair Value Per Share

Outstanding as of May 31, 2025

271,444 $ 3.55

Vested ( 15,397 ) 4.33

Forfeited — —

Outstanding as of February 28, 2026

256,047 $ 3.50

As of February 28, 2026, total remaining expense to be recognized related to these awards was $ 0.6 million and the weighted average remaining recognition period for the unvested awards was 1.2 years.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

Restricted Stock Units

The following is a summary of the activity and balances for unvested restricted stock units granted during the six months ended November 30, 2025:

The following is a summary of the activity and balances for unvested restricted stock units granted during the nine months ended February 28, 2026:

Number of Shares Weighted Average Grant Date Fair Value Per Share

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Forfeited ( 253,713 ) 8.76

Outstanding as of November 30, 2025

Outstanding as of February 28, 2026

8,601,152 $ 17.60

As of November 30, 2025, total remaining expense to be recognized related to these awards was $ 66.1 million and the weighted average remaining recognition period for the unvested awards was 2.0 years.

As of February 28, 2026, total remaining expense to be recognized related to these awards was $ 134.4 million and the weighted average remaining recognition period for the unvested awards was 2.7 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, 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.

Performance stock units (“PSUs”) represent a right to receive a certain number of shares of common stock based on the achievement of performance goals and continued employment during the vesting period (provided that the PSUs may remain outstanding and eligible to vest following certain terminations during the vesting period).

PSUs granted by the Company vest depending on the achievement of Company and individual performance financial, operational and/or market-price driven measures, which must occur on or prior to the deadline set forth in each applicable PSU aware.

The fair value of PSUs, except PSUs for which vesting is based on the market price, is based on the closing price on the date of grant.

The compensation expense related to these PSUs is recognized over the vesting period when the achievement of the performance conditions becomes probable.

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.

The following is a summary of the activity and balances for unvested performance stock units granted during the six months ended November 30, 2025:

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

PSUs that Vest Based on Market Price

On January 6, 2026, the Company granted the CEO 4.5 million PSUs with market-price based and service-based vesting conditions.

The awards vest based on the achievement of certain stock price targets as well as his continued employment with the Company (except that continued employment is not required if his employment is terminated by the Company without “cause,” he resigns for “good reason,” he dies or incurs a “disability,” or the Company elects not to renew his employment term).

The total grant date fair value of the awards was determined to be $ 122.1 million, with each tranche of the awards representing approximately $ 42.7 million, $ 40.6 million, and $ 38.8 million of the total expense, respectively.

The fair value of the PSUs was calculated on the grant date using a Monte Carlo simulation model.

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

January 6, 2026

Valuation date stock price $ 30.26

Simulation term 5.0 years

Expected volatility 100.62 %

Risk free rate 3.69 %

Dividend yield — %

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

The following is a summary of the activity and balances for unvested performance stock units granted during the nine months ended February 28, 2026:

Number of Shares Weighted Average Grant Date Fair Value Per Share

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Forfeited — —

Outstanding as of November 30, 2025

Outstanding as of February 28, 2026

14,692,500 $ 18.22

As of November 30, 2025, total remaining expense to be recognized related to these awards was $ 34.3 million and the weighted average remaining recognition period for the unvested awards was 1.8 years.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

As of February 28, 2026, total remaining expense to be recognized related to these awards was $ 202.9 million and the weighted average remaining recognition period for the unvested awards was 2.7 years.

Temporary Equity

Preferred Stock

The following is a summary of the activity and balances for preferred stock during the three and six months ended November 30, 2024 (in thousands, other than share data):

The following is a summary of the activity and balances for preferred stock during the three and nine months ended February 28, 2025 (in thousands, other than share data):

Series E Redeemable Preferred Stock

1 unchanged sentence

Series E-1 Redeemable Preferred Stock

Outstanding as of August 31, 2024

301,673 $ 6,932 53,191 $ 48,350 — $ —

Outstanding as of November 30, 2024 301,673 $ 6,932 43,000 $ 43,000 6,359 $ 5,850

Issuances, net of costs

1 unchanged sentence

— — ( 43,000 ) ( 43,000 ) — —

Outstanding as of November 30, 2024

Outstanding as of February 28, 2025

301,673 $ 6,932 — $ — 39,763 $ 36,287

7 unchanged sentences

— — ( 53,191 ) ( 48,350 ) — —

Outstanding as of November 30, 2024

Outstanding as of February 28, 2025

301,673 $ 6,932 — $ — 39,763 $ 36,287

The following is a summary of the activity and balances for preferred stock during the three and six months ended November 30, 2025 (in thousands, other than share data):

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

The following is a summary of the activity and balances for preferred stock during the three and nine months ended February 28, 2026 (in thousands, other than share data):

Series E Redeemable Preferred Stock

1 unchanged sentence

Series G Convertible Preferred Stock

Outstanding as of August 31, 2025

301,673 $ 6,932 62,260 $ 56,796 — $ —

Outstanding as of November 30, 2025 281,673 $ 6,432 62,260 $ 56,796 43,250 $ 41,990

Issuances, net of costs

2 unchanged sentences

— — ( 71 ) ( 68 ) — —

Outstanding as of November 30, 2025 281,673 $ 6,432 62,260 $ 56,796 43,250 $ 41,990

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Outstanding as of February 28, 2026 281,673 $ 6,432 62,189 $ 56,728 — $ —

Series E Redeemable Preferred Stock

7 unchanged sentences

( 20,000 ) ( 500 ) ( 296 ) ( 293 ) — —

Outstanding as of November 30, 2025 281,673 $ 6,432 62,260 $ 56,796 43,250 $ 41,990

Outstanding as of February 28, 2026 281,673 $ 6,432 62,189 $ 56,728 — $ —

Series E Redeemable Preferred Stock

6 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 six months ended November 30, 2025, the Company declared and paid approximately $ 170,000 and $ 339,000 , respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statement of operations while during the three and six months ended November 30, 2024, approximately $ 226,000 and $ 270,000 , respectively, of dividends were declared and paid.

During the three and nine months ended February 28, 2026, the Company declared and paid approximately $ 158,000 and $ 498,000 , respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statement of operations while during the three and nine months ended February 28, 2025, approximately $ 170,000 and $ 440,000 , respectively, of dividends were declared and paid.

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

5 unchanged sentences

7.00 % on or after the first anniversary but prior to the second anniversary of the Original Issuance Date;

5.00 % on or after the second anniversary but prior to the third anniversary of the Original Issuance Date:

5.00 % on or after the second anniversary but

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

prior to the third anniversary of the Original Issuance Date:

and 0.00 % on or after the third anniversary of the Original Issuance Date.

3 unchanged sentences

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.

During the three and six months ended November 30, 2025, 20,000 shares of Series E Preferred Stock were redeemed.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

During the nine months ended February 28, 2026, 20,000 shares of Series E Preferred Stock were redeemed.

Series E-1 Redeemable Preferred Stock

6 unchanged sentences

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 six months ended November 30, 2025, the Company declared and paid approximately $ 1.4 million and $ 2.8 million, respectively of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations while during the three and six months ended November 30, 2024, approximately $ 48,000 of dividends were declared and paid.

During the three and nine months ended February 28, 2026, the Company declared and paid approximately $ 1.4 million and $ 4.2 million, respectively of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations while during the three and nine months ended February 28, 2025, approximately $ 370,000 and $ 418,000 , respectively, of dividends were declared and paid.

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.

10 unchanged sentences

Holders may not redeem any shares of Series E-1 Preferred Stock for common stock prior to the first anniversary of the Original Issuance Date.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

The Company may also redeem shares of the Series E-1 Preferred Stock after the second anniversary of the Original Issuance Date, with a minimum notice of 10 days, at a redemption price equal to the Series E-1 Stated Value plus any accrued but unpaid 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 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.

During the six months ended November 30, 2025, 225 of shares were redeemed.

During the nine months ended February 28, 2026, 296 shares of Series E-1 Preferred Stock 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

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

“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 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).

10 unchanged sentences

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.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

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.

2 unchanged sentences

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

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Series G Preferred Stock that have been or will be converted will be retired and resume the status of authorized but unissued shares.

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.

On September 11, 2025, the Company entered into the second amendment (the “Second Amendment”) to the PEPA, as amended by the First Amendment, dated August 14, 2025 to, among other things, increase the aggregate commitment amount of the shares of Series G Convertible Preferred Stock from $ 300 million to $ 450 million.

14 unchanged sentences

The Fifth CoD Amendment amended the Certificate of Designations to, among other things, (i) increase the authorized shares of Series G Preferred Stock from 204,000 shares to 1,030,000 shares, and (ii) increase the limit below which the Floor Price (as defined in Section 1.5(c)(ii) of the Certificate of Designations) may not be reduced from $ 4.33 to $ 4.48 .

In addition, under the Fifth CoD Amendment, the Company’s Corporation’s Board of Directors may increase or decrease the applicable Floor Price with respect to any put, at its sole discretion.

As Series G Preferred Stock may be reissued, during the three and six months ended November 30, 2025, the Company issued and sold 424,050 and 604,050 shares of Series G Preferred Stock, respectively, for gross proceeds of $ 415.0 million and $ 590.0 million, respectively.

During the three and six months ended November 30, 2025, 380,800 and 638,800 shares of Series G Preferred Stock, respectively, were converted into 15.4 million and 43.6 million shares of the Company’s common stock, respectively.

As of November 30, 2025, 43,250 shares of Series G Preferred Stock were issued and outstanding.

Redeemable Noncontrolling Interest

APLD HPC TopCo 2 LLC

As discussed within Note 9 - Variable Interest Entity above, APLD HPC TopCo 2 LLC (“TopCo 2”) completed two closings under its A&R UPA during the quarter ended November 30, 2025, issuing 562,500 preferred units and 75,000

In addition, under the Fifth CoD Amendment, the Company’s Board of Directors may increase or decrease the applicable Floor Price with respect to any put, at its sole discretion.

As Series G Preferred Stock may be reissued, during the three and nine months ended February 28, 2026, the Company issued and sold 154,500 and 758,550 shares of Series G Preferred Stock, respectively, for gross proceeds of $ 150.0 million and $ 740.0 million, respectively.

During the three and nine months ended February 28, 2026, 197,750 and 836,550 shares

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

corresponding common units for $ 562.5 million to MIP HPC Holdings, LLC, which resulted in a redeemable noncontrolling interest.

For the Three and Nine Months Ended February 28, 2026

of Series G Preferred Stock, respectively, were converted into 5.6 million and 49.2 million shares of the Company’s common stock, respectively.

As of February 28, 2026, no shares of Series G Preferred Stock were issued and outstanding.

Redeemable Noncontrolling Interest

APLD HPC TopCo 2 LLC

As discussed within Note 9 - Variable Interest Entity above, APLD HPC TopCo 2 LLC (“TopCo 2”) completed three closings under its A&R UPA as of February 28, 2026, issuing 900,000 preferred units and 102,778 corresponding common units for $ 900.0 million to MIP HPC Holdings, LLC, which resulted in a redeemable noncontrolling interest.

The preferred units accrue dividends at a rate of 12.75 % per annum, which accrue daily and compound semi-annually, and which, if not redeemed by then, will increase by 87.5 basis points on each of October 7, 2030 and October 7, 2031, and by 200 basis points on October 7, 2035 and each one-year anniversary thereof, up to a maximum rate of 16.75 %.

15 unchanged sentences

The Redemption features are inclusive of the Investor put option upon a Sale, APLD Holdings call option, and the Distribution Redemptions (all as defined within the A&R UPA).

The Company engaged a third party valuation specialist in determining the value of the embedded derivatives using a binomial lattice model, which includes Level 3 unobservable inputs.

The key inputs used were the estimated credit spread of the associated preferred stock and corresponding common units, volatility, and risk-free rate of the derivative assets.

As the noncontrolling interest has embedded features that require bifurcation, the fair value at issuance was allocated between the components.

As such, the net proceeds were first allocated to the derivatives at their

The Company engaged a third party valuation specialist in determining the value of the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

embedded derivatives using a binomial lattice model, which includes Level 3 unobservable inputs.

See Note 8 - Derivative Assets for further details.

As the noncontrolling interest has embedded features that require bifurcation, the fair value at issuance was allocated between the components.

As such, the net proceeds were first allocated to the derivatives at their fair value.

The remainder of the proceeds were then allocated to the warrants and noncontrolling interests based on their relative fair values.

As of November 30, 2025, the derivative assets were fair valued at $ 55.7 million.

The balance sheets and operating activities of TopCo 2 are included in the Company's unaudited condensed consolidated financial statements.

4 unchanged sentences

The Company will adjust noncontrolling interest for the attribution of net income (loss) and preferred dividends of TopCo 2 to the noncontrolling interest holder.

Net loss attributable to MIP HPC Holdings, LLC was $ 0.1 million for the three months ended November 30, 2025.

Net loss attributable to MIP HPC Holdings, LLC was $ 28.7 million and $ 31.9 million for the three and nine months ended February 28, 2026, respectively.

The proportionate share of net income was accounted for as a reduction in deriving net income attributable to common stock in the Company's unaudited condensed consolidated statements of operations.

The noncontrolling interest as measured at fair value was $ 517.0 million at November 30, 2025.

The carrying value of the noncontrolling interest was $ 923.1 million as of February 28, 2026.

There was no noncontrolling interest at May 31, 2025.

The change in noncontrolling interest consists of $ 513.9 million of contributions from noncontrolling interest, net of costs, $ 3.1 million of preferred stock dividends paid in-kind, and $ 0.1 million in current year net loss attributable to non-controlling interest.

The change in noncontrolling interest consists of $ 891.0 million of contributions from noncontrolling interest, net of costs, $ 32.0 million of preferred stock dividends paid in-kind, and $ 0.1 million in current year net income attributable to non-controlling interest.

Lessor Accounting

13 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

option or the lessee has the sole ability to exercise the option.

9 unchanged sentences

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

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Three Months Ended Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Operating lease cost:

12 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

The following table represents the Company’s future minimum lease payments as of November 30, 2025:

For the Three and Nine Months Ended February 28, 2026

The following table represents the Company’s future minimum lease payments as of February 28, 2026:

Operating Leases Finance Leases Total

1 unchanged sentence

FY27 22,163 51,069 73,232

FY28 22,650 10,968 33,618

FY29 17,152 — 17,152

FY30 3,536 — 3,536

Thereafter — — —

5 unchanged sentences

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

Six Months Ended

November 30, 2025 November 30, 2024

Nine Months Ended

February 28, 2026 February 28, 2025

Weighted-average years remaining (in years):

6 unchanged sentences

Energy Contracts

As of November 30, 2025, the Company had a minimum commitment of approximately $ 33.1 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 1.2 years.

As of February 28, 2026, the Company had a minimum commitment of approximately $ 26.2 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 0.9 years.

Construction Contracts

3 unchanged sentences

The Company generally has the right to cancel these open purchase orders prior to delivery or terminate the contracts without cause.

Claims and Litigation

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

B&W Guarantee

The Company is party to a Guarantee (the “Guarantee”) in favor of The Babcock & Wilcox Company (“B&W”), pursuant to which it has agreed to unconditionally and irrevocably guarantee the full and timely performance by Base Electron, Inc., a Nevada corporation (“Base Electron”), of its obligations under a Design-Build Agreement, dated February 26, 2026, by and between Base Electron and B&W (the “Design-Build Agreement”).

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

For the Three and Nine Months Ended February 28, 2026

Claims and Litigation

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

Securities Lawsuit

22 unchanged sentences

The plaintiff can seek leave to file an amended complaint but to date has not done so.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

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

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 November 30, 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 February 28, 2026, 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

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 and Six Months Ended November 30, 2025

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

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

the Data Center Hosting Business, Cloud Services Business, and the 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.

3 unchanged sentences

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 Company does not allocate interest expense, net, gain on change in fair value of derivative, gain on change in fair value of investment, loss on conversion of debt, 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 "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 November 30, 2025 and November 30, 2024 (in thousands):

Three Months Ended November 30, 2025 Six Months Ended November 30, 2025

The following tables present segment information, including revenue by segment and segment profit (loss) for the three months ended February 28, 2026 and February 28, 2025 (in thousands):

Three Months Ended February 28, 2026

Data Center Hosting Business

HPC Hosting Business Data Center Hosting Business HPC Hosting Business

Cloud Services Business HPC Hosting Business

Revenue $ 37,542 $ 18,087 $ 71,008

Related party revenue — — — —

Total segment revenue 41,597 84,992 79,517 111,288

Costs and expenses:

2 unchanged sentences

688 4,242 9,885

Loss on classification of held for sale — 59,650 —

Loss on abandonment of assets

— — 512 1,239

Total costs and expenses 23,683 70,281 53,443

3 unchanged sentences

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Three Months Ended November 30, 2024 Six Months Ended November 30, 2024

For the Three and Nine Months Ended February 28, 2026

Three Months Ended February 28, 2025

Data Center Hosting Business

HPC Hosting Business Data Center Hosting Business HPC Hosting Business

Cloud Services Business

HPC Hosting Business

Revenue $ 35,167 $ 17,754 $ —

Costs and expenses:

Cost of revenues 25,664 23,342 45

Selling, general and administrative (1)

723 4,720 177

Total costs and expenses 26,387 28,062 222

Segment profit (loss) $ 8,780 $ ( 10,308 ) $ ( 222 )

(1) Does not include selling, general and administrative expense that is not allocated to reportable segments, such as certain amounts of stock-based compensation, personnel expenses, and professional service expenses.

The following tables present segment information, including revenue by segment and segment profit (loss) for the nine months ended February 28, 2026 and February 28, 2025 (in thousands):

Nine Months Ended February 28, 2026

Data Center Hosting Business

Cloud Services Business

HPC Hosting Business

Revenue $ 117,059 $ 53,207 $ 182,296

Costs and expenses:

Cost of revenues 78,554 12,690 144,189

Selling, general and administrative (1)

2,138 5,188 23,921

Loss on classification of held for sale — 59,650 —

Loss on abandonment of assets

515 598 1,240

Total costs and expenses 81,207 78,126 169,350

Segment profit (loss) $ 35,852 $ ( 24,919 ) $ 12,946

Nine Months Ended February 28, 2025

Data Center Hosting Business

Cloud Services Business

HPC Hosting Business

Revenue $ 104,254 $ 71,313 $ —

Related party revenue 1,926 — —

5 unchanged sentences

Gain on classification of held for sale ( 24,616 ) — —

192 — ( 24,616 ) —

Loss on abandonment of assets

2 unchanged sentences

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

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

The following tables present the reconciliation to net loss before income tax expense (in thousands):

Three Months Ended

Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Segment profit

1 unchanged sentence

$ 13,859 $ 8,780 $ 35,852 $ 57,181

Cloud Services Business ( 52,194 ) ( 10,308 ) ( 24,919 ) ( 31,928 )

HPC Hosting Business 17,565 ( 222 ) 12,946 ( 9,022 )

Total segment profit

13,363 6,705 17,375 39,605

( 44,320 ) ( 19,510 ) ( 70,624 ) ( 27,116 )

Operating (loss) income

Total segment (loss) profit

( 20,770 ) ( 1,750 ) 23,879 16,231

Interest expense, net 11,484 2,929 15,431 5,888

Gain on change in fair value of derivative

( 64,897 ) ( 17,193 ) ( 135,522 ) ( 44,305 )

Operating loss ( 85,667 ) ( 18,943 ) ( 111,643 ) ( 28,074 )

Interest (income) expense, net ( 2,387 ) 8,897 18,883 23,687

Gain on change in fair value of derivatives ( 9,417 ) — ( 22,543 ) —

Gain on change in fair value of investment

2 unchanged sentences

Loss on change in fair value of debt — — — 85,439

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

$ ( 26,548 ) $ ( 128,362 ) $ ( 52,787 ) $ ( 112,450 )

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

Loss on extinguishment of debt — 1,177 — 1,177

Net loss before income tax expense $ ( 70,558 ) $ ( 35,438 ) $ ( 101,911 ) $ ( 178,410 )

(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 Six Months Ended November 30, 2025

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

Three Months Ended Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Three Months Ended Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Depreciation and amortization:

1 unchanged sentence

$ 3,363 $ 3,333 $ 10,101 $ 9,990

Cloud Services Business 2,289 14,403 2,289 66,355

HPC Hosting Business

5 unchanged sentences

(2) Includes amortization of the finance lease right-of-use assets.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

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

November 30, 2025 May 31, 2025

February 28, 2026 May 31, 2025

Data Center Hosting Business

$ 119,634 $ 141,764

Cloud Services Business 255,986 304,466

HPC Hosting Business

1 unchanged sentence

Total segment assets 5,816,925 1,809,571

Cloud Services Business (Discontinued operations)

429,893 60,519

354,395 60,519

Total assets $ 6,246,818 $ 1,870,090

3 unchanged sentences

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 and Six Months Ended November 30, 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 Six Months Ended

November 30, 2025 November 30, 2024 November 30, 2025 November 30, 2024

Three Months Ended Nine Months Ended

February 28, 2026 February 28, 2025 February 28, 2026 February 28, 2025

Net loss $ ( 70,556 ) $ ( 35,555 ) $ ( 101,932 ) $ ( 178,528 )

Net loss attributable to noncontrolling interest ( 3,061 ) — ( 3,061 ) —

Net loss attributable to redeemable noncontrolling interest ( 28,747 ) — ( 31,910 ) —

Preferred dividends ( 1,558 ) ( 540 ) ( 4,705 ) ( 1,213 )

Net loss attributable to common stockholders $ ( 100,861 ) $ ( 36,095 ) $ ( 138,547 ) $ ( 179,741 )

Net (loss) income attributable to common stockholders:

Continuing operations $ ( 31,195 ) $ ( 128,992 ) $ ( 59,017 ) $ ( 113,124 )

Discontinued operations 12,113 ( 10,363 ) 21,434 ( 30,522 )

Net loss $ ( 19,082 ) $ ( 139,355 ) $ ( 37,583 ) $ ( 143,646 )

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

Continuing operations $ ( 0.11 ) $ ( 0.61 ) $ ( 0.22 ) $ ( 0.63 )

Discontinued operations 0.04 ( 0.05 ) 0.08 ( 0.17 )

Basic and diluted net loss per share $ ( 0.07 ) $ ( 0.66 ) $ ( 0.14 ) $ ( 0.80 )

Basic and diluted net loss per share attributable to common stockholders $ ( 0.36 ) $ ( 0.16 ) $ ( 0.51 ) $ ( 0.93 )

Basic and diluted weighted average number of shares outstanding 281,982,553 222,454,578 271,670,830 193,405,721

As of November 30, 2025 and November 30, 2024, the Company had approximately 14.9 million and 7.6 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 November 30, 2025 and November 30, 2024, the Company had approximately 4.2 million and 7.5 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.

Additionally, the Company had approximately 28.1 million and 6.3 million warrants outstanding as of November 30, 2025 and November 30, 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 November 30, 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

Additional Issuance under the A&R UPA

On December 9, 2025, the Subsidiary Issuer sold to the Purchaser an additional 337,500 Preferred Units in the Subsidiary Issuer at a price per Preferred Unit of $ 1,000 , for an aggregate purchase price of $ 337.5 million, bringing the total amount funded to date under the A&R UPA to $ 900.0 million.

DevCo Facility

On December 18, 2025 (the “Closing Date”), APLD DevCo LLC (the “Borrower”), a Delaware limited liability company and a subsidiary of the Company, entered into an ongoing credit arrangement with Macquarie Equipment Capital, Inc., a

As of February 28, 2026 and February 28, 2025, the Company had approximately 23.5 million and 10.9 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 February 28, 2026 and February 28, 2025, the Company had approximately 2.5 million and 5.9 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.

Additionally, the Company had approximately 28.1 million and 4.0 million warrants outstanding as of February 28, 2026 and February 28, 2025, 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 February 28, 2026, approximately 46.1 million shares were excluded from the calculations of earnings per share because the effect of those shares would be antidilutive.

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Delaware corporation (the “Lender”), for the purposes of funding the initial sourcing, planning, development and construction costs associated with a new data center project (the “DevCo Facility”) and other potential projects.

The DevCo Facility is evidenced by, among other documents, a promissory note (the “Promissory Note”) executed by the Borrower in favor of the Lender.

The Promissory Note provides for a principal sum of (a) $ 45 million (the “First Draw”), which was drawn on the Closing Date, plus (b) $ 55 million (the “Second Draw,” and, together with the First Draw, each, a “Draw” and, collectively, the “Initial Loan”), to be funded upon the Borrower’s request at any time after the Closing Date subject to satisfaction of or waiver by the Lender of certain conditions precedent on or prior to the Second Draw, plus (c) the principal sum of any Additional Loans (as defined below, and, together with the Initial Loan, the “Loan”), if applicable, made by the Lender (at the mutual consent of the Borrower and the Lender).

In addition, the Promissory Note provides for, upon request of the Borrower occurring prior to the Maturity Date (as defined below), (a) rolling over of the outstanding principal balance of the Loan from time to time into one or more loans for one or more new projects (such rollovers, the “Rollover Loans”), or (b) increasing the size of the existing Loan by advancing new loans to the Borrower (such loans, the “Additional Loans”), in either case, for the purpose of financing development activities at new or existing data center projects at direct or indirect, wholly owned domestic subsidiaries of the Borrower, each of which shall become a guarantor with respect to such Additional Loans or Rollover Loans, as applicable, subject to the prior written approval of the Lender (in its sole discretion) and the satisfaction of the conditions specified by the Lender.

The First Draw is fully committed, but the Second Draw and any Additional Loans or Rollover Loans made by the Lender under the Promissory Note would be on an uncommitted, discretionary basis (with no specified maximum borrowing limit for any Additional Loans or Rollover Loans).

In connection with the Loan, (i) the Borrower, APLD Intermediate HoldCo LLC (“Intermediate Holdings”), a Delaware limited liability company, as parent of the Borrower, and the Borrower’s subsidiaries have entered into a guarantee and collateral agreement, as grantors thereunder, in favor of the Lender (the “Guarantee and Collateral Agreement”).

Cloud Services Business Update

On December 30, 2025, the Company announced it had entered into a non-binding term sheet for a proposed business combination of the Cloud Services Business, Applied Digital Cloud, with EKSO Bionics Holdings, Inc.

EKSO) (“EKSO”), which, once closed, will go forward as ChronoScale Corporation, an accelerated compute platform purpose-built to support AI workloads (the “Proposed Transaction”).

Upon closing of the Proposed Transaction, the Company expects to initially own over 80 % of the combined company, which will operate under the name ChronoScale.

The Applied Digital Cloud and EKSO businesses would continue to operate upon consummation of the Proposed Transaction.

The Proposed Transaction is subject to execution of final binding documents, completion of customary due diligence, customary regulatory and shareholder approvals, and satisfaction of closing conditions.

For the Three and Nine Months Ended February 28, 2026

Subsequent Events

2031 Senior Secured Notes

On March 10, 2026, our subsidiary APLD ComputeCo 2 LLC, closed a $ 2.15 billion offering (the “2031 Notes Offering”) of 6.750 % senior secured notes due 2031 (the “2031 Notes”) at an issue price of 98.000 %.

The 2031 Notes were issued and sold in a private offering to persons reasonably believed to be qualified institutional buyers in reliance on Rule 144A under the Securities Act of 1933, as amended, and outside the United States to non-U.S.

persons in reliance on Regulation S under the Securities Act.

The 2031 Notes are senior secured obligations of APLD ComputeCo 2 LLC and bear interest at a rate of 6.750 % per annum, payable semi-annually in arrears on March 15 and September 15 of each year, beginning on September 15, 2026.

The principal amount of the 2031 Notes will amortize on a semi-annual basis on March 15 and September 15 of each year, in amounts set forth in the Indenture.

The 2031 Notes will mature on March 15, 2031, unless earlier redeemed or repurchased in accordance with their terms.

The 2031 Notes are fully and unconditionally guaranteed by the subsidiary guarantors, all of which are wholly owned subsidiaries of APLD ComputeCo 2.

The Company provided a customary completion guarantee for the 2031 Notes Offering.

The gross proceeds from the 2031 Notes Offering were deposited into a segregated escrow account pending the execution of an electric service agreement with certain providers on the terms and conditions of a related escrow agreement.

Once the escrow release condition thereunder is satisfied, the escrowed funds will be released into the project accounts to fund the development and construction of the facilities.

If the escrow release condition is not satisfied on or prior to June 30, 2026, or is deemed incapable of being satisfied by such date, the 2031 Notes will be subject to a special mandatory redemption at a price equal to 100 % of the aggregate principal amount thereof, plus accrued and unpaid interest.

On November 4, 2025, the Company and Babcock & Wilcox Enterprises (“BWE”) entered into an agreement under which the Company contributed $ 2.0 million to BWE in exchange for 500,000 shares of BWE’s common stock and warrants to purchase 2,600,000 shares of BWE’s common stock with an exercise price of $ 4.11 (the “Initial Warrants”).

Additionally, under the agreement, to incentivize the Company to execute a definitive agreement with B&W related to B&W designing and installing natural gas technology that will provide one gigawatt of efficient energy for an APLD AI data center, BWE agreed to issue additional warrants to purchase 7,860,000 shares of common stock for $ 4.11 per share (the “Additional Warrants”) to the Company upon execution of such a definitive agreement between B&W and the Company.

As described in Note 5 - Related Party Transactions and Note 8 - Derivative Assets , on February 26, 2026 a definitive agreement was executed between Base Electron and B&W, with the Company as the guarantor.

Subsequent to the end of the quarter, the Company entered into an Assignment and Assumption Agreement, by and among the Company, Base Electron, BWE and B&W, pursuant to which the Company partially assigned its rights with respect to the Additional Warrants (such partial assignment representing the right to purchase up to 5,230,000 shares of BWE common stock) to Base Electron.

The warrants were assigned by the Company to Base Electron in connection with Base Electron’s entry into a Design-Build Agreement with B&W.

On March 18, 2026, the Company received the remaining Additional Warrants (representing the right to purchase up to 2,630,000 shares of BWE common stock).

Base Electron is an independent power producer owned and managed by a combination of third parties, as well as certain officers and directors of the Company acting in their individual capacities, for the purpose of developing stabilized power generation and infrastructure to support the broader AI industry.

CoreWeave Restructuring Agreements

On March 30, 2026, the Company and CoreWeave amended the lease for Building 2 (the “ELN-02 Parent Lease”) to suspend the term for two of the four data halls covered by the lease (the “ELN-02 Parent Lease Amendment”) and the Company entered into a new data center lease with CoreWeave Compute Acquisition Co.

VIII, LLC (“CoreWeave SPV”), a wholly owned subsidiary of CoreWeave, for those same two data halls on substantially the same terms as the ELN-02 Parent Lease (the “ELN-02 SPV Lease”).

The ELN-02 SPV Lease is conterminous with the initial term of the ELN-02

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Six Months Ended November 30, 2025

Cummins Award

On January 6, 2026 (the “Grant Date”), the Board of Directors (the “Board”) of the Company, based on the recommendation of the Compensation Committee of the Board (the “Compensation Committee”), unanimously approved the grant of 4,500,000 performance stock units (“PSUs”) and 1,500,000 restricted stock units (the “RSUs”) to Wes Cummins, Chairman and Chief Executive Officer of the Company, under the Company’s 2024 Omnibus Equity Incentive Plan (as amended from time to time, the “Plan”).

Each PSU and RSU represents a right to receive one share of the Company’s common stock upon vesting, subject to the terms and conditions described below.

These awards are intended to be in lieu of any future equity awards to Mr.

Cummins for the next five years (unless there are unexpected changes in the Company’s business or other unforeseen factors that the Board or the Compensation Committee determines would make it in the best interests of the Company and its stockholders to grant additional equity award(s) to Mr.

Cummins), are structured to further align Mr.

Cummins’ total compensation with the Company’s continued growth and would (in the case of the PSUs) require significant value creation for the Company’s stockholders before any value from the grant can be realized by Mr.

The RSUs are subject to vesting as follows:

300,000 of the RSUs shall vest on the one-year anniversary of the Grant Date (the “Cliff Date”), and the remainder will vest in equal installments of 150,000 every six months after the Cliff Date, such that the RSUs will be fully vested on the five-year anniversary of the Grant Date.

The PSUs are eligible to vest based on the achievement of stock price hurdles, measured based on the Company’s average closing price per share over a 90 consecutive calendar day period (the “Average Closing Price”), as set forth in the table below.

The PSUs will only be earned and vest if the Average Closing Price equals or exceeds the applicable stock price hurdle on a date that is on or before the five-year anniversary of the Grant Date, subject to Mr.

Cummins’ continued full-time employment with the Company in a role approved by the Board on the applicable vesting date.

Shares of common stock issued with respect to the PSUs may not be transferred for two years from the date of issuance, other than shares withheld in respect of tax withholding obligations, or shares transferred by Mr.

Cummins for estate planning purposes.

Company Average Closing Price PSUs Eligible to Vest

100 1,500,000

For the Three and Nine Months Ended February 28, 2026

Parent Lease.

Upon the expiration or earlier termination of the ELN-02 SPV Lease, the suspended term under the ELN-02 Parent Lease will resume and all four data halls of Building 2 will once again be governed by the ELN-02 Parent Lease.

As further credit enhancement, CoreWeave delivered to APLD ELN-02 LLC an Unconditional Springing Guaranty of Payment and Performance (the “ELN-02 Guaranty”) in connection with CoreWeave SPV’s obligations under the ELN-02 SPV Lease.

CoreWeave is obligated to provide a letter of credit in the amount of $ 50,000,000 to secure obligations under the ELN-02 Parent Lease within 30 days of March 30, 2026.

In addition, on March 30, 2026, CoreWeave entered into an Assignment, Assumption and Consent Agreement with CoreWeave SPV and APLD ELN-03 LLC (the “Assignment Agreement”), assigning all of CoreWeave’s rights and obligations under its lease with the Company for Building 3 (the “ELN-03 Parent Lease”) to CoreWeave SPV for the remaining term of the ELN-03 Parent Lease and releasing CoreWeave from the ELN-03 Parent Lease.

In addition, CoreWeave also provided an Unconditional Springing Guaranty of Payment and Performance in connection with CoreWeave SPV’s obligations under the ELN-03 Parent Lease (the “ELN-03 Guaranty”), similar to the ELN-02 Guaranty.

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