What changed in this filing

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Item 1A. Risk Factors

2026-07-29 compared with 2025-07-30 · 206 added, 385 removed, 480 unchanged (55% of the section changed)

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Risks Related to Our Business and Operations

• We are at an early stage of development of our business, currently have limited sources of revenue, and may not be profitable in the future.

• We may be unable to access sufficient additional capital needed to grow our business.

• We may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness.

• We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

• In the past we have identified material weaknesses in our internal control over financial reporting and, though remediated, may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

• We may be unable to complete our data center campuses in a timely manner or within anticipated cost estimates.

• Delays in lease commencement could adversely affect our financial condition and results of operations.

• Our business has and is expected to continue to have significant customer concentration.

• Our consolidated financial statements include the financial results of ChronoScale.

• Changes in U.S.

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• We are subject to a highly evolving regulatory landscape and any adverse changes to certain laws or regulations could adversely affect our customers and our business, prospects or operations.

• We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties.

• Our business depends upon the demand for data centers.

• Any delays or unexpected costs developing our existing space, developable land and newly acquired properties may delay and harm our growth prospects, future operating results and financial condition.

• Our inability to close the sale of our Cloud Services Business that is currently held for sale and treated as discontinued operations may have a material adverse impact on our business and financial condition.

• We have concentrated our operations in the state of North Dakota and, thus, are particularly exposed to the regulatory framework and changes in the regulatory environment, market conditions and natural disasters in that state.

• Failure to attract, grow and retain a diverse and balanced customer base, including key anchor customers, could harm our business and operating results.

• We have substantially concentrated our operations in the state of North Dakota and, thus, are particularly exposed to the regulatory framework and changes in the regulatory environment, market conditions and natural disasters in that state.

• Failure to attract, grow and retain a diverse and balanced customer base could harm our business and operating results.

• We are continuing to invest in our expansion efforts but may not have sufficient customer demand in the future to realize expected returns on these investments.

• We depend upon third-party suppliers for power, and we are vulnerable to service failures and price increases by such suppliers and to volatility in the supply and price of power in the open market.

• Our operations could be materially adversely affected by prolonged power outages at any of our facilities.

• Any failure of our physical or information technology or operational technology infrastructure or services could lead to significant costs and disruptions.

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• Employee disputes or litigation and related unfavorable publicity may negatively affect our future business, financial condition, and operating results.

• We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties.

• We may not be able to compete with other companies, some of which have greater resources and experience.

• If the award of Bitcoin reward for solving blocks and transaction fees is not sufficiently high, our customers may not have an adequate incentive to continue mining and may cease mining operations, which would have an adverse effect on our business and results of operations.

• Intellectual property rights claims may adversely affect the operation of some or all cryptoasset networks.

• We are establishing data centers in remote areas, which may adversely affect our ability to retain staff and increase our compensation costs.

• We are establishing data centers in remote areas, which may adversely affect our ability to recruit, retain staff and could increase our compensation costs.

Risks Related to Our Industry

• Uncertainty in the global economy and instability within international relations, including changes in governmental policies relating to technology, and any potential downturn in the semiconductor and electronics industries, may negatively impact our business.

• Uncertainty in the global economy and international relations instability and unpredictability, including changes in governmental policies relating to technology, and any potential downturn in the semiconductor and electronics industries, may negatively impact our business.

• We depend on significant customers in our HPC Hosting Business and Data Center Hosting Business.

• The use and continued pace of developments in AI are inherently uncertain.

Failure by us to keep up with evolving data center requirements and regulatory frameworks for AI, could have a material adverse effect on our business and financial condition.

• Banks and financial institutions may not provide banking services, or may cut off services, to businesses that engage in cryptocurrency-related activities, and turmoil among financial institutions arising from or relating to cryptoassets or in general can materially adversely affect us and our industry.

• The impact of geopolitical and economic events on the supply and demand for cryptoassets is uncertain.

• Governmental actions may have a materially adverse effect on the cryptoasset mining industry as a whole, which would have an adverse effect on our business and results of operations.

• The development and advancement in the efficiency of AI models presents risks and challenges that may adversely impact our business and operating results.

Risks Related to Our Securities

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• If securities or industry analysts do not publish research or reports about our business, or if they downgrade their recommendations regarding our common stock , its trading price and volume could decline.

• Substantial blocks of our common stock may be sold into the market as a result of our Sales Agreements and the PEPA.

• The Convertible Notes may adversely affect the market price of our common stock.

• The Convertible Notes (as defined below) may adversely affect the market price of our common stock.

• Conversion of the Convertible Notes will dilute the ownership interest of existing stockholders or may otherwise depress the price of our common stock.

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Risks Related to Our Business and Operations

We are at an early stage of development of our business, currently have limited sources of revenue, and may not be profitable in the future.

We are subject to the risks and uncertainties of a new business, including the risk that we may never further develop, complete development of or successfully market any of our proposed services.

We began generating revenue from our crypto mining business in June 2021, however, during the building of our co-hosting operations, we determined that it would be beneficial to our stockholders to focus more of our resources on this line of business than on expanding our mining operations.

Accordingly, in March 2022, we ceased all crypto mining operations.

We began generating revenue

from our hosting operations when our first co-hosting facility came online in February 2022.

Accordingly, we have only a limited history upon which an evaluation of our prospects and future performance can be made.

As we grow and develop as a business, we are attempting to reduce the impact of variability on our revenue and hosting costs by entering into long term contracts with the goal of having one blue chip anchor tenant that has signed a 3-5 year long-term contract at each site and filling the rest of the facility with customers with 18-36 month terms.

In our HPC Hosting Business, we plan to enter into long-term leases of approximately 15 years to host tenants’ compute infrastructures encompassing GPU clusters or other high-performance computing resources (and have recently entered into two such leases).

Given that we have not previously operated an HPC data center of this scale, the profitability of these leases cannot be determined at this time.

If we are unable to successfully implement our development plan or to increase our generation of revenue, we will not be profitable in the future and may be unable to continue our operations.

Furthermore, we have a history of operating losses and our proposed operations continue to be subject to all business risks associated with new enterprises.

We incurred net losses of $231.1 million, $149.7 million, and $45.6 million for the fiscal years ended May 31, 2025, 2024, and 2023, respectively.

We expect to continue to incur net losses for the foreseeable future as we grow our business.

We intend to continue scaling our company to increase our customer base and implement initiatives, including new business lines and global expansion.

These efforts may prove more expensive than we currently anticipate and may not result in increased revenue or profitability in the short term or at all.

We will also incur increased compliance costs associated with growth, expanding our customer base, and being a public company.

As we pivot towards new markets, such as HPC data center hosting, we acknowledge that our limited experience in this area may impact our ability to accurately assess our prospects.

The likelihood of our success must be considered in light of the expenses, difficulties, complications, problems and delays frequently encountered in connection with the expansion of a business, operating a business in a competitive industry, and the development of a customer base.

There can be no assurance that we will operate profitably in the future.

We may be unable to access sufficient additional capital needed to grow our business.

We expect to need to raise substantial additional capital to expand our operations, pursue our growth strategies and to respond to competitive pressures or unanticipated working capital requirements.

Construction of our facilities, including the construction of the Polaris Forge 1 campus, are capital-intensive projects, and we anticipate that our current and future strategic growth initiatives will likewise continue to be capital-intensive.

Construction of our data center campuses,

are capital-intensive projects, and we anticipate that our current and future strategic growth initiatives will likewise continue to be capital-intensive.

We expect to raise additional capital to fund these and other future strategic growth initiatives, however, we may be unable to do so in a timely manner, in sufficient quantities, or on terms acceptable to us, if at all, which could impair our growth and adversely affect our existing operations.

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Our level of debt may negatively impact our liquidity, restrict our operations and ability to respond to business opportunities, and increase our vulnerability to adverse economic and industry conditions.

We utilize debt financings in our capital structure and may incur additional debt in the future.

We utilize debt financings, including high yield bond offerings, in our capital structure and may incur additional debt in the future.

Our level of debt could have significant consequences, including limiting our ability to obtain additional financing for working capital, capital expenditures, acquisitions or other general corporate purposes;

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Our existing indebtedness arrangements contain several restrictive covenants and events of default that limit our corporate activities.

The terms of the Credit and Guaranty Agreement, dated as of February 11, 2025, by and among APLD HPC Holdings LLC, the subsidiary guarantors, the lenders party thereto and Sumitomo Mitsui Banking Corporation, as administrative agent (the "SMBC Credit Agreement"), require us to meet certain financial covenants, contain other covenants and reference multiple potential events of default, including payment and covenant defaults.

Furthermore, the terms of our Loan Agreement with Starion Bank, dated February 16, 2023 (the "Ellendale Loan Agreement") require APLD ELN-01 LLC, our wholly owned subsidiary (“ELN-01”) to meet certain financial covenants, contain other covenants and reference multiple potential events of default, including payment defaults, covenant defaults and material cross defaults to certain ELN-01 contracts.

On February 28, 2024, APLD GPU-01, LLC, our wholly owned subsidiary, entered into a Loan Agreement with Cornerstone Bank and the Company as Guarantor (the “Cornerstone Bank Loan”).

The terms of the Cornerstone Bank Loan require APLD GPU-01, LLC, our wholly owned subsidiary (“GPU-01”), to comply with certain affirmative and negative covenants and include multiple potential events of default, including payment defaults, covenant defaults (subject to applicable cure periods), and payment cross default to other GPU-01 indebtedness.

Even if we are able to meet our obligations under these debt instruments, the amount of debt we have could adversely affect us by limiting our ability to obtain any necessary financing in the future for our working capital needs, as well as other capital expenditures, debt service obligations, dividend payments, if any, or other purposes.

It also places us at a disadvantage relative to our competitors who may have lower levels of debt, while making us more vulnerable to a downturn in our business or the economy in general.

Covenants in the Credit Agreement entered into on May 29, 2026 by and among APLD Intermediate HoldCo LLC, a first-tier subsidiary of the Company (“APLD Intermediate HoldCo”), and certain other subsidiaries of the Company as subsidiary guarantors with First National Bank of Omaha, as administrative agent and collateral agent, and the lenders and issuing banks party thereto (the “Revolving Credit Agreement”) and the indentures governing our notes contain a number

of restrictions that impose operating and financial limitations on us and may inhibit our ability to execute our growth strategy or engage in acts that may be in our long-term best interest, including restrictions on our ability to incur additional indebtedness, grant liens on assets, make distributions, dispose of assets, make loans, pay other indebtedness, engage in mergers, and other matters.

In addition, we must maintain compliance with certain financial covenants.

Our ability to meet those financial covenants can be affected by events beyond our control, and we may be unable to meet them.

A breach of the covenants could result in an event of default under our Revolving Credit Agreement or the indentures governing our notes.

Any such default may allow the applicable creditors to accelerate the related debt.

In the event our lenders accelerate the repayment of our borrowings, we may not have sufficient funds to repay that indebtedness.

We may be unable to refinance our indebtedness at maturity or the refinancing terms may be less favorable than the terms of our original indebtedness.

It is likely that we will need to refinance at least a portion of our outstanding debt, and we plan to replace the SMBC Credit Agreement with permanent project financing.

It is likely that we will need to refinance at least a portion of our outstanding debt.

If we are unable to refinance or extend principal payments due at maturity or pay them with proceeds of other capital transactions or obtain project financing, as the case may be, then our cash flow may not be sufficient in all years to repay all such maturing debt and to pay distributions.

Further, if prevailing interest rates or other factors at the time of refinancing, such as the reluctance of lenders to make commercial real estate loans,

result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase.

We have identified a material weakness in our internal control over financial reporting and may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

Further, if prevailing interest rates or other factors at the time of refinancing, such as the reluctance of lenders to make commercial real estate loans, result in higher interest rates upon refinancing, then the interest expense relating to that refinanced indebtedness would increase.

In the past we have identified material weaknesses in our internal control over financial reporting and, though remediated, may identify additional material weaknesses in the future or otherwise fail to maintain an effective system of internal controls, any of which may result in material misstatements of our financial statements or cause us to fail to meet our periodic reporting obligations.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control.

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In the event that we are unable to maintain or achieve compliance with the applicable provisions of the Sarbanes-Oxley Act and related rules, we may incur significant and additional expenses for remedial efforts that may negatively impact our financial performance, and such process may result in a diversion of management’s time and attention.

We have identified a material weakness in the design of our internal controls as we did not design and maintain effective controls over the assessment of and accounting for complex financial instruments.

In order to remediate this material weakness, we have hired additional qualified accounting personnel as well as engaged with a third-party consultant to assist with analyzing and documenting the treatment of complex financial instruments.

While we are in the process of remediating this material weakness, there can be no assurance as to when or if we will fully remediate such material weakness.

For further discussion of the material weaknesses identified and our remedial efforts, see Item 9A, Controls and Procedures.

We may be unable to maintain effective controls over our financial processes and reporting in the future and comply with the certification and reporting obligations under Sections 302 and 404 of SOX.

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Ineffective internal controls could also cause investors to lose confidence in our reported financial information.

We may be unable to complete our data center campuses in a timely manner or within anticipated cost estimates.

Our business depends upon the completion and build-out of our AI-focused data center campuses (including the Polaris Forge and Delta Forge Campuses).

Until we complete construction of the facilities required by our customer leases, we will not realize the full amount of projected revenue from those leases.

While our present data center projects are proceeding on time and within our cost expectations, we cannot guarantee we will complete these projects on time or within our anticipated cost estimates, if at all.

The build-out of our data center campuses expose us to significant construction risks, including risks related to construction delays;

lack of availability of parts and/or labor;

increased prices;

work stoppages;

unanticipated environmental issues and geological problems;

delays related to permitting and approvals from public agencies and utility companies;

and delays in site readiness, which may lead to our failure to meet commitments, including missing ready for service dates under our

existing and future leases which could result in an adverse effect on our business and results of operations.

Construction-related projects depend on the skill, experience, and performance of designers, contractors, subcontractors and key suppliers.

Should any such party experience financial difficulties or other problems, we could experience significant delays, increased costs and other negative impacts to our expected timelines and returns.

Delays in lease commencement could adversely affect our financial condition and results of operations.

Under certain circumstances, lessees may have the right to terminate applicable leases if there are significant delays in construction.

In the event of a termination, we may not be able to re-lease the applicable data center in a timely or profitable manner.

As a result, a lease termination could adversely affect our financial condition and results of operations.

Our business has and is expected to continue to have significant customer concentration .

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If we were to lose one or more of our large customers, our operating results could suffer dramatically.

HPC Hosting Business

During fiscal year 2026, this business segment was comprised of one customer accounting for 59% of our total revenue from continuing operations.

No other customers accounted for more than 10% of revenue.

This business segment began generating meaningful revenues once the first HPC building within Polaris Forge 1 became operational in fiscal year 2026.

As of the date of this report, we have entered into numerous lease agreements with multiple customers for a combined capacity of approximately 1.4 GW.

As a result, we expect significant growth in revenue from this segment in the coming years.

Due to the limited number of hyperscalers, we expect that a limited number of customers will continue to account for a high percentage of our revenue for the foreseeable future.

The concentration of our customer base increases risks related to the financial condition of our customers, and the deterioration in financial condition of a single customer or the failure of a single customer to perform its obligations could have a material adverse effect on our results of operations and cash flow.

If a subset or all of our customers were to experience harm or loss due to unforeseen circumstances, it could negatively impact their businesses.

In the event that any of our customers experience a decline in their equipment usage for any reason, or decide to discontinue the use of our facilities, we may be compelled to lower our lease prices in some instances or risk losing a significant customer.

Such developments could adversely affect our profit margins and financial position, leading to a negative impact on our revenue and operating results.

Data Center Hosting Business

During fiscal year 2025, this business segment was comprised of four customers accounting for 100% of our revenue from continuing operations.

One of such customers accounted for 93% of our revenue during fiscal year 2025.

During fiscal year 2026, this business segment was comprised of one customer accounting for 25% of our revenue from continuing operations.

No other customers accounted for more than 10% of revenue.

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Should this customer suffer from harm or loss due to a set of circumstances, their business could be negatively impacted.

Further, although this customer is currently under a five year contract with us, with 2.5 years remaining, they may choose to unilaterally reduce or discontinue their contract with us at any time (subject to notice and certain other provisions).

Further, although this customer is currently under a five year contract with us, with one and a half years remaining, they may choose to unilaterally reduce or discontinue their contract with us at any time (subject to notice and certain other provisions).

If our customer experiences declining mining operations for any reason or determines to stop utilizing our facilities altogether, and we are not able to timely replace this customer with one or more comparable revenue-generating customers, our ability to generate any revenue from this business segment could be materially adversely affected, which in turn would have a material adverse effect on our financial condition, results of operations and cash flows.

HPC Hosting Business

We anticipate that this business segment will begin generating meaningful revenues once the first building within Polaris Forge 1 becomes operational, which is expected in calendar year 2025.

As of the date of this report, we entered into two lease agreements with one customer for a combined capacity of 250 MW.

However, we cannot assure you that this business segment will begin generating any revenue when expected, or at all.

Furthermore, we expect that the limited number of customers will continue to account for a high percentage of our revenue for the foreseeable future.

In addition, demand for our services generated by these customers may fluctuate significantly from quarter to quarter.

If a subset or all of our customers were to experience harm or loss due to unforeseen circumstances, it could negatively impact their businesses.

Such developments could adversely affect our profit margins and financial position, leading to a negative impact on our revenue and operating results.

Our consolidated financial statements include the financial results of ChronoScale.

We recently completed the separation of our cloud business segment into a separate publicly traded company, ChronoScale, of which we currently own approximately 96%.

Although ChronoScale is a separate public company, we expect to continue consolidating its financial results in our consolidated financial statements for so long as we are required to do so under applicable accounting rules.

As a result, the accuracy and timeliness of ChronoScale’s financial reporting,

internal control over financial reporting, disclosure controls and procedures, audit process, and related accounting judgments may directly affect our consolidated financial statements and our periodic reports filed with the SEC.

There can be no assurance that ChronoScale will complete its audit or file its annual report on Form 10-K before we are required to finalize and file our own annual report on Form 10-K.

If ChronoScale’s audited financial statements are not available before we complete our financial reporting process, we may be required to consolidate financial information for ChronoScale that is preliminary, unaudited, based on estimates, or otherwise subject to completion of ChronoScale’s audit and year-end reporting procedures.

Those preliminary results may differ from ChronoScale’s final audited financial statements once available, including as a result of audit adjustments, changes in accounting estimates, identification of errors or control deficiencies, impairment analyses, tax adjustments, revenue recognition judgments, valuation matters, or other period-end accounting determinations.

If ChronoScale’s final audited results differ materially from the preliminary results that we consolidate, our consolidated financial statements could contain a material misstatement or omission.

In that event, we may be required to revise or restate our financial statements, amend prior SEC filings, delay future filings, conclude that our disclosure controls and procedures or internal control over financial reporting were ineffective, or incur additional audit, accounting, legal, and other expenses.

Any such developments could adversely affect investor confidence in our financial reporting, result in regulatory scrutiny or stockholder litigation, and have a material adverse effect on the trading price of our securities, our access to capital, and our business, financial condition, results of operations, and cash flows.

In addition, any adverse developments affecting ChronoScale, including operating losses, liquidity constraints, customer or supplier issues, regulatory matters, litigation, impairments, debt covenant defaults or other liabilities, could have a material adverse effect on our consolidated results of operations, financial condition and cash flows.

Furthermore, our consolidation of ChronoScale depends on applicable accounting rules and our continuing ability to control ChronoScale for financial reporting purposes.

If our ownership interest or governance rights were reduced, if minority holders obtained additional rights, or if accounting standards or interpretations changed, we could be required to deconsolidate ChronoScale or otherwise change the manner in which we present its results.

Any such change could materially affect the presentation of our financial statements, make period-to-period comparisons more difficult and adversely affect investors’ perception of our business, results of operations and financial condition.

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Our customers’ businesses are subject to extensive laws, rules, regulations, policies and legal and regulatory guidance, including those governing securities, commodities, cryptoasset custody, exchange and transfer, data governance, data protection, cybersecurity and tax.

Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, cryptoassets and related technologies.

As a result, they do not contemplate or address unique issues associated with the crypto economy, are subject to significant uncertainty, and vary widely across U.S.

Many of these legal and regulatory regimes were adopted prior to the advent of the internet, mobile technologies, AI, cryptoassets and related technologies.

As a result, they do not contemplate or address unique issues associated with AI or the crypto economy, are subject to significant uncertainty, and vary widely across U.S.

federal, state and local and international jurisdictions.

These legal and regulatory regimes, including the laws, rules and regulations thereunder, evolve frequently and may be modified, interpreted and applied in an inconsistent manner from one jurisdiction to another, and may conflict with one another.

Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of the crypto economy requires us to exercise our judgement as to whether certain laws, rules and regulations apply to us or our customers, and it is possible that governmental bodies and regulators may disagree with our or our customers’ conclusions.

Moreover, the complexity and evolving nature of our business and the significant uncertainty surrounding the regulation of AI and the crypto economy requires us to exercise our judgment as to whether certain laws, rules and regulations apply to us or our customers, and it is possible that governmental bodies and regulators may disagree with our or our customers’ conclusions.

To the extent we or our customers have not complied with such laws, rules and regulations, we could be subject to significant fines and other regulatory consequences, which could adversely affect our business, prospects or operations.

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agencies (e.g., the Commodity Futures Trading Commission, the SEC, the Financial Crimes Enforcement Network and the Federal Bureau of Investigation) have begun to examine the operations of cryptoasset networks, cryptoasset users and cryptoasset exchange markets.

Ongoing and future regulatory actions could effectively prevent our customers’ mining operations and our ongoing or planned co-hosting operations, limiting or preventing future revenue generation by us or rendering our operations obsolete.

Ongoing and future regulatory actions could effectively prevent our customers’ ongoing or planned operations, limiting or preventing future revenue generation by us or rendering our operations obsolete.

Such actions could severely impact our ability to continue to operate and our ability to continue as a going concern or to pursue our strategy at all, which would have a material adverse effect on our business, prospects or operations.

We could incur significant costs related to environmental matters, including from government regulation, private litigation, and existing conditions at some of our properties.

Under various laws relating to the protection of the environment in the U.S., a current or previous owner or operator of real estate may be liable for contamination resulting from the presence or discharge of hazardous or toxic substances at a property and may be required to investigate and clean up such contamination at or emanating from a property.

Such laws often impose liability without regard to whether the owner or operator knew of, or was responsible for, the presence of the contaminants, and the liability may be joint and several.

In the U.S., the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (“CERCLA”) established a regulatory and remedial program intended to provide for the investigation and clean-up of facilities where, or from which, a release of any hazardous substance into the environment has occurred or is threatened.

CERCLA also imposes liability for the cost of evaluating and remedying any damage to natural resources.

The costs of CERCLA investigations and clean-ups can be very substantial.

CERCLA also authorizes the imposition of a lien in favor of the U.S.

on all real property subject to, or affected by, a remedial action for all costs for which a party is liable.

Subject to certain procedural restrictions, CERCLA gives a responsible party the right to bring a contribution action against other responsible parties for their allocable shares of investigative and remedial costs.

Our ability to obtain reimbursement from others for their allocable shares of such costs would be limited by our ability to find other responsible parties and prove the extent of their responsibility, their financial resources, and other procedural requirements.

state laws also impose in certain cases strict joint and several liability for investigation, clean-up and other damages associated with hazardous substance releases.

If previous owners of our current and future properties used such properties for industrial and manufacturing purposes, such properties may contain some level of environmental contamination.

To date, independent environmental consultants have conducted Phase I or similar environmental site assessments on the properties in our portfolio.

Site assessments are intended to discover and evaluate information regarding the environmental condition of the surveyed property and surrounding properties.

These assessments, however, do not generally include soil samplings, subsurface investigations or an asbestos survey and the assessments may fail to reveal all environmental conditions, liabilities or compliance concerns.

In addition, material environmental conditions, liabilities or compliance concerns may arise after these reviews are completed.

We could be held jointly and severally liable under CERCLA and various state, local and national laws for the investigation and remediation of environmental contamination on our properties caused by previous owners or operators.

Further, fuel storage tanks may be present at properties we may develop in the future, and if releases were to occur, we may

be liable for the costs of cleaning any resulting contamination.

The presence of contamination or the failure to remediate contamination at any of our properties may expose us to third-party liability or materially adversely affect our ability to sell, lease or develop the real estate or to borrow using the real estate as collateral.

Our properties and their uses have and may in the future require permits and entitlements from various government agencies, including permits and entitlements related to zoning and land use.

Certain permits from state or local environmental regulatory agencies, including regulators of air quality, are usually required to install and operate diesel-powered generators, which provide emergency back-up power at most of our facilities.

These permits often set emissions limits for certain air pollutants, including oxides of nitrogen.

In addition, various federal, state, and local environmental, health and safety requirements, such as fire requirements and treated and storm water discharge requirements, apply to our properties.

Our ability to comply with, as well as changes to, applicable regulations, such as air quality regulations, or the permit requirements for equipment at our facilities, could hinder or prevent our construction or operation of our data center facilities.

Governmental authorities have in the past sought to restrict data center development based on environmental considerations.

For example, governmental authorities have in the past imposed moratoria on data center development, citing concerns about energy usage and requiring new data centers to meet energy efficiency requirements.

Some government agencies have also sought to restrict the use of diesel generators for back-up power.

We may face higher costs from any laws requiring enhanced energy efficiency measures, changes to cooling systems, caps on energy usage, land use restrictions, limitations on back-up power sources, or other environmental requirements.

Moratoria on data center construction could hinder our ability to construct new data centers.

Also, drought conditions in certain markets have resulted in water usage restrictions and proposals to further restrict water usage.

Our data center facilities could face restrictions on water usage, water efficiency mandates, or higher water prices.

Climate change could also limit water availability.

In addition, sea level rise and more frequent and severe weather events caused or contributed to by climate change pose physical risks to our facilities.

Our business depends upon the demand for data centers.

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Our substantial development activities make us particularly susceptible to general economic slowdowns as well as adverse developments in the data center, internet and data communications and broader technology industries.

Any such slowdown or adverse development could lead to reduced corporate IT spending or reduced demand for data center space.

Any such slowdown or adverse development could lead to reduced corporate spending or reduced demand for data center space.

Reduced demand could also result from business relocations, including to metropolitan areas that we do not currently serve.

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Any delays or unexpected costs developing our existing space, developable land and newly acquired properties may delay and harm our growth prospects, future operating results and financial condition.

We are currently in the process of constructing Polaris Forge 1 and we may in the future continue to build out additional HPC hosting facilities on a speculative basis at significant cost.

Our successful development of this and future projects is subject to many risks, including those associated with:

We are currently in the process of constructing numerous data center campuses and we may in the future continue to build out additional HPC hosting facilities on a speculative basis at significant cost.

Our successful development of our announced campuses and future projects is subject to many risks, including those associated with:

• delays in construction, or changes to the plans or specifications;

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• geological, construction, excavation and equipment problems.

If we are not able to secure additional financing to continue our construction efforts with respect to Polaris Forge 1, the completion of this project may be delayed and our ability to collect any potential rental revenue or to otherwise monetize this facility may be compromised, which could have an adverse effect on our expansion strategy and our ability to generate significant or any revenue from our HPC Hosting Business segment.

If we are not able to secure additional financing to continue our construction efforts with respect to our announced campuses, the completion of these projects may be delayed and our ability to collect any potential rental revenue or to otherwise monetize these facilities may be compromised, which could have an adverse effect on our expansion strategy and our ability to generate significant or any revenue from our HPC Hosting Business segment.

In addition, development activities, regardless of whether they are ultimately successful, also typically require a substantial portion of our management’s time and attention.

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If we are unable to complete development projects successfully, our business may be adversely affected.

Our inability to market and close the sale of our Cloud Services Business that is currently held for sale and treated as discontinued operations may have a material adverse impact on our business and financial condition .

Our Cloud Services Business currently meets the criteria for held for sale and discontinued operations.

To be successful in marketing and selling our Cloud Services Business, we and any counterparty must conduct due diligence to identify valuation issues and potential loss contingencies, negotiate transaction terms, and complete and close a potentially complex transaction.

A sale of our Cloud Services Business may require substantial management time and resources and has the potential to divert our attention from our continuing business.

A successful sale of our Cloud Services Business will also require the transfer of certain assets and agreements, the transfer of which may be outside of our control.

If we are unable to market and sell our Cloud Services Business, including the transfer of certain assets and agreements, it may have a material adverse impact on our business and financial condition.

We have concentrated our operations in the state of North Dakota and, thus, are particularly exposed to the regulatory framework and changes in the regulatory environment, market conditions and natural disasters in that state.

We currently operate data centers in the state of North Dakota.

We have substantially concentrated our operations in the state of North Dakota and, thus, are particularly exposed to the regulatory framework and changes in the regulatory environment, market conditions and natural disasters in that state.

While we are currently constructing data center campuses in other states, we are currently operational only in the state of North Dakota.

The revenue we collected from operating these data centers was responsible for the majority of our revenue in the fiscal years ended May 31, 2026, 2025, and 2024.

We are also in the process of constructing Polaris Forge 1, which we expect to begin generating revenue in calendar year 2025.

Consequently, our business operations and financial condition are particularly reliant on the performance of these data centers, which are all located in North Dakota.

As a result of the concentrated nature of our operations in this state, the operation of our business is particularly exposed to the regulatory framework, including but not limited to state utility permitting regulations, and changes in the regulatory environment, market conditions and natural disasters in the state, any of which may cause delays in the construction and operation of our data center facilities, including completion of Polaris Forge 1, or prevent us from executing on our expansion strategy.

In addition, historically, North Dakota, through its regulatory and economic incentives, has encouraged Bitcoin mining companies to locate their operations in the state.

As such, in our Data Center Hosting Business, we face substantial competition in North Dakota for suitable Bitcoin mining data center sites and skilled workers.

Conversely, if the regulatory and economic environment in North Dakota were to become less favorable to Bitcoin mining companies, including by way of increased taxes, and such Bitcoin mining companies were to relocate out of the state, we could lose our current customer or fail to attract new customers in this business segment in the future, either of which would have a material adverse effect on our business, financial condition and results of operations.

Our success depends on external factors in the crypto mining industry.

We have a material concentration of customers in the crypto mining industry.

The crypto mining industry is subject to various risks which could adversely affect our current customer's ability to continue to operate their business, including, but not limited to:

• ongoing and future government or regulatory actions that could effectively prevent our customer's mining operations, with little to no access to policymakers and lobbying organizations in many jurisdictions;

• a high degree of uncertainty about cryptoassets’ status as a “security,” a “commodity” or a financial instrument in any relevant jurisdiction which may subject our customer to regulatory scrutiny, investigations, fines, and other penalties;

• banks or financial institutions may close the accounts of businesses engaging in cryptoasset-related activities as a result of compliance risk, cost, government regulation or public pressure;

• use of cryptoassets in the retail and commercial marketplace is limited;

• extreme volatility in the market price of cryptoassets that may harm our customer's financial resources, their ability to meet their contractual obligations to us or cause them to reduce or cease mining operations;

• use of a ledger-based platform may not necessarily benefit from viable trading markets or the rigors of listing requirements for securities creating higher potential risk for fraud or the manipulation of the ledger due to a control event;

• concentrated ownership, large sales of cryptoassets, or distributions or redemptions by vehicles invested in cryptoassets could have an adverse effect on the demand for, and market price of, such cryptoasset;

• our customer could face difficulty adapting to emergent digital ledgers, blockchains, or alternatives thereto, rapidly changing technology or methods of, rules of, or access to, platforms;

• the number of cryptoassets awarded for solving a block in a blockchain could decrease, which may adversely affect our customer's incentive to expend processing power to solve blocks and/or continue mining and our customer may not have access to resources to invest in increasing processing power, when necessary, in order to maintain the continuing revenue production of their mining operations;

• our customer may face third parties’ intellectual property claims or claims relating to the holding and transfer of cryptoassets and their source code, which, regardless of the merit of any such action, could reduce confidence in some or all cryptoasset networks’ long-term viability or the ability of end-users to hold and transfer cryptoassets;

• contributors to the open-source structure of the cryptoasset network protocols are generally not directly compensated for their contributions in maintaining and developing the protocol and may lack incentive to properly monitor and upgrade the protocols;

• a disruption of the Internet on which our customer's business of mining cryptoassets is dependent;

• decentralized nature of the governance of cryptoasset systems, generally by voluntary consensus and open competition with no clear leadership structure or authority, may lead to ineffective decision making that slows development or prevents a network from overcoming emergent obstacles;

• security breaches, hacking, or other malicious activities or loss of private keys relating to, a hack or other compromise of, digital wallets used to store our customer's cryptoassets could adversely affect their ability to access or sell their cryptoassets or effectively utilize impacted platforms.

Even if we can diversify our customer base, negative impacts to the crypto mining industry may negatively affect our business, financial condition, operating results, liquidity, and prospects.

As a result of the concentrated nature of our operations in this state, the operation of our business is particularly exposed to the regulatory framework, including but not limited to state utility permitting regulations, and changes in the regulatory environment, market conditions and natural disasters in the state, any of which may cause delays in the construction and operation of our data center facilities or prevent us from executing on our expansion strategy.

We may be unable to lease vacant or development space, renew leases, or re-lease space as leases expire.

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A portion of the space that we develop has been, and may continue to be, developed on a speculative basis, meaning that we do not have a signed customer agreement for the space when we begin the development process.

We also develop space specifically for customers pursuant to agreements signed prior to beginning of the development process.

We also develop space specifically for customers pursuant to agreements signed prior to the beginning of the development process.

In those cases, if we fail to meet our development obligations under those agreements, these customers may be able to terminate the agreements and we would be required to find a new customer for this space.

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of operations, cash flow, cash available for distribution and ability to satisfy our debt service obligations could be materially adversely affected.

Failure to attract, grow and retain a diverse and balanced customer base, including key anchor customers, could harm our business and operating results.

Our ability to attract, grow and retain a diverse and balanced customer base, consisting of enterprises, cloud service providers, network service providers, and digital economy customers, some of which we consider to be key magnets drawing in other customers, may affect our ability to maximize our revenues.

Dense and desirable customer concentrations within a facility enable us to better generate significant interconnection revenues, which in turn increases our overall revenues.

Our ability to attract customers to our data centers will depend on a variety of factors, including our product offerings, the presence of carriers, the overall mix of customers, the presence of key customers attracting business through ecosystems, the data center’s operating reliability and security and our ability to effectively market our product offerings.

Failure to attract, grow and retain a diverse and balanced customer base could harm our business and operating results.

Our ability to attract customers to our data centers depends on a variety of factors, including our product offerings, the presence of carriers, the overall mix of customers, the presence of key customers attracting business through ecosystems, the data center’s operating reliability and security and our ability to effectively market our product offerings.

Our inability to develop, provide or effectively execute any of these factors may hinder the development, growth and retention of a diverse and balanced customer base and adversely affect our business, financial condition and results of operations.

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We are subject to risks associated with our need for significant electrical power.

Our operations require significant amounts of electrical power and we anticipate our demand for electrical power will continue to grow as we begin to operate Polaris Forge 1.

The fluctuating price of electricity required for our operations and to power our expansion may inhibit our profitability.

Our operations require significant amounts of electrical power and we anticipate our demand for electrical power will continue to grow as we begin to operate our data center campuses.

The fluctuating price of electricity required for our operations and to power our planned expansion may inhibit our profitability.

If we are unable to continue to obtain sufficient electrical power on a cost-effective basis, we may not realize the anticipated benefits of our significant capital investments.

Furthermore, we currently have a minimum commitment of approximately $47.2 million related to the energy services agreement for our Jamestown, North Dakota co-hosting facility payable over the remaining term of the services agreement of approximately 1.7 years as of May 31, 2025.

Any delay or failure to make timely payments under this agreement could risk the operation of our Jamestown, North Dakota co-hosting facility, which would have a material adverse effect on our business.

Additionally, our operations could be materially adversely affected by prolonged power outages.

Although certain critical functions of our facilities may be powered by backup generators on a temporary basis, it may not be feasible or cost-

effective to run on back-up power generators for extended periods of time.

Although certain critical functions of our facilities may be powered by backup generators on a temporary basis, it may not be feasible or cost-effective to run on back-up power generators for extended periods of time.

Therefore, we may have to reduce or cease our operations in the event of an extended power outage, or as a result of the unavailability or increased cost of electrical power.

If this were to occur, our business and results of operations could be materially and adversely affected.

Even if we have additional space available for lease at any one of our data centers, our ability to lease this space to existing or new customers could be constrained by our ability to provide sufficient electrical power.

As current and future customers increase their power footprint in our data centers over time, the corresponding reduction in available power could limit our ability to increase occupancy rates or network density within our existing data centers.

Furthermore, our aggregate maximum contractual obligation to provide power and cooling to our customers may exceed

the physical capacity at such data centers if customers were to quickly increase their demand for power and cooling.

If we are not able to increase the available power and/or cooling or move the customer to another location within our data centers with sufficient power and cooling to meet such demand, we could lose the customer as well as be exposed to liability under our customer agreements.

In addition, our power and cooling systems are difficult and expensive to upgrade.

Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs that we may not be able to pass on to our customers.

Any such material loss of customers, liability or additional costs could adversely affect our business, financial condition and results of operations.

We depend upon third-party suppliers for power, and we are vulnerable to service failures and price increases by such suppliers and to volatility in the supply and price of power in the open market.

We rely on third parties to provide power to our data centers, and we cannot ensure that these third parties will deliver such power in adequate quantities or on a consistent basis.

We are also reliant on third parties to deliver additional power capacity to support the growth of our business.

We are also reliant on third parties to deliver the additional power capacity required to support the growth of our business.

If the amount of power available to us is inadequate to support our customer requirements, we may be unable to satisfy our obligations to our customers or grow our business.

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In particular, disruptions in the oil and gas and electric power markets have caused, and could continue to cause, significant increases in energy prices, which could have a material effect on our business.

Our operations could be materially adversely affected by prolonged power outages at any of our facilities.

While we had no material outages in fiscal year 2025, beginning in December 2023, we encountered a series of outages at our Ellendale and Garden City locations which had a significant adverse impact on our revenue in the third and fourth quarter of fiscal year 2024 until the repairs and upgrades necessary to restore full operational capacity were substantially complete.

The outage had no impact on Polaris Forge 1, which is being designed to provide higher levels of availability in accordance with industry standards.

Despite our concentrated efforts towards remediation and return to full operational capacity, there can be no assurance that similar or greater power outages will not occur at our facilities in the future.

If and as they occur, we may have to reduce or cease our operations at such impacted facility, which may materially adversely affect our business, financial condition, and operating results.

Any failure of our physical or information technology or operational technology infrastructure or services could lead to significant costs and disruptions.

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Our customer agreements include terms requiring us to meet certain service level commitments.

Any failure to meet these or other commitments or any equipment damage in our data centers due to any reason could subject us to contractual

liability, including service level credits against customer rent payments, legal liability and monetary damages, regulatory sanctions, or, in certain cases of repeated failures, the right by the customer to terminate the agreement.

Any failure to meet these or other commitments or any equipment damage in our data centers due to any reason could subject us to contractual liability, including service level credits against customer rent payments, legal liability and monetary damages, regulatory sanctions, or, in certain cases of repeated failures, the right by the customer to terminate the agreement.

Service interruptions, equipment failures or security breaches could also materially impact our brand and reputation globally and lead to customer contract terminations or non-renewals and an inability to attract customers in the future.

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We may also experience disruptions due to mechanical failure, human error, physical or electronic security breaches, war, terrorism, fire, earthquake, pandemics, hurricane, flood and other natural disasters, sabotage and vandalism.

Our systems may be susceptible to damage, interference, or interruption from modifications or upgrades, power loss, telecommunications failures, computer viruses, ransomware attacks, computer denial of service attacks, phishing schemes, or other attempts to harm or access our systems.

or other attempts to harm or access our systems.

Such disruptions could materially and adversely affect our business and our financial condition, operating results, cash flows, and prospects.

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When we pursue joint ventures or joint ownership arrangements, we may be subject to a number of risks, including risks around ultimately closing the contemplated transactions.

For example, our anticipated partnership with MIP VI HPC Holdings, LLC ("MAM") is subject to closing conditions and no assurance can be given that the closing conditions will be met and that the transactions contemplated by the Unit Purchase Agreement entered into by and between APLD HPC Holdings ("APLDH") and MAM will be consummated.

In some joint ventures and joint ownership arrangements we may not be responsible for the operation of projects and will rely on our joint venture or joint owner counterparties for such services.

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Such circumstances could have a material adverse effect on our business, prospects or operations.

A decline in the price of cryptoassets could lead to a reduction in the usage of mining equipment at our facilities.

Although we no longer hold any direct exposure to Bitcoin, our customers engage in Bitcoin mining.

The price of cryptoassets have historically been subject to dramatic price fluctuations and are highly volatile.

If the price of cryptoassets declines, our customers could incur future losses and these losses could be significant as they incur costs and expenses associated with our hosting of their miners at our facilities and other costs and expenses.

If our co-hosting customers’

losses are significant enough, they may be unable to continue to pay our fees and we may experience a decline in revenue from our co-hosting operations, which could have a material adverse effect on our business, prospects or operations.

We have an evolving business model which is subject to various uncertainties.

As cryptoassets and blockchain technologies become more widely available, we expect the services and products associated with them to evolve.

Future regulations may require our co-hosting customers to change their business in order to comply fully with federal and state laws regulating cryptoasset (including Bitcoin) mining.

In order to stay current with the industry, our business model may need to continue to evolve as well.

From time to time, we may modify aspects of our business model relating to our strategy.

We cannot offer any assurance that these or any other modifications will be successful or will not result in harm to our business.

Furthermore, our aggregate maximum contractual obligation to provide power and cooling to our customers may exceed the physical capacity at such data centers if customers were to quickly increase their demand for power and cooling.

In addition, our power and cooling systems are difficult and expensive to upgrade.

Accordingly, we may not be able to efficiently upgrade or change these systems to meet new demands without incurring significant costs that we may not be able to pass on to our customers.

Any such material loss of customers, liability or additional costs could adversely affect our business, financial condition and results of operations.

Various actual and potential conflicts of interest may be detrimental to our stockholders.

In determining to engage with potential competitors and entities with whom our officers or directors may have relationships, we considered the risks and risk mitigation factors, including requiring that transactions valued at over $120,000 in which our officers, directors and holders of more than 5% of our common stock have an interest be approved or ratified by our Audit Committee.

In determining to engage with potential competitors and entities with whom our officers or directors may have relationships, including ChronoScale and Base Electron, we considered the risks and risk mitigation factors, including requiring that transactions valued at over $120,000 in which our officers, directors and holders of more than 5% of our common stock have an interest be approved or ratified by our Audit Committee.

Cummins holds over 7% of our common stock and has a financial interest in the success of our operations.

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We cannot, however, guarantee that any conflicts of interest will not manifest in advice or decisions that negatively impact our financial results and our operations.

Our company maintains business relationships with several companies, including those involved in software development.

Our company maintains business relationships with several companies, including those involved in power generation, cloud computing and software development.

For example, several of our Board members serve on the board of directors of other related companies such as ChronoScale and Base Electron.

One of our Board members, Richard Nottenburg, has interests in various companies, some of which provide software services to our crypto hosting business.

The current value of the annual contract with his software providers is below $500,000 per year.

While we strive to maintain transparent and ethical business practices, potential conflicts of interest may arise due to these relationships.

While we strive to maintain transparent and ethical business practices, potential

conflicts of interest may arise due to these relationships.

We continuously monitor and manage such situations to ensure compliance with legal and regulatory requirements.

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We are, and may in the future be, the subject of unfavorable allegations made by short sellers.

For example, in 2023, short sellers published reports that contained certain allegations against us that we believe to be misleading.

Any such allegations may be followed by periods of instability in the market price of our shares of common stock and negative publicity.

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Such a situation could be costly and time-consuming and could distract our management from operating our business.

We previously received in 2023 an inquiry from the SEC into these reports, we cooperated fully with this inquiry and received a closure letter from the SEC in late 2023 concluding this matter with no further action.

We and our third-party providers may be vulnerable to cyberattacks and security breaches that could materially disrupt or compromise our operations, data and results.

We rely on computer systems, hardware, software, online sites and networks, as well as physical, digital and operational technology infrastructure to support our internal and external operations (collectively, “Information Systems”).

We own, operate, and manage complex, global Information Systems and also rely on third-party providers for a range of Information Systems and other products and services, such as cloud computing.

We own, operate, and manage complex, global Information Systems and also rely on third-party providers for a range of Information Systems and other products and services.

We face evolving risks that threaten the confidentiality, integrity, and availability of Information Systems and data, including from state-sponsored espionage actors, financially motivated hackers, hacktivists and insiders, as well as through diverse attack vectors, such as social engineering/phishing, malware (including ransomware), human or technological error, or due to “bugs,” misconfigurations and known and unknown vulnerabilities in hardware, software, systems and processes that support our business.

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Our future success also depends in large part on our ability to attract, retain and motivate key management and operating personnel.

As we continue to develop and expand our operations, we may require personnel with different skills and experiences, and who have a sound understanding of our business and high computing power technologies.

As we continue to develop and expand our operations, we may require personnel with different skills and experiences, and who have a sound

understanding of our business and high computing power technologies.

The market for highly qualified personnel in this industry is very competitive and we may be unable to attract such personnel.

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Attending to such matters can be time-consuming, divert management’s attention and resources, cause us to incur significant expenses or liability or require us to change our business practices.

Because of the potential risks, expenses and uncertainties of litigation, we may, from time to time, settle disputes, even where we believe that we have meritorious claims or defenses and we cannot assure you that the results of any of these actions will not have a material adverse effect

on our business.

Adverse outcomes in such proceedings or claims could result in significant liabilities, monetary damages, fines, or injunctive relief, which may materially impact our financial condition, results of operations, or cash flows.

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Furthermore, increased public awareness and concern regarding environmental risks, including global climate change, has resulted and may continue to result in increased public scrutiny of our business and our industry, and our management team may divert significant time and energy away from our operations and towards responding to such scrutiny and reassuring our employees.

In addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supply of energy, demand for Bitcoin and other cryptocurrencies, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events.

In addition, the physical risks of climate change may impact the availability and cost of materials and natural resources, sources and supply of energy, demand for AI, demand for Bitcoin, and could increase our insurance and other operating costs, including, potentially, to repair damage incurred as a result of extreme weather events or to renovate or retrofit facilities to better withstand extreme weather events.

If environmental laws or regulations or industry standards are either changed or adopted and impose significant operational restrictions and compliance requirements on our operations, or if our operations are disrupted due to the physical impacts of climate change, our business, capital expenditures, results of operations, financial condition and competitive position could be negatively impacted.