What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-10-07 compared with 2026-04-08 · 685 added, 865 removed, 586 unchanged (73% of the section changed)

3 unchanged sentences

(In thousands, except share and par value data)

February 28, 2026 May 31, 2025

August 31, 2026 May 31, 2026

Current assets:

4 unchanged sentences

Prepaid expenses and other current assets (1)

685,638 613,692

Current assets held for sale 19,366 19,841

Total current assets 4,082,408 4,662,857

14 unchanged sentences

Due to customer 11,448 10,065

Current liabilities held-for-sale 4,988 7,426

Other current liabilities 158,273 97,489

Total current liabilities 1,593,232 1,162,856

Long-term deferred revenue 107 —

Long-term portion of operating lease liability 41,670 47,178

1 unchanged sentence

Long-term debt 6,263,947 4,959,516

Other long-term liabilities 5,432 5,454

Total liabilities 7,906,845 6,185,735

1 unchanged sentence

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 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

Series E preferred stock, $ 0.001 par value, 2,000,000 shares authorized, no shares issued and outstanding at August 31, 2026, and 276,673 shares issued and outstanding at May 31, 2026

Series E-1 preferred stock, $ 0.001 par value, 62,500 shares authorized, 61,831 shares issued and outstanding at August 31, 2026, and 61,909 shares issued and outstanding at May 31, 2026

56,373 56,460

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

Series G preferred stock, $ 0.001 par value, 1,030,000 shares authorized, 128,750 shares issued and outstanding at August 31, 2026, and no shares issued and outstanding at May 31, 2026

Redeemable noncontrolling interest

2,010,873 1,956,303

Stockholders' equity:

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

Common stock, $ 0.001 par value, 600,000,000 shares authorized, 304,232,295 shares issued and 297,066,995 shares outstanding at August 31, 2026, and 295,048,903 shares issued and 287,883,603 shares outstanding at May 31, 2026

Treasury stock, 7,165,300 shares at August 31, 2026 and 7,165,300 shares at May 31, 2026, at cost

( 52,737 ) ( 52,737 )

2 unchanged sentences

Total stockholders’ equity attributable to Applied Digital Corporation 1,602,472 1,717,476

Noncontrolling interest 5,684 7,032

Total stockholders’ equity including noncontrolling interest 1,608,156 1,724,508

TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS' EQUITY

$ 11,707,176 $ 9,929,312

(1) Includes a related party receivable of $ 59.3 million and $ 58.6 million as of August 31, 2026 and May 31, 2026, respectively.

See Note 7 - Related Party Transactions for further discussion.

See accompanying notes to the unaudited condensed consolidated financial statements

2 unchanged sentences

(In thousands, except share and per share data)

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

Related party revenue — — — 1,926

Three Months Ended

August 31, 2026 August 31, 2025

Services and other revenue $ 262,755 $ 80,934

Data center rental and other revenue 79,120 —

Total revenue 341,875 80,934

Costs and expenses:

Cost of revenues (1)

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

Services and other cost of revenue 245,709 58,831

Data center rental and other cost of revenue 43,862 140

Selling, general and administrative (1)

114,683 29,482

Loss (gain) on classification of held for sale (4)

59,650 — 59,650 ( 24,616 )

Loss on abandonment of assets — 2,243

1 unchanged sentence

Operating loss ( 62,379 ) ( 9,762 )

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)

Interest expense 77,383 8,013

Interest income (2)

( 35,821 ) ( 857 )

Loss on conversion of debt — — — 33,612

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

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

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

Loss on change in fair value of derivatives 49,511 —

Loss on change in fair value of investment 11,352 —

Other expense, net 1,311 —

Net loss before income tax expense ( 166,115 ) ( 16,918 )

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

Income tax expense 1,886 8

Net loss from continuing operations ( 168,001 ) ( 16,926 )

Net loss from discontinued operations ( 16,054 ) —

Net loss ( 184,055 ) ( 16,926 )

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

Net loss attributable to noncontrolling interest and redeemable noncontrolling interest ( 51,484 ) —

Preferred dividends ( 1,543 ) ( 1,576 )

Net loss attributable to common stockholders $ ( 237,082 ) $ ( 18,502 )

Net loss attributable to common stockholders

Continuing operations $ ( 221,028 ) $ ( 18,502 )

Discontinued operations ( 16,054 ) —

Net loss attributable to common stockholders $ ( 237,082 ) $ ( 18,502 )

Basic and diluted net loss per share attributable to common stockholders

Continuing operations $ ( 0.76 ) $ ( 0.07 )

Discontinued operations ( 0.06 ) —

Basic and diluted net loss per share attributable to common stockholders $ ( 0.82 ) $ ( 0.07 )

Basic and diluted weighted average number of shares outstanding 291,557,618 255,892,902

(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.

(1) Includes related party selling, general and administrative expense of $ 49.7 thousand and $ 74.3 thousand for the three months ended August 31, 2026 and August 31, 2025, respectively.

See Note 7 - Related Party Transactions for further discussion of related party transactions.

(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.

(2) Includes related party income of $ 0.7 million for the three months ended August 31, 2026.

See Note 7 - Related Party Transactions for further discussion of related party transactions.

2 unchanged sentences

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

For the Three Months ended February 28, 2026

(In thousands, except share data)

Temporary Equity

Permanent Equity

Preferred Stock (1)

Redeemable Noncontrolling Interest

Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

Shares Amount Shares Amount Shares Amount

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 ) — —

Tax payments for restricted stock upon vesting — — — — — — — ( 9,371 ) — ( 9,371 )

Issuance of Preferred Stock, net of costs 154,500 149,927 — — — — — — — —

Conversion of Preferred Stock

( 197,750 ) ( 191,917 ) — 5,648,970 5 — — 191,912 — 191,917

Redemption of Preferred Stock

( 71 ) ( 68 ) — — — — — — — —

Preferred Stock dividends

— — — — — — — ( 1,558 ) — ( 1,558 )

Contributions from noncontrolling interest, net of costs

— — 377,104 — — — — — — —

Noncontrolling interest preferred stock dividends

— — 28,868 — — — — ( 28,868 ) — ( 28,868 )

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

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.

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

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

For the Three Months ended February 28, 2025

(In thousands, except share data)

Temporary Equity Permanent Equity

Preferred Stock (1)

Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

Shares Amount Shares Amount Shares Amount

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 ) — —

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 ) — —

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

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

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

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

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

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.

See accompanying notes to the unaudited condensed consolidated financial statements

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

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

For the Nine Months ended February 28, 2026

For the Three Months ended August 31, 2026

(In thousands, except share data)

4 unchanged sentences

Stockholders’

Noncontrolling Interest Total Equity

Shares Amount Shares Amount Shares Amount

6 unchanged sentences

Preferred Stock dividends — — — — — — — ( 1,543 ) — ( 1,543 ) — ( 1,543 )

Shares issued in offering, net of costs — — — 15,320,373 15 — — 190,402 — 190,417

Issuance of warrants, at fair value, net of costs — — — — — — — 155,421 — 155,421

Exercise of warrants — — — 800,188 1 — — 6,264 — 6,265

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 — — 1,349 — — — — — — — — —

1 unchanged sentence

Stock-based compensation — — — — — — — 69,164 — 69,164 — 69,164

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

Issuance of equity by subsidiary, net of costs — — — — — — — 3,009 — 3,009 389 3,398

Net loss — — ( 6,830 ) — — — — — ( 175,488 ) ( 175,488 ) ( 1,737 ) ( 177,225 )

Balance, August 31, 2026 190,581 $ 181,302 $ 2,010,873 304,232,295 $ 305 ( 7,165,300 ) $ ( 52,737 ) $ 2,492,725 $ ( 837,821 ) $ 1,602,472 $ 5,684 $ 1,608,156

(1) See Note 16 - 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 Nine Months ended February 28, 2025

For the Three Months ended August 31, 2025

(In thousands, except share data)

2 unchanged sentences

Common Stock Treasury Stock Additional

Paid in Capital

Stockholders’

1 unchanged sentence

Balance, May 31, 2025 442,158 $ 136,037 234,200,868 $ 230 ( 9,291,199 ) $ ( 31,400 ) $ 1,009,913 $ ( 481,055 ) $ 497,688

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

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

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

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

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

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

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

Issuance of Preferred Stock, net of costs 180,000 170,396 — — — — — — —

Shares issued in offering, net of costs

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

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

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

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

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

Conversion of preferred stock ( 53,191 ) ( 48,350 ) 7,598,712 7 — — 53,185 — 53,191

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

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

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

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

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

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

(1) See Note 16 - Temporary Equity for further discussion of preferred stock activity.

2 unchanged sentences

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

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

Nine Months Ended

February 28, 2026 February 28, 2025

For the Three Months ended August 31, 2026 and August 31, 2025

Three Months Ended

August 31, 2026 August 31, 2025

CASH FLOW FROM OPERATING ACTIVITIES

Net loss $ ( 184,055 ) $ ( 16,926 )

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

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

Depreciation and amortization 41,912 4,152

1 unchanged sentence

Lease expense 6,517 5,381

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

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

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

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

Loss on change in fair value of derivatives 49,511 —

Loss on change in fair value of investment 11,352 —

Amortization of debt issuance costs 5,896 4,851

Loss on classification of held for sale 14,126 —

Loss on abandonment of assets — 2,243

Loss on change in fair value of warrants issued

Gain on change in fair value of warrants ( 22 ) —

Changes in operating assets and liabilities:

2 unchanged sentences

Customer deposits 107 627

Related party customer deposits — ( 1,549 )

Deferred revenue 34,480 ( 2,316 )

Related party deferred revenue — ( 1,692 )

Accounts payable ( 7,981 ) ( 77,784 )

2 unchanged sentences

Lease assets and liabilities 5,856 ( 9,598 )

Other current liabilities 1,886 —

Other assets 14,516 1,930

CASH FLOW USED IN OPERATING ACTIVITIES ( 42,860 ) ( 122,257 )

CASH FLOW PROVIDED BY (USED IN) OPERATING ACTIVITIES 63,921 ( 81,531 )

CASH FLOW FROM INVESTING ACTIVITIES

Purchases of property and equipment and other assets ( 2,074,698 ) ( 249,914 )

Proceeds from satisfaction of contingency on sale of assets — 25,000

Finance lease prepayments

Investment in companies

( 17,000 ) ( 2,498 )

CASH FLOW USED IN INVESTING ACTIVITIES ( 2,082,879 ) ( 249,914 )

2 unchanged sentences

Borrowings of long-term debt 1,648,500 65

Draw on revolver 82,390 —

Repayments of long-term debt ( 315,932 ) ( 2,416 )

1 unchanged sentence

Tax payments for restricted stock upon vesting ( 99,413 ) ( 4,497 )

Noncontrolling interest contributions 900,000 —

Noncontrolling interest issuance costs

Noncontrolling interest issuance contributions 1,349 —

Proceeds from issuance of common stock — 196,366

3 unchanged sentences

Redemption of preferred stock

( 6,996 ) ( 225 )

Dividends issued on preferred stock ( 1,543 ) ( 1,576 )

Warrant issuance costs

Exercise of warrants

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

Repurchase of shares — ( 31,342 )

Proceeds from convertible notes — 450,000

Purchase of capped call options — ( 51,750 )

Purchase of prepaid forward contract — ( 52,736 )

Issuance of equity by subsidiary, net of costs 3,398 —

CASH FLOW PROVIDED BY FINANCING ACTIVITIES $ 1,543,472 $ 322,236

NET DECREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH $ ( 475,486 ) $ ( 9,209 )

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF PERIOD, INCLUDING CASH FROM DISCONTINUED OPERATIONS 4,153,431 123,318

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD, INCLUDING CASH FROM DISCONTINUED OPERATIONS 3,677,945 114,109

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

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH FROM CONTINUED OPERATIONS $ 3,677,943 $ 114,109

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

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

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 123,318 31,688

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

For the Three Months ended August 31, 2026 and August 31, 2025

Three Months Ended

August 31, 2026 August 31, 2025

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

4 unchanged sentences

Property and equipment in accounts payable and accrued liabilities $ 142,284 $ 132,113

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

Consideration for guarantee of an affiliate's obligations

Conversion of preferred stock to common stock $ 149,921 $ 242,480

Cashless exercise of warrants $ 1 $ 5

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

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 Nine Months Ended February 28, 2026

For the Three Months Ended August 31, 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 three reportable segments.

The Company has two reportable segments.

Financial information for each segment is contained in Note 19 - Business Segments .

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

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

2 unchanged sentences

The unaudited condensed consolidated balance sheet as of May 31, 2026 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements.

The unaudited condensed consolidated financial statements include the accounts of the Company and its consolidated subsidiaries and entities that meet the definition of a variable interest entity (“VIE”) for which the Company is considered the primary beneficiary.

See Note 9 - Variable Interest Entity for further discussion.

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 variable interest holders.

The Company also evaluates its economic interests in the VIE.

See Note 12 - Variable Interest Entities for additional information related to the consolidation of investments.

Intercompany accounts and transactions have been eliminated.

The Company consolidates the results of ChronoScale Holdings Corporation, the Company’s majority owned subsidiary (“ChronoScale”) under the voting interest model because the Company holds a controlling financial interest in ChronoScale.

The ownership interests in ChronoScale not attributable to the Company are presented as noncontrolling interests in the unaudited condensed consolidated financial statements.

All intercompany balances and transactions have been eliminated in consolidation.

In the Company’s opinion, all necessary adjustments have been made for the fair presentation of the results of the interim periods presented.

2 unchanged sentences

Significant Accounting Policies

Significant Accounting Policies and Use of Estimates

There have been no material changes to the Company’s significant accounting policies included in the Annual Report on Form 10-K for the year ended May 31, 2026, except as disclosed herein.

Use of Estimates

The preparation of the unaudited condensed consolidated financial statements is in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods.

Actual results could differ significantly from those estimates.

Revenue Recognition

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.

Performance obligations are achieved simultaneously by providing the hosting environment for the customers’ operations.

Customers pay a fixed rate to the Company in exchange for a managed hosting environment supported by customer-provided equipment.

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

The preparation of financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods.

On an on-going basis, the Company evaluates its estimates, including those related to stock-based compensation, specifically the likelihood of timing and achievement of performance conditions to its performance stock units, contingencies, and those related to the fair value of warrants and the fair value of the

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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.

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

HPC Hosting Revenue

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.

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.

For the Three Months Ended August 31, 2026

redeemable noncontrolling interest.

Although these estimates are based on historical facts and various other assumptions that the Company believes are reasonable, actual results could differ from those estimates.

Revenue Recognition

ChronoScale Revenue

Revenue associated with ChronoScale is accounted for under ASC 606.

ChronoScale, a VOE consolidated by the Company in accordance with ASC 810, 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 ChronoScale in exchange for managed cloud services supported by 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”).

During the three months ended August 31, 2026, the Company also completed certain one-time resale arrangements involving AI infrastructure, or GPU-related, hardware and ancillary support and maintenance services.

Revenues from GPU hardware sales were recognized at a point-in-time, generally when control of the hardware transferred to the customer.

Revenues from the related support and maintenance services were recognized on a net basis at a point-in-time, as the Company acted as an agent in the selling arrangement.

The Company has identified two reportable segments:

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

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

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 May 2026 business combination transaction (“Business Combination”) with Ekso Bionics Holdings, Inc., the Company identified its cloud services business operated through the Company’s wholly owned subsidiary Applied Digital Cloud Corporation (the “Cloud Services Business”) as a reportable segment.

Following the transaction, pursuant to which the Cloud Services Business was contributed to Ekso Bionics Holdings, Inc.

and became part of ChronoScale, ChronoScale is consolidated into the Company's financial statements;

however, it is no longer identified by the Company as an operating or reportable segment because its activities are managed by a separate management team and its operating results are not regularly reviewed by the Company's CODM for purposes of resource allocation and performance assessment.

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 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.

Operating results by segment include costs or expenses directly attributable to each segment, which include services and other cost of revenue, data center rental and other cost of revenue, and selling, general, and administrative expenses.

The Company does not allocate interest expense, interest income, loss on change in fair value of derivatives, loss on change in fair value of investment, other expense, net 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.

The HPC Hosting Business designs, constructs, and operates next-generation data centers, which are designed to provide massive computing power and support HPC applications within a cost-effective model.

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, 2026, 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

Reclassifications

During the quarter ended August 31, 2025, the Cloud Services Business was presented as discontinued operations and held for sale.

However, during the quarter ended February 28, 2026, the Company determined that the Cloud Services Business

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

All intercompany amounts and transactions have been eliminated.

Redeemable Noncontrolling Interest

The Company determined for the noncontrolling interest, the initial amount presented in temporary equity should be the initial carrying amount of the noncontrolling interest pursuant to ASC 805-20-30.

Under ASC 805-20-30, noncontrolling interests are initially measured at fair value at the acquisition date.

However, as the noncontrolling interest has embedded features that require bifurcation, the fair value at issuance must be allocated between the components.

The Company initially measured the noncontrolling interest by first allocating the proceeds from the offering to the derivatives and, with the residual net proceeds allocated to the temporary equity classified noncontrolling interest and the warrants based on their respective relative fair values.

The Company will not subsequently remeasure the temporary equity classified noncontrolling interest until it is probable that the noncontrolling interest will become redeemable.

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.

For the Three Months Ended August 31, 2026

no longer qualified for held-for-sale and discontinued operations accounting as a result of entering into the Contribution and Exchange Agreement with Ekso Bionics Holdings, Inc.

("Ekso") pursuant to which the Cloud Services Business became a wholly owned subsidiary of Ekso.

As a result, the Cloud Services Business was reclassified to continuing operations, with its assets and liabilities returned to their respective held-and-used balance sheet line items and prior-period financial statements retrospectively revised to reflect this presentation.

The Company has revised the presentation of revenue and cost of revenue within the unaudited condensed consolidated statements of operations to separately present services and other revenue and cost of revenue and data center rental and other revenue and cost of revenue.

Prior period amounts have been reclassified to conform to the current period presentation.

These presentation changes had no impact on previously reported total revenue, total cost of revenue, or net loss.

During the quarter ended August 31, 2026, the Company has separately presented interest expense and interest income in its unaudited condensed consolidated statements of operations as the individual amounts are material.

Prior period amounts have been reclassified to conform to the current period presentation.

These presentation changes had no impact on previously reported net loss.

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.

The Company’s restricted cash balances consist of debt service reserves and letters of credit secured by cash.

The debt service reserves are held in separate accounts and are to be used to fund interest and principal on senior secured notes during construction.

See further discussion in Note 9 - 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

These balances are held in a combination of money market funds and demand deposit accounts, each of which the Company considers 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 August 31, 2026 and May 31, 2026 were as follows (in thousands):

August 31, 2026 May 31, 2026

Cash and cash equivalents $ 2,949,909 $ 1,591,988

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Total cash, cash equivalents, and restricted cash $ 3,677,943 $ 4,153,430

Recent Accounting Pronouncements

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

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 .

As of August 31, 2026, the Ekso business at ChronoScale met the held for sale criteria and was classified as such on the unaudited condensed consolidated balance sheet (see Note 6 - Discontinued Operations ) as well as $ 14.4 million of certain corporate assets.

The sale of the Ekso business was completed on September 30, 2026.

Refer to Note 21 - Subsequent Events for additional information regarding the sale of the Ekso business.

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.

As of August 31, 2026, the Ekso business at ChronoScale was deemed to be discontinued

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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).

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

Improvements to Income Tax Disclosures.

This ASU is intended to enhance the transparency and decision usefulness of income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

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

The Company 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.

For the Three Months Ended August 31, 2026

operations due to meeting all three criteria (see Note 6 - Discontinued Operations ).

The sale of the Ekso business was completed on September 30, 2026.

Refer to Note 21 - Subsequent Events for additional information regarding the sale of the Ekso business.

Recent Accounting Pronouncements

Accounting Pronouncements Not Yet Adopted

7 unchanged sentences

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

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

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

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

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

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

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

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

13 unchanged sentences

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

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

The Company is currently evaluating the impact the adoption of ASU 2025-12 may have on the Company’s consolidated financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2027.

In April 2026, the FASB issued ASU 2026‑01, Equity (Topic 505):

Initial Measurement of Paid‑in‑Kind Dividends on Equity‑Classified Preferred Stock.

The ASU provides guidance on the initial measurement of paid‑in‑kind (“PIK”) dividends on equity‑classified preferred stock and does not affect the timing of dividend recognition.

The amendment is effective for fiscal years beginning after December 15, 2026, and interim periods within those fiscal years.

Early adoption is permitted.

The Company is currently evaluating the impact the adoption of this ASU may have on the Company's consolidated financial statements and plans to adopt this pronouncement beginning with its fiscal year beginning June 1, 2027.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

For the Three Months Ended August 31, 2026

Business Combination

On May 5, 2026, the Company, through APLD ChronoScale HoldCo LLC, a wholly owned subsidiary, (“Contributor”), completed the Business Combination pursuant to which Contributor contributed 100 % of the equity interests of Applied Digital Cloud (“Cloud”) to Ekso Bionics Holdings, Inc.

(“Ekso”), a publicly traded company, in exchange for shares of Ekso common stock (the "May 2026 transaction").

Although Ekso was the legal acquirer, Cloud was identified as the accounting acquirer and the transaction was accounted for as a reverse acquisition under ASC 805, Business Combinations .

Following the closing of the transaction, Ekso was renamed ChronoScale Corporation.

As a result of the transaction, at closing, the Company owned approximately 97 % of ChronoScale’s outstanding common stock, and legacy Ekso shareholders retained approximately 3 % (before giving effect to any dilution from new investments) which represents a noncontrolling interest in ChronoScale.

As of August 31, 2026, the Company owns approximately 96 % of ChronoScale’s outstanding common stock.

As the transaction was accounted for as a reverse acquisition, the consideration transferred was measured based on the number of equity interests Cloud would have had to issue to provide legacy Ekso shareholders with the same percentage ownership interest in the combined company that resulted from the transaction.

The fair value of the consideration transferred was approximately $ 57.6 million, based on 4,357,026 equity interests valued at Ekso's closing share price of $ 13.22 per share on the acquisition date.

The consideration was entirely in the form of equity.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

The following table summarizes the fair values of the assets acquired and liabilities assumed as of the acquisition date:

Cash and cash equivalents $ 13,492

Accounts receivable, net of allowance for doubtful accounts 4,125

Inventory 4,562

Prepaid expenses 1,150

Property and equipment, net 1,086

Operating lease right-of-use assets, net 315

Intangible assets, net 10,950

Other assets 369

Total assets acquired $ 36,049

Accounts payable $ ( 281 )

Accrued expenses ( 5,055 )

Deferred revenues ( 1,400 )

Operating lease liabilities ( 321 )

Debt, current ( 3,346 )

Deferred revenues non-current ( 1,288 )

Debt, non-current ( 464 )

Operating lease liabilities, non-current ( 114 )

Other non-current liabilities ( 3,305 )

Total liabilities assumed $ ( 15,574 )

Total identifiable net assets $ 20,475

Cash acquired through PIPE (defined below) ( 15,000 )

Fair value of net assets acquired 5,475

Impairment for assets held for sale (see Note 6 - Discontinued Operations )

Fair value less costs to sell $ 3,110

Total consideration transferred $ 57,623

Fair value less costs to sell 3,110

Goodwill $ 54,513

The fair value of acquired accounts receivable was approximately $ 4.1 million as of the acquisition date.

ChronoScale expects to collect substantially all acquired receivables.

The fair value of acquired intangible assets consists of Ekso's developed technology and trade name.

The valuations of the developed technology and trade name were performed by a third-party valuation specialist using the relief-from-royalty method.

Refer to Note 6 - Discontinued Operations — Loss on Impairment of Net Assets Held for Sal e for information regarding ChronoScale’s impairment loss of its net assets held for sale for the three months ended August 31, 2026.

In connection with the transaction, ChronoScale arranged a private investment in public equity (“PIPE”), which refers to a private placement of ChronoScale’s equity to select investors concurrent with closing.

Pursuant to the PIPE Agreement, ChronoScale agreed to issue and sell 1,311,407 shares of its common stock to Contributor at a price of $ 12.01 per share, resulting in aggregate gross proceeds of approximately $ 15.7 million with $ 0.8 million in offering costs.

The Business Combination resulted in the recognition of goodwill of approximately $ 54.5 million, which is calculated as the excess of the consideration transferred over the fair value of the identifiable net assets acquired.

The goodwill is primarily attributed to the expected operational synergies, assembled workforce, public company platform benefits, and

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

other intangible benefits that do not qualify for separate recognition.

The goodwill was assigned to ChronoScale, which was expected to benefit from the synergies of the acquisition.

As of May 31, 2026, ChronoScale was not a separate reportable segment under ASC 280, although the Cloud Business had previously been presented as a reportable segment.

The assigned goodwill is included within the reporting unit used for goodwill impairment testing.

The Company expects that $ 0.5 million of goodwill will be deductible for tax purposes.

As the fair value of the acquired assets and assumed liabilities are subject to change during the measurement period, up to one year from the acquisition date, ChronoScale recorded a measurement adjustment which reduced goodwill by approximately $ 0.1 million to approximately $ 54.4 million.

The acquisition-date fair value of the noncontrolling interest was approximately $ 4.6 million, based on the equity interests retained by legacy Ekso shareholders and Ekso's closing share price of $ 13.22 per share on the acquisition date.

The noncontrolling interest is presented as a separate component of permanent equity in the Company’s consolidated balance sheet.

Acquisition-related costs in connection with the transaction, including legal, accounting, valuation, and other professional fees of $ 5.3 million were expensed as incurred and are not included as a component of consideration transferred.

The following unaudited pro forma financial information presents the combined results of operations as if the acquisition had occurred on June 1, 2025.

The unaudited pro forma information is presented for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had occurred as of that date, nor is it intended to project future results.

Three Months Ended

August 31, 2025

Pro forma revenue $ 82,991

Pro forma net loss $ ( 19,635 )

The unaudited pro forma results include adjustments directly attributable to the acquisition, including amortization of acquired intangible assets and the related income tax effects.

No additional earnings per share impacts were identified other than the impact of amortization of acquired intangible assets.

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Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

Property and Equipment

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

Estimated Useful Life February 28,

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

Estimated Useful Life August 31,

Networking equipment, electrical equipment, and software

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15 years - 25 years

1,085,386 682,348

Land 150,363 59,713

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Property and equipment, net $ 6,330,411 $ 4,236,300

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 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

Depreciation expense totaled $ 29.3 million and $ 2.7 million for the three months ended August 31, 2026 and August 31, 2025, respectively.

The Company capitalizes a portion of the interest on funds borrowed to finance its capital expenditures.

Capitalized interest is recorded as part of an asset’s cost and is depreciated over the same period as the related asset.

Capitalized interest costs were $ 35.7 million and $ 8.7 million for the three months ended August 31, 2026 and August 31, 2025, respectively.

Below is a summary of the Company’s revenue concentration by major customers for the three months ended August 31, 2026 and August 31, 2025, respectively.

Three Months Ended

August 31, 2026 August 31, 2025

Customer A 56 % 32 %

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Customer D — % 21 %

Deferred Revenue

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

Advance billings 300,141 136,559

Revenue recognized ( 295,209 ) ( 177,243 )

Other adjustments 4,025 6,197

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

The Company’s contract liabilities consist of deferred revenue that arises when the Company receives consideration in advance of providing the goods or services provided in the contract.

As of August 31, 2026 and May 31, 2026, the Company recorded $ 39.3 million and $ 4.7 million, respectively, of deferred revenue primarily related to advance billings for tenant fit-out services and the delivery of power.

The Company classified deferred revenue based on the timing of when it expect to recognize revenue, which typically occurs within a short window after period-end.

The full balance of deferred revenue at May 31, 2026 and May 31, 2025 was recognized as revenue during the three months ended August 31, 2026 and August 31, 2025, respectively.

Further, the contract assets consist of unbilled receivables that are recorded when revenue is recognized in advance of billings to its customers.

These amounts are primarily associated with difference between the revenue recognized under ASC 842 and billings per the lease agreement as well as the receivable arising from tenant fit-out services.

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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 ) $ —

For the Three Months Ended August 31, 2026

assets balance was $ 103.1 million and $ 43.1 million as of August 31, 2026 and May 31, 2026, respectively, and is included in “accounts receivable, net” and “other assets” in the unaudited condensed consolidated balance sheet.

Customer Deposits

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

Changes in the Company's customer deposits balances for the three months ended August 31, 2026 and August 31, 2025, respectively, are shown in the following table (in thousands):

Three Months Ended

August 31, 2026 August 31, 2025

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

3 unchanged sentences

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

Discontinued Operations

During the year ended May 31, 2026, the Board of Directors of ChronoScale committed to a plan to divest its wholly owned subsidiary, Ekso Bionics, Inc., a Delaware corporation (“Ekso”), and to focus ChronoScale's operations solely on its Cloud Services Business.

As such, legacy Ekso met the criteria to be classified as "held for sale" on the unaudited condensed consolidated balance sheets.

Therefore, upon consolidation, the Company reported Ekso's operations as discontinued operations in its unaudited condensed consolidated statements of operations for the three months ended August 31, 2026 in accordance with ASC 205-20, Discontinued Operations.

The sale of the Ekso business was completed on September 30, 2026.

Refer to Note 21 - Subsequent Events for additional information regarding the sale of the Ekso business.

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

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

Three Months Ended

August 31, 2026

Revenue $ 2,597

Cost of revenues 1,289

Selling, general and administrative 17,366

Operating loss from discontinued operations ( 16,058 )

Interest expense ( 4 )

Net loss from discontinued operations before income tax expense ( 16,054 )

Income tax expense —

Net loss from discontinued operations $ ( 16,054 )

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

As of August 31, 2026, the assets and liabilities of Ekso are classified as current in the unaudited condensed consolidated balance sheets, as it is probable that the sale will occur within one year.

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

August 31, 2026 May 31, 2026

Cash and cash equivalents $ 2 $ 2

Accounts receivable 3,090 3,914

Prepaid expenses and other current assets 5,659 5,604

Property and equipment, net 1,069 1,084

Operating lease right of use asset, net 284 284

Intangible assets 10,950 10,950

Other assets 425 368

Impairment on assets held for sale $ ( 16,491 ) $ ( 2,365 )

Total current assets held for sale $ 4,988 $ 19,841

Accounts payable $ 360 $ 263

Accrued liabilities 1,859 4,205

Current portion of operating lease liability 191 290

Deferred revenue 2,493 2,563

Long-term portion of operating lease liability 86 105

Total current liabilities held for sale $ 4,988 $ 7,426

Loss on Impairment of Net Assets Held for Sale

In connection with the classification of the Ekso business as held for sale and discontinued operations, the Company evaluated the Ekso business for impairment as of August 31, 2026, in accordance with ASC 360-10, Impairment and Disposal of Long-Lived Assets.

The Ekso business was measured at the lower of its carrying amount and fair value less cost to sell.

During the first and second quarters of fiscal year 2027, the Company continued to market the Ekso business and advance negotiations with prospective buyers.

The disposal of the Ekso business was completed on September 30, 2026.

As of August 31, 2026, the Ekso business consisted of approximately $ 21.5 million of assets and $ 5.0 million of liabilities, resulting in net assets of $ 16.5 million.

The Company estimated the fair value of the Ekso business to be $ 1.5 million.

After deducting $ 2.6 million of estimated incremental costs to sell the Ekso business, the Company determined that the fair value less costs to sell resulted in a negative value of $ 1.1 million.

The fair value less costs to sell used for measuring the Ekso business under ASC 360-10 is floored at $ 0 , and as a result, the remaining $ 1.1 million of estimated costs to sell Ekso is not included in this initial impairment calculation and will be recognized as period expenses when incurred.

As the Ekso business’s carrying amount of $ 16.5 million exceeded its estimated fair value less costs to sell, the Company recognized an impairment loss of $ 14.1 million as of August 31, 2026.

The impairment loss was recognized through a valuation allowance and was not allocated to the individual classes of assets held for sale.

The impairment loss is included in net loss from discontinued operations in the unaudited condensed consolidated statement of operations for the three months ended August 31, 2026.

The related valuation allowance is presented as valuation allowance for impairment loss on the unaudited condensed consolidated balance sheet as of August 31, 2026.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

Following the closing of the sale of the Ekso business, the Company does not expect further material impairment losses related to the Ekso business as of the date of this Quarterly Report on Form 10-Q.

The Company determined that no impairment of goodwill, which was assigned to ChronoScale as discussed in Note 3 - Business Combination , existed for the three months ended August 31, 2026.

The following table summarizes the net cash flows from discontinued operations of Ekso for the three months ended August 31, 2026 (in thousands):

Three Months Ended

August 31, 2026

Net cash used in operating activities - discontinued operations $ ( 1,257 )

Net cash used in investing activities - discontinued operations $ 15

Related Party Transactions

Related Party Revenue

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 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.

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

In the prior year, the Company and Base Electron Corporation (“Base Electron”) entered into the Intercompany Administrative Services Agreement (the "Intercompany Agreement").

The amount of services provided during the three months ended August 31, 2026 were approximately $ 0.1 million.

In the prior fiscal year, Base Electron issued to the Company approximately 10 % of Base Electron’s outstanding equity.

The investment in Base Electron is 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 three months ended August 31, 2026.

As of August 31, 2026, the Company determined the fair value of the investment was $ 2.0 million, which is recorded as an Other asset on the unaudited condensed consolidated balance sheets.

Base Electron Demand Grid Promissory Note

In the prior fiscal year, Base Electron entered into a promissory note with the Company (“Demand Grid Promissory Note”) for up to $ 100.0 million which is payable on-demand.

As of August 31, 2026, the principal balance of the Demand Grid Promissory Note was $ 58.5 million, which was recorded as a related party loan receivable and presented within Prepaid expense and other current assets on the unaudited condensed consolidated balance sheets.

During the three months ended August 31, 2026, approximately $ 0.7 million of interest income was recognized.

Further, no allowance for credit loss and no credit loss expense have been recognized for the three months ended August 31, 2026, and receivables are presented at their gross amount, which approximates the net amount expected to be collected.

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 $ 49.7 thousand and $ 74.3 thousand during the three months ended August 31, 2026 and 2025, respectively, which were incurred with a company whose chairman is also a member of the Company’s Board of Directors.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

For the Three Months Ended August 31, 2026

Fair Value Measurements

There have been no significant changes to the Company’s valuation techniques or fair value measurement policies from those disclosed in the Company’s Annual Report on Form 10-K for the year ended May 31, 2026.

The carrying amounts of cash and cash equivalents including notice deposits and certificate of deposits, restricted cash, accounts receivable, accounts payable, accrued liabilities, customer deposits, amounts due to customers and other short-term financial instruments approximate their fair values principally due to their short-term maturities.

The following table presents the Company’s financial assets, presented in the unaudited condensed consolidated balance sheets within Other assets, measured at fair value on a recurring basis (in thousands):

August 31, 2026 May 31, 2026

Fair Value Hierarchy Fair Value Fair Value

Equity investments Level 1 $ 7,846 $ 19,198

Derivative instruments:

Derivative associated with Redeemable preferred shares Level 3 169,837 163,283

B&W warrants Level 3 34,727 90,793

Total assets measured at fair value $ 212,410 $ 273,274

Our investments in equity securities with readily determinable fair values are measured at fair value using quoted market prices and, therefore, are classified within Level 1 of the fair value hierarchy.

Our investments in equity securities without readily determinable fair values are accounted for at cost under ASC 321 and are evaluated quarterly for impairment indicators.

There were no impairment indicators during the quarter for these investments.

Refer to Note 11 - Derivative Assets for a discussion of the valuation assumptions and inputs used in measuring the Company’s derivative instruments and Note 9 - Debt for a discussion of the fair value measurement of the Company’s debt.

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

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

2030 Senior Secured Notes 9.25 % December 2030

Interest Rate Maturity Date August 31, 2026 May 31, 2026

2030 9.250 % Senior Secured Notes (1)

9.25 % December 2030

$ 2,350,000 $ 2,350,000

2031 6.750 % Senior Secured Notes (2)

6.75 % March 2031 2,150,000 2,150,000

2031 7.000 % Senior Secured Notes

7.00 % June 2031 1,590,000 —

Convertible Notes, senior unsecured (3)

1 unchanged sentence

450,000 450,000

DevCo Facility 8.00 % December 2027 87,104 —

SMBC Loan (2)

Starion Ellendale Loan (3)

7.48 % February 2028 9,183 12,283

Cornerstone Bank Loan (4)

8.59 % March 2029 10,682 12,866

Starion Term Loan (5)

6.50 % July 2027 4,711 7,061

Other long-term debt (6)

Bridge Facility (4)

See below April 2027 — 300,000

2026 Revolving Credit Facility (5)

See below See below 82,390 —

Other debt (6)

99,215 56,680

4 unchanged sentences

Long-term debt, net $ 6,263,947 $ 4,959,516

(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.

(1) The 2030 9.250 % Senior Secured Notes are guaranteed by APLD ELN-02 HoldCo LLC, APLD ELN-03 HoldCo LLC, APLD ELN-02 LLC, APLD ELN-03 LLC, APLD ELN-02 LandCo LLC and APLD ELN-03 LandCo LLC, each a majority-owned subsidiary of the Company, and are secured by the equity interests of the issuer and guarantors, the Project Accounts (as defined in the 2030 Notes Indenture), and substantially all of the assets of the issuer and guarantors.

(2) The 6.750 % 2031 Senior Secured Notes are guaranteed by APLD FAR-01 HoldCo LLC, APLD FAR-02 HoldCo LLC, APLD FAR-01 LLC, APLD FAR-02 LLC, APLD FAR-01 LandCo LLC and APLD FAR-02 LandCo LLC, each majority-owned subsidiaries of the Company, and are secured by the equity interests of the issuer and guarantors, the

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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.

The average SOFR plus the applicable margin for the fiscal year ended May 31, 2025 was 7.82 %.

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

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

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

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

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

For the Three Months Ended August 31, 2026

Project Accounts (as defined in the 2031 6.750 % Notes Indenture), and substantially all of the assets of the issuer and guarantors.

(3) The net carrying amount of the Convertible Notes was $ 276.6 million and $ 276.0 million and the remaining unamortized deferred financing costs related to the issuance was $ 173.4 million and $ 174.0 million, each as of August 31, 2026 and May 31, 2026, respectively.

(4) The Bridge Facility is guaranteed by the wholly owned subsidiaries of APLD ComputeCo 3 LLC and by the Company and is secured by substantially all assets of APLD ComputeCo 3 LLC and the subsidiary guarantors, as well as a pledge of the equity interests of APLD ComputeCo 3 LLC by APLD HPC Holdings 2 LLC.

The Bridge Facility bears interest at a rate equal to either Daily SOFR plus 2.75 % per annum or the Base Rate plus 1.75 % per annum, depending on the type of loans under any Borrowing.

(5) The 2026 Revolving Credit Facility is guaranteed by the Company, APLD Intermediate HoldCo LLC (as the borrower), Applied Talent Resources LLC, James River Housing LLC, APLD Holdings 1 LLC, APLD Holdings 2 LLC, APLD HPC TopCo LLC, and APLD HPC Holdings LLC and is secured by substantially all assets of the loan parties, subject to certain exclusions.

The 2026 Revolving Credit Facility bears interest at a rate per annum equal to, at the borrower’s election, either Term SOFR plus 2.25 % or the Alternate Base Rate plus 1.25 %.

Additionally, there is an unused commitment fee of 0.25 % per annum based on the daily unused amount, payable quarterly in arrears at the end of each quarter.

The 2026 Revolving Credit Facility matures on the earlier of (i) May 29, 2029 and (ii) the date that is ninety-one ( 91 ) days prior to a specified date under the Preferred Equity Purchase Agreement.

(6) Other debt as of August 31, 2026 includes three secured terms loans totaling $ 19.2 million (previously disclosed in our Annual Report on Form 10-K for the year ended May 31, 2026), as well as two promissory notes the Company entered into during the second fiscal quarter of 2026 for a total of approximately $ 18.5 million and the Texas Capital Note entered into during the current quarter for $ 58.5 million (as defined and discussed below).

As of May 31, 2026, the balance includes the three secured term loans and two promissory notes referenced above, as well as $ 12.0 million of proceeds from the issuance of two SAFE agreements, classified as liabilities, which were repaid during the three months ended August 31, 2026 (as discussed below).

Below is the weighted-average interest rate for the Company's term loans:

August 31, 2026 August 31, 2025

Weighted-average interest rate 7.3 % 7.1 %

Remaining Principal Payments

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

Below is a summary of the remaining principal payments due over the life of the term loans as of August 31, 2026 (in thousands):

FY27 $ 108,739

FY31 4,256,666

Thereafter 1,438,908

Total $ 6,721,605

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

Letters of Credit

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.

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

Revolving Credit Facility

On November 10, 2025, the Company entered into a loan and security agreement with First National Bank of Omaha, pursuant to which the lender agreed to make one or more revolving loans, and issue letters of credit, from time to time to the Company in an aggregate principal amount of $ 65 million.

Amounts borrowed and repaid are available for future borrowing.

Interest accrues on the outstanding balance at a rate of SOFR plus 2.75 % per annum.

Additionally, there is an unused facility fee of 0.35 % per annum based on the daily average unused amount, payable quarterly in arrears at the end of each quarter.

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

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

Debt Fair Value Measurements

The carrying value of the Company's variable rate borrowings approximate fair value at August 31, 2026 and May 31, 2026, as applicable, each balance sheet date due to the variable nature of the interest rates and the short period between interest rate resets.

Further, the Company determined that the estimated fair values of the Promissory Note approximated their respective carrying amounts based on the relatively short period of time since the business combination acquisition date, the continued accretion of acquisition-date fair value adjustments through the effective interest method, and the

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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

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

The Promissory Note provided for an initial principal sum of $ 50 million (the “Loan”), which was drawn on the Closing Date.

The Loan bore interest at 8.0 % per annum.

From the Closing Date and for the succeeding twelve months (the “PIK Period”), accrued interest was to be paid in kind, with such payment in kind being capitalized to principal monthly and at such other times as specified in the Promissory Note.

After the PIK Period, accrued interest was to be paid in cash in certain circumstances.

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

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

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

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

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

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.

In connection with the Loan, (i) APLD FAR-01 LLC, APLD FAR Holdings LLC (“Intermediate Holdings”), a Delaware limited liability company, as parent of the APLD FAR-01 LLC, and APLD FAR-02 LLC (“FAR-02”), a Delaware limited liability company, as a subsidiary of Intermediate Holdings, entered into a guarantee and collateral agreement, as grantors thereunder, in favor of the Lender (the “Guarantee and Collateral Agreement”).

On November 28, 2025, the Company repaid the Promissory Note in full, including all outstanding and unpaid principal, accrued interest, and rate of return.

As a result, the accrued interest and rate of return on the Macquarie Promissory Note of $ 1.4 million was capitalized to CIP commensurate with the use of proceeds associated with construction.

2030 Senior Secured Notes

On November 20, 2025, APLD ComputeCo LLC (“Issuer”), a subsidiary of the Company, completed a private offering of 9.25 % Senior Secured Notes due 2030 (the “2030 Notes”).

The 2030 Notes were sold pursuant to the terms of a purchase agreement, dated as of November 13, 2025 and as amended thereafter, entered into by and among the Issuer, the subsidiary guarantors party thereto (the “Subsidiary Guarantors”) and Morgan Stanley & Co.

LLC as the representative (the “Representative”) of the several initial purchasers (the “Initial Purchasers”) in a Rule 144A/Regulation S offering.

For the Three Months Ended August 31, 2026

absence of significant changes in the underlying economics, contractual terms, or assumptions that would materially impact the estimated fair values of the instruments since the acquisition date.

The Company has determined the fair value of its 2030 Senior Secured Notes, 2031 Senior Secured Notes and 2031 7 % Senior Secured Notes to be approximately $ 2.5 billion, $ 2.0 billion and $ 1.5 billion, respectively, as of August 31, 2026 using level 2 inputs.

The Company has determined the fair value of its 2030 Senior Secured Notes and the 2031 Senior Secured Notes to be approximately $ 2.5 billion and $ 2.2 billion, respectively, as of May 31, 2026 using level 2 inputs.

The Company has determined the fair value of its fixed rate term loans to be $ 18.4 million and $ 22.4 million, in aggregate, as of August 31, 2026 and May 31, 2026, respectively, based on discounted cash flow analysis, which uses Level 3 inputs.

The Company has determined the fair value of its Convertible Notes, senior unsecured to be $ 399.1 million and $ 392.9 million as of August 31, 2026 and May 31, 2026, respectively, based on discounted cash flow analysis, which uses Level 3 inputs.

Cloud SAFE Payoff

During the fiscal year ended May 31, 2025, the Company entered into two Simple Agreements for Future Equity (“SAFEs”) with an investor for equity in Applied Digital Cloud Corporation, which was, at that time, a wholly-owned subsidiary, for aggregate proceeds of $ 12.0 million.

On June 2, 2026, following an agreement reached with the investor, the Company paid off all amounts outstanding under the SAFEs, totaling $ 13.3 million.

During the three months ended August 31, 2026, the Company recorded a loss of $ 1.3 million, which is included within other expense, net within the unaudited condensed consolidated statement of operations.

7.000 % Senior Secured Notes due 2031

On June 16, 2026, the Company’s subsidiary APLD ComputeCo 3 LLC (“APLD ComputeCo 3”) completed a private offering of 7.000 % Senior Secured Notes due 2031 (the “2031 7.000 % Notes”).

The 2031 7.000 % Notes were sold pursuant to the terms of a purchase agreement, dated as of June 9, 2026, entered into by and among APLD ComputeCo 3, the subsidiary guarantors thereto and Goldman Sachs & Co.

LLC, as representative (the “Representative”) of the several initial purchasers (the “Initial Purchasers”), in a Rule 144A/Regulation S offering.

The aggregate principal amount of notes sold in the offering was $ 1.59 billion.

The 2031 7.000 % Notes were issued at a price equal to 100 % of their aggregate principal amount.

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.

APLD ComputeCo 3 used or intends to use the net proceeds from the offering to fund the construction and associated expenses of its ELN-04 data center project, repay in full the outstanding borrowings and related amounts under its then existing bridge facility, fund debt service reserves and interest during construction, and pay transaction and operating expenses.

Also on June 16, 2026, APLD ComputeCo 3, its direct parent and the subsidiary guarantors entered into an indenture for the 2031 7.000 % Notes (the “2031 7.000 % Notes Indenture”) with Wilmington Trust, National Association, as trustee (the “Trustee”) and collateral agent (the “Collateral Agent”), governing the 2031 7.000 % Notes.

The 2031 7.000 % Notes are senior secured obligations of APLD ComputeCo 3 and bear interest at a rate of 7.000 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2026.

The 2031 7.000 % Notes will mature on June 15, 2031, unless earlier redeemed or repurchased in accordance with their terms.

The principal amount of the 2031 7.000 % Notes will amortize on a semi-annual basis beginning after the final commencement date of the applicable data center leases in effect on the issue date.

The initial annual amortization amount will equal 2.70 % of the original aggregate principal amount of the 2031 7.000 % Notes and will increase by 0.50 % per annum on each anniversary of the issue date commencing after the first installment is due, subject to adjustment as set forth in the 2031 7.000 % Notes Indenture.

On or after June 15, 2028, APLD ComputeCo 3 may redeem the 2031 7.000 % Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the 2031 7.000 % Notes Indenture.

Prior to June 15, 2028, APLD ComputeCo 3 may redeem the 2031 7.000 % Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100 % of the principal amount redeemed, plus an applicable “make-whole” premium and accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, prior to June 15, 2028, APLD ComputeCo 3 may redeem up to 40 % of the aggregate principal amount of the 2031 7.000 % Notes with the proceeds of

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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”).

The 2030 Notes are senior secured obligations of the Issuer and bear interest at a rate of 9.25 % per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2026.

The 2030 Notes will mature on December 15, 2030, unless earlier redeemed or repurchased in accordance with their terms.

The principal amount of the 2030 Notes will amortize on a semi-annual basis on June 15 and December 15 of each year, beginning on December 15, 2027, in amounts set forth in the Indenture.

Required amortization shall be subject to adjustment in case of partial redemption or repurchase or, in certain circumstances, the issuance of additional notes.

On or after December 15, 2027, the Issuer may redeem the 2030 Notes at its option, in whole at any time or in part from time to time, at the redemption prices set forth in the Indenture.

Prior to December 15, 2027, the Issuer may redeem the 2030 Notes at its option, in whole at any time or in part from time to time, at a redemption price equal to 100 % of the principal amount of the 2030 Notes redeemed, plus a “make-whole” premium and accrued and unpaid interest, if any.

In addition, prior to December 15, 2027, the Issuer may redeem up to 40 % of the aggregate principal amount of the 2030 Notes in an amount not to exceed the amount of the proceeds of certain equity offerings, at the redemption price set forth in the Indenture, plus accrued and unpaid interest.

The Indenture limits the ability of the Issuer and the Subsidiary Guarantors to, among other things:

For the Three Months Ended August 31, 2026

certain equity offerings at the redemption price set forth in the 2031 7.000 % Notes Indenture, plus accrued and unpaid interest, , to, but excluding, the redemption date, subject to the conditions set forth in the 2031 7.000 % Notes Indenture.

Prior to June 15, 2028, APLD ComputeCo 3 may also redeem up to 10 % of the original aggregate principal amount of the 2031 7.000 % Notes during each calendar year at the redemption price set forth in the 2031 7.000 % Notes Indenture, plus accrued and unpaid interest, to, but excluding, the redemption date.

The 2031 7.000 % Notes Indenture limits the ability of APLD ComputeCo 3 and the subsidiary guarantors to, among other things:

(i) incur or guarantee additional indebtedness;

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(v) consummate certain asset sales;

(vi) enter into sale and lease back transactions;

(vii) hold assets or conduct operations unrelated to the operation of the Facilities and certain additional projects;

(viii) engage in certain transactions with its affiliates;

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.

Additionally, upon the occurrence of specified change of control events, the Issuer must offer to repurchase the 2030 Notes at 101 % of the principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date.

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 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).

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

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.

(vi) enter into sale and leaseback transactions;

(vii) conduct certain operations or hold certain assets outside their permitted businesses;

(viii) engage in certain transactions with affiliates;

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

These covenants are subject to a number of important qualifications and exceptions as set forth in the 2031 7.000 % Notes Indenture.

Additionally, upon the occurrence of specified change of control events, APLD ComputeCo 3 must offer to repurchase the 2031 7.000 % Notes at 101 % of the aggregate principal amount, plus accrued and unpaid interest, if any, to, but excluding, the purchase date.

Upon receipt of certain termination fees under an applicable data center lease, APLD ComputeCo 3 generally will be required to apply the proceeds to redeem the 2031 7.000 % Notes at 100 % of the principal amount, plus accrued and unpaid interest, to, but excluding, the redemption date, subject to the permitted deferral and replacement tenant provisions set forth in the 2031 7.000 % Notes Indenture.

The 2031 7.000 % Notes Indenture also provides for customary events of default.

The 2031 7.000 % Notes are fully and unconditionally guaranteed on a senior secured basis, jointly and severally, by APLD ComputeCo 3’s subsidiaries, including APLD ELN-04 HoldCo LLC, APLD ELN-04 LLC and APLD ELN-04 LandCo LLC.

The 2031 7.000 % Notes and the related guarantees are secured, subject to permitted liens and certain exclusions, by first-priority liens on substantially all of the assets of APLD ComputeCo 3 and the subsidiary guarantors, including the applicable project accounts, and by a pledge of the equity interests of APLD ComputeCo 3 held by its direct parent.

In connection with the 2031 7.000 % Notes, the Company provides a customary completion guarantee with respect to the construction and completion of the ELN-04 data center project.

Other than the completion guarantee, the Company is not a guarantor of any obligations under the 2031 7.000 % Notes.

As of August 31, 2026, the remaining unamortized debt issuance costs were approximately $ 28.7 million.

The debt issuance costs are presented as a direct deduction from the outstanding principal balance of the 2031 7.000 % Notes and are amortized to interest expense using the effective interest method.

Satisfaction of Escrow Release Condition for 6.750 % Senior Secured Notes due 2031

On June 18, 2026, APLD ComputeCo 2 LLC satisfied the escrow release condition under the escrow agreement for the 6.750 % Senior Secured Notes due 2031 (the “2031 6.750 % Notes”) and executed and delivered to the escrow agent an escrow release certificate directing the escrow agent to release the funds in the escrow account to APLD ComputeCo 2 and apply such funds in accordance with the escrow agreement and the Indenture for the 2031 6.750 % Notes.

Upsize 2026 Revolving Credit Facility

On June 26, 2026, the commitments under the 2026 Revolving Credit Facility were increased by $ 80.0 million, from $ 350.0 million to $ 430.0 million.

Following the increase, the remaining accordion capacity under the facility was $ 120.0 million.

The additional commitments are subject to the existing terms and conditions of the 2026 Revolving Credit Facility.

As of August 31, 2026, approximately $ 82.4 million was drawn under the 2026 Revolving Credit Facility and approximately $ 241.0 million of standby letters of credit were outstanding under the 2026 Revolving Credit Facility.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

For the Three Months Ended August 31, 2026

Loan and Security Agreement

On June 30, 2026, the Company entered into a Loan and Security Agreement (the “Texas Capital Loan Agreement”) with Texas Capital Bank (“Texas Capital”) and issued a related promissory note in the stated principal amount of $ 58.5 million (the “Texas Capital Note”).

The Texas Capital Note bears interest at a rate per annum equal to one-month Term SOFR plus 2.75 % and matures on June 30, 2031.

The Texas Capital Note is secured by certain corporate assets.

The Texas Capital Loan Agreement requires the Company to maintain a specified level of liquidity based, in part, on the Company’s market capitalization and requires the Company’s market capitalization to remain above $ 2.0 billion as of the close of any trading day.

The Texas Capital Loan Agreement also contains customary affirmative and negative covenants, cross-default provisions, and events of default.

The Company was in compliance with the applicable financial covenants under all outstanding debt arrangements as of August 31, 2026.

Balance Sheet Components

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

February 28, 2026 May 31, 2025

August 31, 2026 May 31, 2026

Prepaid expenses and other current assets

Short term equipment deposit $ 380,824 $ —

Short term equipment and utility deposit $ 560,523 $ 500,290

Deferred issuance costs 2,966 3,397

Short term lease incentive 8,543 6,231

Related party receivable (1)

59,334 58,632

Prepaid expenses 29,641 24,471

2 unchanged sentences

$ 685,638 $ 613,692

February 28, 2026 May 31, 2025

(1) Balance as of August 31, 2026 consists of the $ 59.2 million promissory note and $ 0.1 million of deferred construction costs with Base Electron.

See Note 7 - Related Party Transactions for further discussion.

August 31, 2026 May 31, 2026

Long term lease incentive

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170,978 47,719

Deferred construction costs 12 45

54,387 54,513

Lease receivables 34,141 21,026

Deferred lease costs — 10,729

Derivative assets (2)

169,837 163,283

Investments in other companies (3)

64,092 123,329

Investment in related party (4)

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Total Other assets $ 1,112,220 $ 830,710

(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 .

(1) Balance as of August 31, 2026 consists of goodwill held at ChronoScale.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

(2) Balance as of August 31, 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 8 - Fair Value Measurements , Note 16 - Temporary Equity, and Note 11 - Derivative Assets for further discussion.

(3) Includes $ 34.7 million of warrants, which are accounted for as derivatives, and $ 7.8 million of common shares, which are recorded at fair value, issued by B&W to the Company in association with the Company’s investment in B&W.

See Note 11 - Derivative Assets for further discussion.

The balance also includes a $ 10.0 million investment by the Company in Corintis SA (“Corintis”) in exchange for Series A1 preferred shares, approximating 4 % 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.

The investment in Corintis is accounted for at cost under ASC 321.

During the quarter ended August 31, 2026, the Company invested in three private companies for a total of $ 8.2 million, which are included within this balance.

These investments are accounted for at cost under ASC 321.

See Note 8 - Fair Value Measurements for further discussion on fair value measurements for equity investments and derivative assets.

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

See further discussion of the transaction in Note 7 - Related Party Transactions .

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

February 28, 2026 May 31, 2025

August 31, 2026 May 31, 2026

Accrued liabilities

5 unchanged sentences

$ 850,355 $ 548,493

February 28, 2026 May 31, 2025

August 31, 2026 May 31, 2026

Other current liabilities

Construction retainer $ 154,749 $ 95,848

Other 3,524 1,641

Total Other current liabilities $ 158,273 $ 97,489

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

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.

APLD HPC TopCo 2’s Redeemable Noncontrolling Interest

The preferred units and corresponding common units associated with APLD HPC TopCo 2’s redeemable 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).

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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

August 31, 2026 May 31, 2026

Expected maturity date October 6, 2032 October 6, 2032

Credit spread (annual) 8.29 % 9.00 %

Yield volatility 42.5 % 40.0 %

Put right/trigger event de minimus de minimus de minimus

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

Put right/trigger event de minimis de minimis

Risk-free rate USD Yield Curve USD Yield Curve

Number of time-steps 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.

During the three months ended August 31, 2026, the Company recorded a gain on change in fair value of derivatives of $ 6.6 million, which is included within the loss on change in fair value of derivatives assets within the unaudited condensed consolidated statement of operations.

During the fiscal year ended May 31, 2026, the Company entered into agreements which resulted in the Company acquiring 500,000 shares of Babcock & Wilcox (“B&W”) common stock as well as two warrants to purchase 2,600,000 shares and 2,630,000 shares, respectively, of B&W common stock with an exercise price of $ 4.11 for a period of seven years .

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

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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

The estimated fair value of the B&W Warrants are based on the following significant inputs as of August 31, 2026 and May 31, 2026:

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

August 31, 2026 May 31, 2026

Time to expiry 6.18 years 6.43 years

3 unchanged sentences

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

Based upon the criteria set forth in ASC 810, Consolidation , the Company consolidates variable interest entities (“VIEs”) in which it has a controlling financial interest and is therefore deemed the primary beneficiary.

During the three months ended August 31, 2026, the Company recorded a loss of $ 56.1 million, which is included within the loss on change in fair value of derivatives assets within the unaudited condensed consolidated statement of operations.

Variable Interest Entities

Based upon the criteria set forth in ASC 810, Consolidation , the Company consolidates VIEs in which it has a controlling financial interest and is therefore deemed the primary beneficiary.

A controlling financial interest will have both of the following characteristics:

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and (b) the obligation to absorb the VIE losses and the right to receive benefits that are significant to the VIE.

As of November 30, 2025, the Company has determined that it was the primary beneficiary of one VIE, APLD HPC TopCo 2 LLC (“TopCo 2”), as it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

Additionally, under the A&R UPA (as defined below), the Company is required to fund its portion of the equity to TopCo 2 for the applicable project at the rate of $ 750,000 per MW of capacity (less any equity capital previously invested in the project by the Company or any of its subsidiaries).

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

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 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 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.

Consolidated VIE

The Company has determined that it is the primary beneficiary of one VIE, APLD HPC TopCo 2 LLC (“TopCo 2”), as it has both the power to direct the activities that most significantly impact the entity’s economic performance and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE.

During the fiscal year ended May 31, 2026, TopCo 2 completed four closings under its Amended and Restated Unit Purchase Agreement (“A&R UPA”), issuing 1,825,000 preferred units and 144,593 corresponding common units for proceeds of approximately $ 1.8 billion to MIP HPC Holdings, LLC.

The issuance of the preferred units at closing resulted in a redeemable noncontrolling interest - see Note 16 - Temporary Equity for further discussion.

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 14 - Warrants .

The purpose of TopCo 2 is to design, build and operate high-performance, sustainably engineered data centers and colocation services for artificial intelligence, cloud, and networking workloads in North Dakota.

TopCo 2 is a bankruptcy-remote legal entity with separate assets and liabilities.

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 February 28, 2026, which are included in the unaudited condensed consolidated balance sheets (in thousands):

February 28, 2026

The creditors of TopCo 2 have recourse to the Company’s general

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

The following table presents the assets and liabilities held by TopCo 2 as of August 31, 2026, which are included in the unaudited condensed consolidated balance sheets (in thousands):

August 31, 2026

Cash and cash equivalents $ 2,909,372

6 unchanged sentences

Accrued liabilities 745,548

Current portion of debt

Current deferred revenue 39,669

2 unchanged sentences

Total liabilities

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.

Third-party equity ownership interests in TopCo 2 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 (loss) attributable to noncontrolling interests is disclosed in the unaudited condensed consolidated statement of operations.

Stockholders' Equity

June 2025 At-the-Market Sales Agreement

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

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

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

Unconsolidated VIE

As discussed in Note 7 - Related Party Transactions , Base Electron is a related party formed to develop power generation and infrastructure projects supporting the broader AI industry.

The Company has determined that Base Electron is a VIE because it does not have sufficient equity at risk to finance its activities without additional subordinated financial support.

The Company's variable interests in Base Electron consist of its equity investment and related party promissory note.

Additionally, the Company has determined that it is not the primary beneficiary of Base Electron because it does not have the power to direct the activities that most significantly impact Base Electron's economic performance.

Accordingly, the Company does not consolidate Base Electron because ASC 810 requires both power and economics for consolidation.

As of August 31, 2026, the carrying value of the Company's investment in Base Electron was $ 2.0 million and the outstanding balance of the related party promissory note was $ 59.3 million, which together reflect the Company's maximum exposure to loss.

The Company is not contractually required to provide financial support to Base Electron and did not provide material non-contractual financial support during the three months ended August 31, 2026.

The Company’s tax provision or benefit from income taxes for interim periods is determined using an estimate of the Company’s annual effective tax rate, adjusted for discrete items, if any, that are considered in the relevant period.

The Company has an effective tax rate of approximately ( 1 )% and 0 % for the three months ended August 31, 2026, and August 31, 2025, respectively, primarily due to the recording of a valuation allowance against its deferred tax assets, as well as the mix of earnings across its separate operational components within the Company.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

Increase In Authorized Shares

On November 5, 2025, at the Annual Stockholders’ Meeting, the Company’s stockholders approved an amendment to the Second Amended and Restated Articles of Incorporation, increasing the number of shares of common stock authorized for issuance thereunder to 600,000,000 shares, which became effective upon filing on November 6, 2025.

Treasury Stock

On October 7, 2025, the Board of Directors authorized and approved 9,291,199 shares of the Company’s capital stock that was currently held in treasury stock to be retired and returned to the authorized but unissued capital stock.

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 February 28, 2026.

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

For the Three Months Ended August 31, 2026

ASC 740, Income Taxes (“ASC 740”), requires a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some or a portion or all the deferred tax assets will not be realized.

As of August 31, 2026 and May 31, 2026, the Company estimated a portion of its deferred tax assets will be utilized to offset the Company’s deferred tax liabilities.

Based upon the level of historical losses and future projections over the period in which the net deferred tax assets are deductible, at this time, management believes it is more likely than not that the Company will not realize the benefits of the remaining deductible temporary differences, and as a result the Company has recorded a valuation allowance as of August 31, 2026 and May 31, 2026 for the amount of deferred tax assets that will not be realized.

There were no material changes to the unrecognized tax benefits for the three months ended August 31, 2026.

A summary of warrant activity for the three months ended August 31, 2026 is presented below:

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

Outstanding at May 31, 2026 28,091,029 $ 8.61 7.86

18,097,718 $ 7.63 8.52

Granted — — —

1 unchanged sentence

Exercised — — —

Outstanding at February 28, 2026

Outstanding at August 31, 2026

28,091,029 $ 8.61 7.60

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

As of August 31, 2026, all of the AI Warrants were outstanding.

Macquarie Warrants

1 unchanged sentence

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 February 28, 2026.

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

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

As of August 31, 2026, 200,000 of the STB Warrants remain outstanding.

CoreWeave Warrants

On May 28, 2025, in connection with the entry into the data center leases with CoreWeave (the "CoreWeave Leases"), the Company issued to CoreWeave a warrant (the “CoreWeave Warrant”) to acquire up to 13,062,521 shares of the Company's

In connection with certain data center leases with CoreWeave, the Company issued warrants to CoreWeave to purchase up to 13,062,521 and 8,393,611 shares of the Company’s common stock on May 28, 2025 and August 28, 2025, respectively, at an exercise price of $ 7.19 and $ 10.75 per share, respectively (the “CoreWeave Warrants”).

The CoreWeave Warrants are exercisable upon issuance, upon payment of the applicable exercise price in cash or through cashless exercise for a period of 10 years each from the respective issuance date of such warrants.

As of August 31, 2026, 21,455,832 warrant shares remain outstanding.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

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.

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

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

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

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

Building 4 Warrant

Contractual term 10 years

Volatility 80 %

Risk-free rate 4.18 %

Dividend yield — %

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

For the Three Months Ended August 31, 2026

On October 6, 2025, in connection with the Amended and Restated Unit Purchase Agreement dated October 3, 2025 (the “Purchase Agreement”), the Company issued MIP VI REIT AIV, L.P.

1 unchanged sentence

two warrants (the “MAM Warrants”) to acquire up to 2,400,000 shares of the Company’s common stock at an exercise price of $ 8.29 per share, subject to adjustment in accordance with the terms and conditions set forth in the warrants.

The MAM Warrants were 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 MAM Warrants are based on the following significant inputs:

Contractual term 5.5 years

Volatility 95 %

Risk-free rate 3.76 %

Dividend yield — %

The resulting fair value of the MAM Warrants was $ 24.47 per share, totaling $ 58.7 million.

The Company elected a relative fair value approach to record the warrants as part of the overall MAM transaction and as such, $ 34.2 million, net of issuance costs, was recorded as additional paid in capital on the Company's unaudited condensed consolidated balance sheets.

The MAM Warrants have a five and one-half-year term.

As of August 31, 2026, the MAM Warrants have not been exercised and remain outstanding.

Stock-Based Compensation Plans

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

The 2024 Plan provides for grants of various equity awards for eligible employees, officers, non-employee directors and other service

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

The 2024 Plan provides for grants of various equity awards for eligible employees, officers, non-employee directors and other service providers.

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 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.

As of August 31, 2026, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 20.4 million under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award.

As of August 31, 2026, there are approximately 7.6 million shares of common stock available for issuance under the 2024 Plan.

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

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

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

Three Months Ended

August 31, 2026 August 31, 2025

Services and other cost of revenue $ 746 $ 773

Data center rental and other cost of revenue 270 8

Selling, general, and administrative 65,483 13,755

Capitalized (1)

1,128 521 3,056 828

Total stock-based compensation $ 69,164 $ 15,465

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

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

Restricted Stock Awards

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

The following is a summary of the activity and balances for unvested restricted stock awards granted during the three months ended August 31, 2026:

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

Number of Shares Weighted Average Grant Date Fair Value Per Share

1 unchanged sentence

35,722 $ 3.73

Vested ( 15,397 ) 4.33

Forfeited — —

Outstanding as of February 28, 2026

Outstanding as of August 31, 2026

35,722 $ 3.73

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 Nine Months Ended February 28, 2026

As of August 31, 2026, total remaining expense to be recognized related to these awards was $ 0.1 million and the weighted average remaining recognition period for the unvested awards was 0.6 years.

Restricted Stock Units

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

The following is a summary of the activity and balances for unvested restricted stock units granted during the three months ended August 31, 2026:

Number of Shares Weighted Average Grant Date Fair Value Per Share

4 unchanged sentences

Forfeited ( 38,553 ) 14.20

Outstanding as of February 28, 2026

Outstanding as of August 31, 2026

7,767,668 $ 23.08

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.

As of August 31, 2026, total remaining expense to be recognized related to these awards was $ 150.6 million and the weighted average remaining recognition period for the unvested awards was 2.6 years.

Performance Stock Units

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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.

In the prior fiscal year, 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 — %

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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:

For the Three Months Ended August 31, 2026

The following is a summary of the activity and balances for unvested performance stock units granted during the three months ended August 31, 2026:

Number of Shares Weighted Average Grant Date Fair Value Per Share

1 unchanged sentence

14,386,250 $ 18.45

Granted 7,485,000 29.42

Vested ( 6,911,250 ) 10.14

Forfeited — —

Outstanding as of February 28, 2026

Outstanding as of August 31, 2026

7,475,000 $ 26.14

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.

As of August 31, 2026, total remaining expense to be recognized related to these awards was $ 90.8 million and the weighted average remaining recognition period for the unvested awards was 3.5 years.

Temporary Equity

Preferred Stock

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

Series F Convertible Preferred Stock

Series E-1 Redeemable Preferred Stock

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

Issuances, net of costs

— — — — 33,404 30,437

— — ( 43,000 ) ( 43,000 ) — —

Outstanding as of February 28, 2025

301,673 $ 6,932 — $ — 39,763 $ 36,287

Series E Redeemable Preferred Stock

Series F Convertible Preferred Stock

Series E-1 Redeemable Preferred Stock

Outstanding as of May 31, 2024

— $ — — $ — — $ —

Issuances, net of costs

301,673 6,932 53,191 48,350 39,763 36,287

— — ( 53,191 ) ( 48,350 ) — —

Outstanding as of February 28, 2025

301,673 $ 6,932 — $ — 39,763 $ 36,287

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):

The following is a summary of the activity and balances for preferred stock during the three months ended August 31, 2025 (in thousands, other than share data):

Series E Redeemable Preferred Stock

1 unchanged sentence

Series G Convertible Preferred Stock

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

Outstanding as of June 1, 2025 301,673 $ 6,932 62,485 $ 57,011 78,000 $ 72,094

Issuances, net of costs

2 unchanged sentences

— — ( 225 ) ( 225 ) — —

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

Outstanding as of August 31, 2025

301,673 $ 6,932 62,260 $ 56,796 — $ —

The following is a summary of the activity and balances for preferred stock during the three months ended August 31, 2026 (in thousands, other than share data):

Series E Redeemable Preferred Stock

1 unchanged sentence

Series G Convertible Preferred Stock

Outstanding as of May 31, 2025

301,673 $ 6,932 62,485 $ 57,011 78,000 $ 72,094

Outstanding as of June 1, 2026 276,673 $ 6,306 61,909 $ 56,460 — $ —

Issuances, net of costs

2 unchanged sentences

( 276,673 ) ( 6,306 ) ( 78 ) ( 87 ) — —

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

Outstanding as of August 31, 2026 — $ — 61,831 $ 56,373 128,750 $ 124,929

Series E Redeemable Preferred Stock

2 unchanged sentences

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

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

Holders of the Series E Preferred Stock are entitled to receive cumulative dividends at a fixed rate of 9.0 % per annum.

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

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

During the three 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.

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

In the event of liquidation, holders are entitled to receive $ 25.00 per share (the “Series E Stated Value”) plus any accrued but unpaid dividends before any distributions are made to common stockholders.

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

Holders may require the Company to redeem any portion of their Series E Preferred Stock at any time for a "Settlement Amount" calculated as the Series E Stated Value plus any unpaid dividends, less a Holder Optional Redemption Fee, equal to a percentage of the Series E Stated Value based on the year when the redemption occurs as follows:

9.00 % prior to the first anniversary of the respective tranche closing date (the "Original Issuance Date");

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

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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.

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

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

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

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

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

For the Three Months Ended August 31, 2026

There were no material changes to the terms of the Series E Preferred Stock during the three months ended August 31, 2026.

During the three months ended August 31, 2026 and August 31, 2025, the Company declared and paid approximately $ 163,000 and $ 170,000 , respectively, of dividends related to Series E Preferred Stock as presented on the unaudited condensed consolidated statement of operations.

During the three months ended August 31, 2026, all 276,673 shares of Series E Preferred Stock were redeemed.

Series E-1 Redeemable Preferred Stock

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

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

Holders of the Series E-1 Preferred Stock are entitled to receive cumulative dividends at a fixed rate of 9.0 % per annum of the Series E-1 Stated Value.

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

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

During the three and nine months ended February 28, 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.

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

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

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

Holders may require the Company to redeem any portion of their Series E-1 Preferred Stock at any time for a "Settlement Amount" calculated as the Series E-1 Stated Value plus any unpaid dividends, less a Holder Optional Redemption Fee equal to a percentage of the Series E-1 Stated Value based on the year when the redemption occurs as follows:

9.00 % prior to the first anniversary of the respective tranche closing date (the "Original Issuance Date");

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:

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

The Settlement Amount can be settled in cash or shares of common stock at the sole option of the Company, subject to a share cap (if required by Nasdaq rules and regulations), which limits the total shares deliverable upon redemption to 19.99 % of the common stock outstanding immediately prior to the Series E-1 Preferred Stock offering ( 25,889,470 shares, the “Share Cap”), unless approval by the Company’s stockholders is obtained to exceed the Share Cap.

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

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 nine months ended February 28, 2026, 296 shares of Series E-1 Preferred Stock were redeemed.

There were no material changes to the terms of the Series E-1 Preferred Stock during the three months ended August 31, 2026.

During the three months ended August 31, 2026 and August 31, 2025, the Company declared and paid approximately $ 1.4 million and $ 1.4 million, respectively, of dividends related to the Series E-1 Preferred Stock as presented on the unaudited condensed consolidated statements of operations.

During the three months ended August 31, 2026, 78 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 “Commitment Date”) and terminating on the earlier of (i) the 36-month anniversary of the Commitment Date or (ii) such date as there ceases to be a sufficient number of authorized but unissued shares of common stock remaining under the Exchange Cap (as defined in the PEPA).

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

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

Conversion of the Series G Preferred Stock is subject to a customary 4.99 % beneficial ownership limitation, as well as a 19.99 % conversion limitation pursuant to the applicable Nasdaq Listing Rules (the “Exchange Cap”).

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

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

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

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

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

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

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

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

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

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.

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

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

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

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

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.

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

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

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

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

On October 7, 2025, the Company entered into the third amendment (the “Third Amendment”) to the PEPA to, among other things, increase the aggregate commitment amount of the shares of the Series G Preferred Stock from $ 450.0 million to $ 590.0 million.

In addition, on October 14, 2025, the Company filed a fourth amendment (the “Fourth CoD Amendment”) to the Series G Certificate of Designation, as amended.

The Fourth CoD Amendment amended the Series G Certificate of Designation, as amended, to increase the Floor Price (as set forth in Section 1.5(c)(i) of the Certificate of Designation) to $ 34.00 from $ 22.00 .

On October 21, 2025, the Company entered into the fourth amendment (the “Fourth Amendment”) to the PEPA to, among other things:

(i) increase the aggregate commitment amount of the shares of Series G Preferred Stock, from $ 590.0 million to $ 1.59 billion;

(ii) subject to waiver by a majority-in-interest of the investors, (a) set the maximum put issuance amount to $ 75.0 million per issuance, (b) set the limit to one put issuance per seven (7) business day period, and (c) set the maximum aggregate stated value of Series G Preferred Stock outstanding at any one time to $ 75.0 million;

(iii) increase the original discount from 2 % to 3 %;

(iv) eliminate the placement agent fee;

and (v) eliminate the prohibition on Variable Rate Transactions (as defined in the PEPA).

On October 21, 2025, in connection with the entry into the Fourth Amendment, the the Company filed an amendment (the “Fifth CoD Amendment”) to the Series G Certificate of Designation, originally filed with the Secretary of State of the State of Nevada on April 30, 2025, as amended on each of August 14, 2025, September 11, 2025, September 25, 2025 and October 14, 2025 (as amended, the “Certificate of Designations”).

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 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 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.

On June 26, 2026, the Company entered into the sixth amendment (the “Sixth Amendment”) to the PEPA to increase the aggregate commitment amount under the PEPA for the issuance of shares of Series G Preferred Stock from $ 1,590,000,000 to $ 2,000,000,000 .

There were no other material changes to the terms of the Series G Preferred Stock during the three months ended August 31, 2026.

As Series G Preferred Stock may be reissued, during the three months ended August 31, 2026, the Company issued and sold 283,250 shares of Series G Preferred Stock for gross proceeds of $ 275.0 million.

During the three months ended August 31, 2026, 154,500 shares of Series G Preferred Stock were converted into 4.5 million shares of the Company’s common stock.

As of August 31, 2026, 128,750 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 %.

The dividend rate will be further increased (i) by the amount that the weighted average all-in annual interest rate on certain indebtedness exceeds 8.75 % per annum for so long as such indebtedness is outstanding and (ii) for so long as certain significant events of default or other “trigger events” under the A&R LLCA remain uncured, by 200 basis points per annum.

Subject to limited exceptions, the dividends are payable (i) from the initial closing through October 6, 2035, at TopCo 2’s election, either in cash or in kind, and (ii) after October 6, 2035, in cash only.

Additionally, the preferred units carry a minimum 1.80 x multiple of invested capital liquidation preference, inclusive of the value of the common units;

provided, that (x) in connection with an initial public offering or a drag-along sale in which the sellers receive highly liquid securities, the minimum multiple of invested capital increases to 2.00 x and (y) with respect to any additional equity contributions with respect to the Polaris Forge 1 (other than pursuant to the additional closings under the A&R UPA), the then applicable minimum multiple of invested capital will be reduced by an amount that reflects the time between when MIP HPC Holdings, LLC first committed to make the investment and when the actual contribution is made, calculated as interest at a fixed annual rate of 12.75 %, accruing daily, on the amount of such additional equity contribution for such period.

The preferred units and the common units are redeemable after April 6, 2028, in exchange for:

(i) from April 6, 2028 up to October 6, 2029, the sum of (x) the applicable minimum multiple of invested capital, plus (y) 120 % of the fair market value of such common unit(s);

(ii) from October 6, 2029 up to October 6, 2030, the sum of (x) the applicable minimum multiple of invested capital, plus (y) 112.5 % of the fair market value of such common unit(s);

and (iii) from and after October 6, 2030, the greater of (x) the accreted amount, plus any accrued and unpaid dividend, plus the fair market value of such common units, plus certain indemnity payments by TopCo 2 for breaches of business representations of the TopCo 2 under the A&R UPA, if any, and (y) the applicable multiple of invested capital minus certain indemnity payments by the Company for breaches of fundamental representations of the Company under the A&R UPA (such greater amount, the “Liquidation Preference Amount”).

If the preferred units and common units are outstanding on October 6, 2032, or if certain trigger events occurs and are not cured within specified time periods, MIP HPC Holdings, LLC may require TopCo 2 to commence a customary marketed sale process managed by an independent investment bank, where the proceeds of any such sale are to be used to redeem the preferred units and the common units on the terms set forth above.

Distributions of available excess cash will be made in accordance with a multi-tiered waterfall, generally as follows:

(i) first, to MIP HPC Holdings, LLC, to pay certain specified losses under the A&R UPA, if any;

(ii) second, to MIP HPC Holdings, LLC, to pay any accrued but unpaid dividends on its preferred units;

(iii) third, to the MIP HPC Holdings, LLC, until it has received its Liquidation Preference Amount;

and (iv) fourth, to the holders of common units, pro rata in accordance with the number of common units held by them.

The preferred units and corresponding common units 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).

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 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 discussed within Note 12 - Variable Interest Entities above, APLD HPC TopCo 2 LLC (“TopCo 2”) completed four closings under its A&R UPA during the fiscal year ended May 31, 2026, issuing 1,825,000 preferred units and 144,593 corresponding common units for proceeds of approximately $ 1.8 billion to MIP HPC Holdings, LLC, which resulted in a redeemable noncontrolling interest.

There were no material changes to the terms of the redeemable noncontrolling interest during the three months ended August 31, 2026.

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

The Company adjusts net income in the unaudited condensed consolidated statements of operations to exclude the proportionate share of results that is attributable to the noncontrolling interest.

Additionally, the Company presents the proportionate share that is attributable to the noncontrolling interest as temporary equity within the unaudited condensed consolidated balance sheets.

This temporary equity presentation is the result of the noncontrolling interest being subject to certain redemption rights that are not entirely within the Company's control.

The Company adjusts net income in the unaudited condensed consolidated statements of operations to exclude the proportionate share of results that is attributable to the redeemable noncontrolling interest.

Additionally, the Company presents the proportionate share that is attributable to the redeemable noncontrolling interest as temporary equity within the unaudited condensed consolidated balance sheets.

This temporary equity presentation is the result of the redeemable noncontrolling interest being subject to certain redemption rights that are not entirely within the Company's control.

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 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 $ 28.7 million and $ 31.9 million for the three and nine months ended February 28, 2026, respectively.

See Note 11 - Derivative Assets for

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

further details.

The Company will adjust redeemable 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 $ 66.9 million for the three months ended August 31, 2026.

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 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 $ 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.

The carrying value of the redeemable noncontrolling interest was $ 2.0 billion and $ 2.0 billion as of August 31, 2026 and May 31, 2026, respectively.

The change in redeemable noncontrolling interest consists of $ 60.1 million of preferred stock dividends paid in-kind, $ 1.3 million of contributions from noncontrolling interest, net of costs and $ 6.8 million in current year net loss attributable to non-controlling interest.

Lessor Accounting

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

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

The first lease is for the full capacity of Building 2, our 100 MW data center, which was completed and became operational in November 2025.

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

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

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

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

On October 20, 2025, APLD FAR-01 LLC and APLD FAR-02 LLC, the Company’s subsidiaries, entered into a data center lease with a U.S.

based investment grade hyperscaler to deliver 200MW of critical IT load to support the hyperscaler’s AI and HPC infrastructure at Polaris Forge 2, which is currently under construction.

The initial 200 MW are phased within two buildings expected to begin to come online during the calendar year 2026.

On June 5, 2026, the Company entered into an approximately 15-year lease (with three five-year renewal options) with a high investment-grade hyperscaler at its Delta Forge 2 210 MW critical IT load campus located in its southern region, comprising a single building under construction.

The lease is for the full 210 MW of critical IT load, representing approximately $ 5.2 billion of contracted revenue over the base term, with expected delivery in the first half of calendar year 2028.

Following the signing of this lease, our aggregate contracted critical IT load is 1,410 MW.

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

These amounts do not reflect future rental revenues from renewal or replacement of existing leases unless the Company is reasonably certain it will exercise the

APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

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

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

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

1 unchanged sentence

FY27 $ 467,961

FY28 1,579,517

FY29 2,360,558

FY30 2,371,420

FY31 2,371,420

Thereafter 26,580,159

4 unchanged sentences

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

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

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

Three Months Ended Nine Months Ended

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

Three Months Ended

August 31, 2026 August 31, 2025

Operating lease cost:

10 unchanged sentences

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

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

The following table represents the Company’s future minimum lease payments as of August 31, 2026:

Operating Leases Finance Leases Total

11 unchanged sentences

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

Nine Months Ended

February 28, 2026 February 28, 2025

Three Months Ended

August 31, 2026 August 31, 2025

Weighted-average years remaining (in years):

4 unchanged sentences

Finance leases 9.9 % 9.9 %

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

Commitments and Contingencies

Energy Contracts

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.

As of August 31, 2026, the Company had a minimum commitment of approximately $ 12.1 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility payable over, approximately, the next 0.4 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.

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 Nine Months Ended February 28, 2026

Claims and Litigation

21 unchanged sentences

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

On June 5, 2024, following briefing and argument on the defendants’ motion to dismiss the Derivative Lawsuit, the Court entered an order granting the defendants’ motion without prejudice and dismissing all claims against all defendants, including the Company, on the grounds that the plaintiff failed to plead (1) demand futility as to each of plaintiff’s claims or (2) a claim for breach of fiduciary duty.

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

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

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

For the Three Months Ended August 31, 2026

including the Company, on the grounds that the plaintiff failed to plead (1) demand futility as to each of plaintiff’s claims or (2) a claim for breach of fiduciary duty.

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

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

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 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.

As of August 31, 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 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.

As discussed above, prior to the Business Combination, the Cloud Services Business was identified as a reportable segment.

Following the consummation of the Business Combination in May 2026, which resulted in the formation of ChronoScale, the Cloud Services Business is no longer a reportable segment because its activities are not regularly reviewed by the CODM, which is the Company’s Chief Executive Officer, for purposes of resource allocation and performance assessment.

As such, the results of ChronoScale, inclusive of the Cloud Services Business, which is now part of ChronoScale, are included in Other and are not separately presented as a segment for all periods presented.

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 available and evaluated regularly by the CODM.

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, loss on classification of held for sale and loss on abandonment of assets.

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

1 unchanged sentence

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

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

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

Cloud Services Business HPC Hosting Business

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

Costs and expenses:

Cost of revenues 22,992 6,282 43,558

Selling, general and administrative (1)

688 4,242 9,885

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

Loss on abandonment of assets

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

Segment profit (loss) $ 13,859 $ ( 52,194 ) $ 17,565

(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.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

Three Months Ended February 28, 2025

Data Center 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 )

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

For the Three Months Ended August 31, 2026

The following tables present segment information, including revenue by segment and segment profit (loss) for the three months ended August 31, 2026 and August 31, 2025 (in thousands):

Three Months Ended August 31, 2026

Data Center Hosting Business

Cloud Services Business

HPC Hosting Business

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

Services and other revenue $ 37,755 $ 183,518

Data center rental and other revenue — 79,120

Total segment revenue 37,755 262,638

Costs and expenses:

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

Services and other cost of revenue 23,978 176,100

Data center rental and other cost of revenue — 43,861

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 24,428 229,207

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

Segment profit $ 13,327 $ 33,431

Nine Months Ended February 28, 2025

Three Months Ended August 31, 2025

Data Center Hosting Business

Cloud Services Business

HPC Hosting Business

Revenue $ 104,254 $ 71,313 $ —

Related party revenue 1,926 — —

Services and other revenue $ 37,921 $ 26,296

Data center rental and other revenue — —

Total segment revenue 37,921 26,296

Costs and expenses:

Cost of revenues 70,607 91,359 100

Services and other cost of revenue 30,409 25,044

Data center rental and other cost of revenue — 140

Selling, general and administrative (1)

2,290 11,882 8,922

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

Loss on abandonment of assets

2 unchanged sentences

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026

For the Three Months Ended August 31, 2026

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

Three Months Ended

Nine Months Ended

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

August 31, 2026 August 31, 2025

Segment profit

1 unchanged sentence

$ 13,327 $ 6,035

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

HPC Hosting Business 33,431 ( 2,022 )

Total segment (loss) profit

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

Total segment profit 46,758 4,013

( 109,137 ) ( 13,775 )

Operating loss ( 62,379 ) ( 9,762 )

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

( 3,305 ) — ( 6,072 ) —

Loss on conversion of debt — — — 33,612

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

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

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

Interest expense 77,383 8,013

Interest income ( 35,821 ) ( 857 )

Loss on change in fair value of derivatives 49,511 —

Loss on change in fair value of investment 11,352 —

Other expense, net 1,311 —

Net loss before income tax expense $ ( 166,115 ) $ ( 16,918 )

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

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

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

Three Months Ended Nine Months Ended

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

Three Months Ended

August 31, 2026 August 31, 2025

Depreciation and amortization:

1 unchanged sentence

$ 2,386 $ 3,391

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

HPC Hosting Business

14,415 982 19,828 3,056

746 60 1,334 183

Total depreciation and amortization (2)

$ 41,912 $ 4,152

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

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

(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):

February 28, 2026 May 31, 2025

August 31, 2026 May 31, 2026

Data Center Hosting Business

$ 111,850 $ 113,788

Cloud Services Business 255,986 304,466

HPC Hosting Business

3 unchanged sentences

Total assets $ 11,707,176 $ 9,929,312

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

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

Loss Per Share

1 unchanged sentence

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.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

For the Three Months Ended August 31, 2026

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

The table below shows the calculation for earnings per share:

Three Months Ended Nine Months Ended

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

Three Months Ended

August 31, 2026 August 31, 2025

Net loss $ ( 184,055 ) $ ( 16,926 )

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

Net loss attributable to noncontrolling interest and redeemable noncontrolling interest ( 51,484 ) —

Preferred dividends ( 1,543 ) ( 1,576 )

Net loss attributable to common stockholders $ ( 237,082 ) $ ( 18,502 )

Net loss attributable to common stockholders:

Continuing operations $ ( 221,028 ) $ ( 18,502 )

Discontinued operations ( 16,054 ) —

Net loss $ ( 237,082 ) $ ( 18,502 )

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

Continuing operations $ ( 0.76 ) $ ( 0.07 )

Discontinued operations ( 0.06 ) —

Basic and diluted net loss per share $ ( 0.82 ) $ ( 0.07 )

Basic and diluted weighted average number of shares outstanding 291,557,618 255,892,902

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 Nine Months Ended February 28, 2026

As of August 31, 2026 and August 31, 2025, the Company had approximately 15.2 million and 14.4 million shares, respectively, of granted but unvested performance stock units and restricted stock units that would have a potentially dilutive effect on earnings per share.

As of August 31, 2026 and August 31, 2025, the Company had approximately 7.5 million and 4.4 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 25.5 million warrants outstanding as of August 31, 2026 and August 31, 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 August 31, 2026, 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

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

Subsequent to the quarter, 128,750 shares of Series G Preferred Stock were converted into an aggregate of 5.2 million shares of the Company’s common stock.

Sale of Legacy Ekso Business

On September 30, 2026, ChronoScale, through its wholly-owned subsidiary ChronoScale Intermediate LLC, completed the sale of its legacy Ekso business through two related transactions:

Ekso and its wholly-owned German subsidiary sold substantially all of the assets of Ekso’s “EksoWorks” industrial exoskeleton business, including the EVO product line, to DynaWear Tech, Inc.

under an asset purchase agreement, and immediately thereafter, ChronoScale Intermediate LLC sold all of the outstanding capital stock of Ekso, which held the remaining neuro-rehabilitation business, to WanderEkso Inc., a subsidiary of Wandercraft SAS, under a stock purchase agreement.

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APPLIED DIGITAL CORPORATION AND SUBSIDIARIES

Notes to the Condensed Consolidated Financial Statements (Unaudited)

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.

For the Three Months Ended August 31, 2026

Base Electron Power Purchase Agreement

On October 4, 2026, the Company entered into a Power Purchase Agreement with Base Electron, for the purchase of capacity and energy from an approximately 1,200 MW natural gas-fired generation facility to be developed by Base Electron in North Dakota, which is intended to provide dedicated generation for the Company’s Polaris Forge 3 campus expansion.

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