Applied Digital Corporation
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Item 1. Business
Overview
Our Business
We are a U.S.-based designer, developer, owner, and operator of large-scale, purpose-built data centers engineered to support high-performance computing (“HPC”) workloads, including artificial intelligence (“AI”), machine learning, and other accelerated-compute applications. We design, build, and operate high-performance, sustainably engineered data centers—which we refer to as AI factories—and deliver that capacity to investment-grade hyperscalers and other leading compute customers under long-term lease and hosting arrangements. Our standardized, repeatable design model spans site selection, design, construction, and operations, and has been qualified by major hyperscalers, enabling rapid, flexible deployment in both air-cooled and liquid-cooled configurations.
Over the past several fiscal years, we have evolved from a company focused on blockchain hosting into a purpose-built HPC data center platform organized around our proprietary AI factory model. Today, our growth, capital allocation, and operating focus are centered on developing and operating HPC data centers, while our legacy blockchain hosting operations represent a smaller, single-customer component of our business that we expect to continue to decline in relative significance over time.
We conduct our business through two reportable segments: our HPC data center hosting business (the “HPC Hosting Business”) and our blockchain data center hosting business (the “Data Center Hosting Business”). As discussed further under Note 1 - Business and Basis of Presentation and Note 19 - Business Segments, our cloud services business is no longer an operating or reportable segment following the May 2026 transaction.
Our Competitive Strengths
We believe the following strengths position us to capture growing demand for HPC and AI infrastructure:
Control of power-advantaged sites
We originate and control large, contiguous sites with access to substantial, cost-competitive power and the interconnection rights necessary to energize high-density compute at scale. We believe that securing power and interconnection ahead of demand is the principal constraint on new HPC capacity and a core differentiator for us from many of our competitors.
Purpose-built, high-density design
Our campuses are engineered for liquid-cooled, high-density graphics processing unit (GPU) deployments, with redundant electrical and mechanical systems designed to meet the uptime and performance requirements of mission-critical AI workloads.
Long-term contracted revenue with high-quality counterparties
Our HPC capacity is contracted under long-term leases, including with investment-grade hyperscalers, providing long-dated revenue visibility.
Standardized, repeatable AI factory platform
We develop our campuses using a standardized, franchise-style design that is engineered to deliver state-of-the-art data centers of approximately 150 MW in approximately 14 to 18 months, with low water usage. A scalable operating model which standardizes operations and leverages the same core roles across campuses and our master service and master telecom service agreements with leading hyperscalers—agreements that are difficult to obtain—position us to move quickly as hyperscaler AI infrastructure investment accelerates.
HPC Hosting Business
Our HPC Hosting Business designs, constructs, owns, and operates next-generation data centers purpose-built to host high-density GPU and other accelerated-compute infrastructure for AI, machine learning, and other HPC applications.
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Polaris Forge 1
Our flagship HPC campus, located in Ellendale, North Dakota, is being developed in phases. Our first HPC data center at the campus, with approximately 100 MW of critical IT load, became operational in October 2025. A second data center, expected to provide an additional 150 MW, is partially operational, and a third data center, also expected to provide approximately 150 MW, is under construction with an anticipated ready-for-service date in calendar year 2027.
On May 28, 2025, our subsidiaries APLD ELN-02 LLC and APLD ELN-03 LLC each entered into a data center lease (the "ELN-02 Lease" and the "ELN-03 Lease”) with CoreWeave, Inc. (“CoreWeave”) to deliver an aggregate of 250 MW of capacity to host CoreWeave’s HPC operations at Polaris Forge 1. On August 28, 2025, our subsidiary APLD ELN-02 C LLC entered into a third lease (the “Building 4 Lease”) with CoreWeave for an additional 150 MW, bringing the total contracted capacity at Polaris Forge 1 under our CoreWeave leases to 400 MW. We have guaranteed the obligations of the applicable subsidiaries under each of these leases. On March 30, 2026, as a result of an internal restructuring at CoreWeave, the ELN-02 Lease was amended and the ELN-03 Lease was assigned, in each case, to a wholly owned subsidiary of CoreWeave, CoreWeave Compute Acquisition Co. VIII, LLC, as further described in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations – Business Overview."
Polaris Forge 2
On August 18, 2025, we broke ground on our Polaris Forge 2 data center campus near Harwood, North Dakota, with an initial 200 MW data center. We currently anticipate reaching initial capacity in the second half of calendar year 2026 and full capacity in early calendar year 2027. On October 22, 2025, we entered into an approximately 15-year lease with a U.S.-based investment-grade hyperscaler for 200 MW of critical IT load at the campus.
Delta Forge 1
On January 22, 2026, we broke ground on Delta Forge 1, a 300 MW critical IT load campus located in a strategic southern U.S. market. On April 23, 2026, we entered into two approximately 15-year leases with a second U.S.-based investment-grade hyperscaler for an aggregate 300 MW of critical IT load at the campus.
Polaris Forge 3
Polaris Forge 3 is a 300 MW critical IT load data center campus located in our northern United States region, currently under construction across two buildings. The aggregate 300 MW of critical IT load is contracted under two approximately 15-year leases (with three five-year renewal options) with a high investment-grade hyperscaler, representing approximately $7.5 billion of contracted revenue over the base term, with expected delivery beginning in the second half of calendar year 2027 through the second half of calendar year 2028.
Delta Forge 2
Delta Forge 2 is a 210 MW critical IT load campus located in our southern region, comprising a single building under construction. The full 210 MW of critical IT load is contracted under an approximately 15-year lease (with three five-year renewal options) with a high investment-grade hyperscaler, representing approximately $5.2 billion of contracted revenue over the base term, with expected delivery in the first half of calendar year 2028.
Contracted Lease Portfolio
As of May 31, 2026, we had executed long-term leases representing approximately 1,410 MW of contracted critical IT load across five campuses, representing approximately $36.2 billion of total contracted revenue over the initial 15-year base lease terms. Each lease is a direct, long-term agreement with CoreWeave or an investment-grade hyperscaler, is structured
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on a take-or-pay basis, and is non-cancellable, such that a termination for convenience would require payment of the full remaining contractual value. The following table summarizes our contracted HPC lease portfolio as of May 31, 2026:
| Campus | Anchor Tenant | Contracted Critical IT Load | Lease Term | Total Contracted Revenue (1) | Expected Delivery (2) | ||||||||||||||
| Polaris Forge 1 | CoreWeave | 400 MW | 15 years | ~$11.0B | 2H25–1H27 | ||||||||||||||
| Polaris Forge 2 | Investment-grade hyperscaler | 200 MW | 15 years | ~$5.0B | 2H26–1H27 | ||||||||||||||
| Polaris Forge 3 | High investment-grade hyperscaler | 300 MW | 15 years | ~$7.5B | 2H27–2H28 | ||||||||||||||
| Delta Forge 1 | High investment-grade hyperscaler | 300 MW | 15 years | ~$7.5B | 1H27–1H28 | ||||||||||||||
| Delta Forge 2 | High investment-grade hyperscaler | 210 MW | 15 years | ~$5.2B | 1H28 | ||||||||||||||
| Total / Portfolio | 1,410 MW | ~$36.2B | 2H25–2H28 | ||||||||||||||||
(1)Total contracted revenue reflects the initial 15-year base term of each lease and excludes renewal options. Each lease includes multiple five-year renewal options (three five-year options, except Polaris Forge 2, which includes two five-year options), which are not reflected in the amounts shown.
(2)Expected delivery reflects management’s current estimates of the periods during which contracted capacity is expected to be placed in service and is subject to construction, permitting, interconnection, and other risks. Expected delivery is presented as calendar year periods.
Site and Power Pipeline
In addition to our contracted lease portfolio, we are developing and originating additional capacity that we expect to support future HPC leasing. We categorize this pipeline as follows:
Secured and under construction
As of May 31, 2026, we had approximately 1.5 GW of critical IT load that is contracted and operating or under construction across our five named campuses—Polaris Forge 1, Polaris Forge 2, and Polaris Forge 3 in our northern region and Delta Forge 1 and Delta Forge 2 in our southern region—of which approximately 100 MW was operating and revenue-generating. Each megawatt in this category is backed by land under our control and/or an executed utility power agreement.
Active pipeline
We are advancing an active development pipeline of over 3 GW of utility (gross) power, consisting of near-term greenfield sites in multiple states together with expansion capacity at our existing campuses, certain of which are scalable to 1 GW or more.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and the related notes appearing elsewhere in this Annual Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. You should read the sections titled “Risk Factors” and “Forward-Looking Statements” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
This Item generally discusses fiscal year 2026 and 2025 items and year-to-year comparisons between fiscal year 2026 and 2025. A comparison of our results of operations and cash flows for fiscal year 2025 and fiscal year 2024 is not included in this Annual Report and can be found under “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, filed with the SEC on July 30, 2025.
During the fiscal year 2026, we completed the contribution of our Cloud Services Business to ChronoScale (each as defined below), formerly Ekso (as defined below). As a result of this transaction, certain prior-period amounts presented in this Annual Report have been recast to conform to the current period presentation. The recast primarily reflects changes associated with the transaction, including revisions to segment reporting and the presentation of certain historical financial statement line items and related disclosures. As a result, certain fiscal year 2025 and fiscal year 2024 amounts presented in this Annual Report differ from the amounts previously reported in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.
Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “we,” “us,” “our,” and “the Company” are intended to mean the business and operations of Applied Digital Corporation and its subsidiaries.
Business Overview
We are a U.S. designer, developer, and operator of high-performance, sustainably engineered data centers and colocation services for artificial intelligence (“AI”), networking, and blockchain workloads. We provide digital infrastructure solutions to the rapidly growing industries of high-performance computing (“HPC”) and AI. As of May 31, 2026, we operated in two distinct business segments, data center hosting (the "Data Center Hosting Business") and HPC data center hosting (the “HPC Hosting Business”), all of which are included in our consolidated financial statements, as further discussed below. Management considers the Data Center Hosting Business and the HPC Hosting Business to be its core operations for long-run strategic and performance evaluation purposes.
We consolidate variable interest entities (“VIE”) and voting interest entities ("VOE") where it has been determined that the Company is the primary beneficiary of the entities' 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/VOE's economic performance and the obligation to absorb losses or the right to receive benefits of the VIE/VOE that could potentially be significant to the VIE/VOE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its power to direct the most significant activities of the VIE/VOE 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/VOE.
On May 5, 2026, the Company completed the previously announced divestiture of its cloud business pursuant to that certain Contribution and Exchange Agreement (the “Contribution and Exchange Agreement”), dated February 15, 2026, by and among Ekso Bionics Holdings, Inc. (“Ekso”), 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, a Nevada corporation, a wholly owned indirect subsidiary of the Company and a direct subsidiary of Contributor (“Cloud”), for purposes of consummating a business combination (the “Cloud Business Combination”). Pursuant to the Contribution and Exchange Agreement, Contributor contributed to Ekso all of its right, title and interest in and to 1,200 shares of common stock of Cloud, constituting 100% of the issued and outstanding equity of Cloud, in exchange for 138,216,820 newly issued shares of Ekso common stock, par value $0.001 per share. As a result of
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the Cloud Business Combination, Cloud became a wholly owned subsidiary of Ekso, Ekso changed its name to ChronoScale Corporation (“ChronoScale”) and ChronoScale’s common stock began trading on the Nasdaq Capital Market under the symbol “CHRN” on May 5, 2026. Immediately following the closing of the Cloud Business Combination, the Company (on an aggregate basis with Contributor), owned approximately 97% of the issued and outstanding equity of ChronoScale.
Business Update
HPC Hosting Business
Our 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.
We recently commenced operations at our first HPC data center at our Polaris Forge 1 campus with 100MW of capacity. We continue building our second HPC data center at Polaris Forge 1 to provide an additional 150MW of capacity. These facilities are being designed and purpose-built to host high-density graphics processing unit architecture or other HPC applications, such as artificial intelligence, natural language processing, machine learning, and additional HPC developments. Our third HPC focused data center facility at Polaris Forge 1, which is expected to provide an additional 150MW of capacity, is currently under construction, with an anticipated ready for service date in calendar year 2027.
On May 28, 2025, APLD ELN-02 LLC and APLD ELN-03 LLC, our subsidiaries, each entered into a data center lease (the “ELN-02 Lease” and the “ELN-03 Lease”) with CoreWeave, Inc. (“CoreWeave”) to deliver an aggregate of 250 MW of infrastructure to host CoreWeave’s HPC operations at Polaris Forge 1. The ELN-02 Lease is for the full capacity of our 100 MW data center that was completed and became operational in October 2025, and the ELN-03 Lease is for the full capacity of our 150 MW data center that is also under construction. We have guaranteed the obligations of APLD ELN-02 LLC and APLD ELN-03 LLC under the respective lease to which such subsidiary is a party.
On March 30, 2026, the Company and CoreWeave amended the ELN-02 Lease to suspend the term for two of the four data halls covered by the lease (the “ELN-02 Lease Amendment”) and the Company entered into a new datacenter lease with CoreWeave Compute Acquisition Co. VIII, LLC (“CoreWeave SPV”), a wholly owned subsidiary of CoreWeave, for those two data halls on substantially the same terms as the ELN-02 Lease (the “ELN-02 SPV Lease”). The ELN-02 SPV Lease is conterminous with the initial term of the ELN-02 Lease. Upon the expiration or earlier termination of the ELN-02 SPV Lease, the suspended term under the ELN-02 Lease will resume and all four data halls of ELN-02 will once again be governed by the ELN-02 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 million to secure obligations under the ELN-02 Lease within 30 days of March 30, 2026.
Also on March 30, 2026, CoreWeave entered into an Assignment, Assumption and Consent Agreement with CoreWeave SPV and APLD ELN-03 LLC, assigning all of CoreWeave’s rights and obligations under the ELN-03 Lease to CoreWeave SPV for the remaining term of the ELN-03 Lease and releasing CoreWeave from the ELN-03 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 Lease, similar to the ELN-02 Guaranty.
On August 28, 2025, APLD ELN-02 C LLC, our subsidiary, entered into a third data center lease, the (“Building 4 Lease”) with CoreWeave to deliver an additional 150 MW at Polaris Forge 1, bringing the total capacity under contract at Polaris Forge 1 to 400 MW. We have guaranteed the obligations of APLD ELN-02 C LLC under the Building 4 Lease.
On August 18, 2025, we also announced that we would be breaking ground on our Polaris Forge 2 campus with an initial 200 MW data center near Harwood, North Dakota. The project has begun and we currently anticipate reaching initial capacity in the calendar year 2026 and reaching full capacity in early 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.
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On January 22, 2026 we announced that we broke ground on Delta Forge 1, a 300 MW critical IT load campus located in a strategic southern U.S. market.
On April 20, 2026 and April 22, 2026, APLD AEX-01 LLC and APLD AEX-02 LLC, respectively, each a subsidiary of the Company, entered into separate data center leases with a second U.S.-based investment-grade hyperscaler to deliver a combined 300MW of critical IT load to support the hyperscaler’s AI and HPC infrastructure at Delta Forge 1. Initial operations at Delta Forge 1 are anticipated to commence during calendar year 2027. On May 20, 2026, a different subsidiary of the Company entered into a data center lease with the same U.S.-based investment-grade hyperscaler to deliver a combined 300MW of critical IT load to support the second hyperscaler’s AI and HPC infrastructure at Polaris Forge 3. Initial operations at Polaris Forge 3 are anticipated to commence during calendar year 2027.
We began to generate revenue from this business segment in fiscal year 2026, recognizing $385.3 million in revenue during the fiscal year ended May 31, 2026, with $270.6 million related to services revenue and $114.7 million related to data center rental and other revenue.
Data Center Hosting Business
Our Data Center Hosting Business provides energized infrastructure services to crypto mining customers. Our custom-designed data centers allow customers to rent space based on their power requirements. We currently serve one crypto mining customer with a remaining contractual term of one and a half years. As of May 31, 2026, our 106 MW facility in Jamestown, North Dakota and our 180 MW facility in Ellendale, North Dakota continue to operate at full capacity.
We recognized $154.4 million, $144.2 million, and $136.6 million in revenue from this business segment during the fiscal years ended May 31, 2026, May 31, 2025, and May 31, 2024 respectively.
ChronoScale
On May 5, 2026, we completed the separation of our cloud business in a series of transactions that resulted in the Company owning approximately 97% of the issued and outstanding equity of ChronoScale Corporation ("ChronoScale"). ChronoScale owns and operates our historic cloud business and is consolidated into our financial statements. The common stock of ChronoScale began trading on the Nasdaq Capital Market under the symbol “CHRN” on May 5, 2026.
ChronoScale's cloud business currently operates in three states: Colorado, Minnesota and Utah. This business provides cloud services to customers, such as AI and machine learning developers by renting space at third party co-location centers and providing the customers with access to its cloud computing equipment.
Management Updates
On January 15, 2026, the Company appointed Jason Zhang, co-founder and Chief Strategy Officer, to serve as the Company’s co-founder and President.
Organizational Update
In part to facilitate the 2030 9.250% Notes Offering (as defined below), we completed a targeted reorganization of the entities and assets related to the Polaris Forge 1 campus. This reorganization included a series of steps such as renaming certain existing entities and forming new direct and indirect wholly owned subsidiaries of APLD HPC Holdings 2 LLC, including APLD ComputeCo LLC, the issuer of the 2030 9.250% Notes (“APLD ComputeCo”), and additional internal transactions, including equity distributions and contributions and asset transfers, resulting in APLD ELN-02 LLC and APLD ELN-03 LLC being owned by APLD ComputeCo. APLD ComputeCo is wholly owned by APLD HPC TopCo 2, in which we own 86.5% of fully diluted common equity, and an affiliate of funds and investment vehicles managed by entities within MAM owns 13.5% of fully diluted common equity, as well as preferred equity.
In order to facilitate the 2031 6.750% Notes Offering (as defined below), we also completed a targeted reorganization of the entities and assets related to the Polaris Forge 2 campus consistent with the reorganizations completed in connecting with the 2030 9.250% Notes Offering. This reorganization included a series of steps such as renaming certain existing entities and forming new direct and indirect wholly owned subsidiaries of APLD FAR Holdings LLC, including APLD ComputeCo 2 LLC (“APLD ComputeCo 2”), the issuer of the 2031 6.750% Notes, and additional internal transactions,
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including equity distributions and contributions and asset transfers. Under the resulting structure, APLD FAR-01 LLC and APLD FAR-02 LLC are owned by APLD ComputeCo 2. APLD ComputeCo 2 is wholly owned by APLD HPC TopCo 2.
Public Offerings and Changes to 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.
Series G Preferred Stock
On August 14, 2025, we entered into the first amendment (the “First Amendment”) to the Preferred Equity Purchase Agreement (the “PEPA”), dated April 30, 2025, to, among other things, (i) increase the aggregate commitment amount of the shares of Series G Convertible Preferred Stock (the “Series G Preferred Stock”) from $150 million to $300 million, and (ii) increase our 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, we 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 we determine to do so in our 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, we entered into the second amendment (the “Second Amendment”) to the PEPA, dated April 30, 2025, by and between us and the investors signatory thereto, as amended by the First Amendment, dated August 14, 2025 in order to increase our access to capital to fund the continued construction and development of our Polaris Forge 1 data center campus in Ellendale, North Dakota and other general corporate purposes.
The Second Amendment amends the PEPA to, among other things, increase the aggregate commitment amount of the shares of Series G Preferred Stock from $300 million to $450 million. Concurrent with the Second Amendment, the
Company filed an amendment to the Certificate of Designations 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, dated April 30, 2025, by and between the Company and the investors signatory thereto, as amended by the First Amendment and the Second Amendment, in order to increase its access to capital to fund the continued construction and development of its Polaris Forge I data center in Ellendale, North Dakota. The Third Amendment amends the PEPA to, among other things, increase the aggregate commitment amount of the shares of the Series G Preferred Stock from 450.0 million to 590.0 million.
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, which increased 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 in order to increase its access to capital to fund the continued construction and development of its Polaris Forge 1 and Polaris Forge 2
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data centers in Ellendale and Harwood, North Dakota, as well as general working capital purposes and for transaction expenses.
The Fourth Amendment amended 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 Applied Digital filed an amendment (the “Fifth Certificate of Designations Amendment”) to the Certificate of the Designations, Powers, Preferences and Rights of Series G Convertible Preferred Stock, 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 Certificate of Designations 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 Certificate of Designations Amendment, Applied Digital’s Board of Directors may increase or decrease the applicable Floor Price with respect to any put, at its sole discretion.
On May 29, 2026, the Company entered into the fifth amendment (the “Fifth Amendment”) to the PEPA. The Fifth Amendment amended the PEPA to, among other things: (i) set the maximum put issuance amount to $150,000,000 per issuance, (ii) set the limit to one put issuance per seven (7) calendar day period, (iii) set the maximum aggregate stated value of Series G Preferred Stock outstanding at any one time to $150,000,000, (iv) create a controlled account for which proceeds from the put issuance will be funded, (v) extend the term of the PEPA to August 29, 2029, and (vi) provide a cure period for the investors to pay the purchase price for any put issuance.
As Series G Preferred Stock may be reissued, during the fiscal years ended May 31, 2026 and May 31, 2025, the Company issued and sold 835,800 and 78,000 shares of Series G Preferred Stock, respectively, for gross proceeds of $815.0 million and $75.0 million, respectively. During the fiscal year ended May 31, 2026, 913,800 shares of Series G Preferred Stock were converted into approximately 51.0 million shares of the Company’s common stock. As of May 31, 2026, no shares of Series G Preferred Stock were issued or outstanding.
CoreWeave Warrants
On May 28, 2025, in connection with the entry into the data center leases with CoreWeave for Building 2 and Building 3 (the "CoreWeave Leases"), the Company issued to CoreWeave a warrant (the “CoreWeave Warrant”) to acquire up to 13,062,521 shares of the Company's common stock at an exercise price of $7.19 per share, subject to adjustment in accordance with the terms and conditions set forth in the CoreWeave Warrant. The CoreWeave Warrant is exercisable upon issuance, upon payment of the applicable exercise price in cash or through cashless exercise for a period of 10 years. On June 9, 2025, CoreWeave assigned a portion of the CoreWeave Warrant to acquire up to 6,531,261 shares of the Company's common stock to PEAK6 Capital Management, LLC (the “PEAK6 Warrant”). CoreWeave concurrently assigned the remaining portion of the CoreWeave Warrant to acquire up to 6,531,260 shares of the Company's common stock to Jane Street (the “Jane Street CW Warrant”), and on or around May 15, 2026, Jane Street assigned all of its right, title and interest in and to the Jane Street CW Warrant to Wells Fargo Bank, National Association ("WFBNA"). As of May 31, 2026, 300 warrant shares subject to the PEAK6 Warrant 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 CoreWeave Warrant. In addition, we agreed to file a resale registration statement with the SEC to register the resale of the shares of common stock issuable upon exercise of the Building 4 Warrant pursuant to the Registration Rights Agreement, dated May 28, 2025, between us and CoreWeave (“CoreWeave Registration Rights Agreement”). On October 31, 2025, CoreWeave assigned the Building 4 Warrant and its rights under the CoreWeave Registration Rights Agreement to Jane Street Global Trading, LLC (“Jane Street”). On or around May 15, 2026, Jane Street assigned all of its right, title and interest in and to the Building 4 Warrant to WFBNA.
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Macquarie Warrants
On November 27, 2024, as partial consideration for the Macquarie Promissory Note, the Company issued warrants to purchase up to 1,035,197 shares of the Company’s common stock (the “Macquarie Warrants”) to Macquarie Equipment Capital, Inc. (“MEC”). 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 May 31, 2026. On October 31, 2025, MEC assigned the Macquarie Warrants and its rights under the Registration Rights Agreement in connection therewith to Jane Street and on or around May 15, 2026, Jane Street assigned all of its right, title and interest in and to Macquarie Warrants to WFBNA.
Amended and Restated Unit Purchase Agreement
As previously disclosed, on January 13, 2025, APLD HPC Holdings LLC (formerly, APLD ELN-02 Holdings LLC), an indirect wholly owned subsidiary of the Company, entered into a Unit Purchase Agreement (the “Unit Purchase Agreement” or “UPA”) for its HPC Hosting Business with MIP VI HPC Holdings, LLC, which is an affiliate of funds and investment vehicles managed by entities within Macquarie Asset Management (“MAM”). On February 11, 2025, APLD 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 (“TopCo 2”), and MIP HPC Holdings, LLC (formerly, MIP VI HPC Holdings, LLC) (the “Purchaser”) entered into an Amended and Restated Unit Purchase Agreement (the “A&R UPA”).
On October 6, 2025, all conditions to the Initial Closing (as defined in the A&R UPA) were satisfied and the Initial Closing occurred. At the Initial Closing, TopCo 2 sold to the Purchaser 112,500 Preferred Units in TopCo 2 at a price per Preferred Unit of $1,000, for an aggregate purchase price of $112.5 million, and for no additional consideration, TopCo 2 agreed to issue to the Purchaser such number of Common Units of TopCo 2 representing, in the aggregate, seven and a half percent (7.5%) of the fully diluted common equity of TopCo 2 as of immediately following the Initial Closing. The proceeds of the Initial Closing will be used to pay, among other things, construction and development costs of Polaris Forge 1 and transaction expenses. MAM has the right to invest up to an additional $4.9 billion under the A&R UPA.
In addition, pursuant to the A&R UPA, on October 6, 2025, the Company issued to the designated affiliates of the Purchaser, warrants to purchase an aggregate of 2.4 million shares of the Company’s common stock. Under its terms the warrants became exercisable on April 6, 2026. Also on October 6, 2025, the Company entered into a registration rights agreement with the Purchaser, pursuant to which the Company agreed to file with the SEC a registration statement registering the resale of the shares of common stock issuable upon exercise of the warrants within 60 days of the execution of the registration rights agreement. On November 25, 2025, TopCo 2 sold to the Purchaser 450,000 Preferred Units in TopCo 2 at a price per Preferred Unit of $1,000, for an aggregate purchase price of $450.0 million.
On December 9, 2025, TopCo 2 sold to the Purchaser an additional 337,500 Preferred Units in TopCo 2 at a price per Preferred Unit of $1,000, for an aggregate purchase price of $337.5 million. Additionally, 27,778 common units were issued.
On May 29, 2026, TopCo 2 completed a fourth closing under its A&R UPA, selling 925,000 preferred units for $925.0 million and issuing an additional 41,815 common units. This brought the total amount funded to date under the A&R UPA to $1.8 billion as of May 31, 2026 and MIP HPC Holdings, LLC's holdings to 13.5% of TopCo 2’s fully diluted common equity.
Retirement of Treasury Stock
On October 7, 2025, the Board of Directors approve and authorized 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.
STB Warrant
During the fiscal year ended May 31, 2026, 800,000 of the STB Warrants were exercised for $6.3 million.
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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 May 31, 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.
Increase in 2024 Plan Authorized Shares
On November 5, 2025, at the Annual Stockholders’ Meeting, the Company’s stockholders approved an amendment to the Applied Digital Corporation 2024 Omnibus Equity Incentive Plan to increase the number of shares of common stock authorized for issuance thereunder by 15,000,000 shares.
Debt Financing
Promissory Note
On September 9, 2025, our subsidiary, APLD FAR-01 LLC ("APLD FAR-01"), entered into a promissory note (the “MEC Promissory Note”) with Macquarie Equipment Capital, Inc., a Delaware corporation ("MEC”). The MEC Promissory Note provides for a principal sum of (a) $50 million (the “Initial Loan”), which was drawn on the Closing Date, plus (b) subject to the mutual consent of us and MEC, additional loans in an aggregate principal amount not to exceed $25 million (the “Additional Loans” and together with the Initial Loan, the “MEC Loan”).
The MEC Loan shall bear interest at 8.0% per annum, unless an Event of Default (as defined therein) has occurred and is continuing, in which case, the Secured Obligations (as defined therein) shall bear interest at the sum of 8.0% per annum plus an additional 1.50% per month (the “Post-Default Rate”). From the Closing Date until the date that is twelve months following the Closing Date (the “PIK Period”), accrued interest will be paid in kind, with such payment in kind being capitalized to principal monthly and at such other times as may be specified in the MEC Promissory Note. After the PIK Period, accrued interest will be paid in cash, provided that (i) the Post-Default Rate interest is payable in cash on demand and (ii) accrued interest on any principal amount repaid or prepaid is payable on the date of such repayment or prepayment. The MEC Promissory Note matures on the earliest of (i) the date of acceleration of the MEC 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 MEC Loan will accelerate and we must mandatorily prepay the full outstanding principal balance of the MEC Promissory Note, together with accrued interest to the date of prepayment on the principal amount prepaid and any other amounts then due and payable, upon the occurrence of any of the following conditions: (a) a Change of Control (as defined therein), (b) within ninety (90) days following the occurrence of the 200 MW Lease Execution, and (c) within thirty (30) days following a Qualifying Preference Share Issuance (as defined therein).
We may voluntarily prepay all or part of the MEC 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 MEC 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 1.10x return hurdle applies to repayment at maturity. Amounts repaid under the MEC Promissory Note will not be available to be re-borrowed.
Proceeds of the MEC Loan under the MEC 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, North Dakota (“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.
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In connection with the MEC Loan, (i) APLD FAR-01, APLD FAR Holdings LLC, a Delaware limited liability company ("APLD FAR Holdings"), as parent of the APLD FAR-01, and APLD FAR-02 LLC, a Delaware limited liability company ("APLD FAR-02"), as a subsidiary of APLD FAR Holdings, have entered into a guarantee and collateral agreement, as grantors thereunder, in favor of MEC (the “Guarantee and Collateral Agreement”).
On November 28, 2025, APLD FAR-01 repaid the MEC Promissory Note in full, including all outstanding and unpaid principal, accrued interest, and rate of return.
2025 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 (the "2025 Revolving Credit Facility"). 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. The loan is secured by all of the Company’s (but none of its subsidiaries’) assets. On May 29, 2026, the 2025 Revolving Credit Facility was modified and the standby letters of credit thereunder transferred when the Company and certain of its subsidiaries entered into the 2026 Revolving Credit Facility (as defined below).
9.250% Senior Secured Notes due 2030
On November 20, 2025, our subsidiary APLD ComputeCo LLC ("APLD ComputeCo"), closed a $2.35 billion offering (the “2030 9.250% Notes Offering”) of 9.250% senior secured notes due 2030 (the “2030 9.250% Notes”) at an issue price of 97.000%. The 2030 9.250% 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 2030 9.250% Notes are senior secured obligations of APLD ComputeCo and bear interest at a rate of 9.250% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on June 15, 2026. The principal amount of the 2030 9.250% 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. The 2030 9.250% Notes will mature on December 15, 2030, unless earlier redeemed or repurchased in accordance with their terms. The 2030 9.250% Notes are fully and unconditionally guaranteed by the subsidiary guarantors, all of which are wholly owned subsidiaries of APLD ComputeCo. Other than a customary completion guarantee, the Company is not providing credit support for the 2030 9.250% Notes Offering.
SMBC Loan Extinguishment
Concurrently with the closing of the 2030 9.250% Notes Offering, we repaid in full the aggregate principal balance plus accrued interest under the Credit and Guaranty Agreement, dated as of February 11, 2025, by and among APLD HPC Holdings LLC, the Subsidiary Guarantors thereunder (as defined therein), the lenders party thereto and Sumitomo Mitsui Banking Corporation (“SMBC”), as administrative agent.
DevCo Facility
On December 18, 2025, APLD DevCo LLC ("APLD DevCo”), a subsidiary of the Company, entered into an ongoing credit arrangement with MEC, 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, dated as of December 18, 2025 (such date, the “Initial Closing Date”) (as amended and restated by that certain Amendment No. 1 to Promissory Note dated as of February 24, 2026 and as may be further amended, restated, amended and restated, supplemented, or otherwise modified from time to time, the “DevCo Promissory Note”) executed by APLD DevCo in favor of MEC. The DevCo 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, the “Initial Loan,” and each, individually, a “Draw”) with the Third Draw to be funded upon APLD DevCo’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 “DevCo Loan”), if applicable, made by MEC (at the mutual consent of APLD DevCo and MEC).
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In addition, the DevCo Promissory Note provides for, upon request of APLD DevCo occurring prior to the Maturity Date (as defined below), (a) rolling over of the outstanding principal balance of the DevCo Loan from time to time into one or more loans for one or more new projects (such rollovers, the “Rollover Loans”), or (b) increasing the size of the existing DevCo Loan by advancing new loans to APLD DevCo (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 APLD DevCo, 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 DevCo Promissory Note would be on an uncommitted, discretionary basis (with no specified maximum borrowing limit for any Additional Loans or Rollover Loans).
The DevCo 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 DevCo Loan matures on the earliest of (i) the date of acceleration of the DevCo 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”).
Proceeds from the DevCo 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, our latest new project under development.
In connection with the Loan, (i) APLD Intermediate as direct parent of APLD DevCo, and APLD DevCo’s subsidiaries (the “Note Parties”) 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 DevCo Promissory Note.
On May 29, 2026, APLD DevCo repaid the DevCo Loan in full, including all outstanding and unpaid principal, accrued interest, and rate of return, when the Company and certain of its subsidiaries completed the fourth closing under the Amended & Restated Unit Purchase Agreement, as described in Note 11 - Variable Interest Entities.
6.750% Senior Secured Notes due 2031
On March 10, 2026, APLD ComputeCo 2 LLC, a subsidiary of the Company (“APLD ComputeCo 2”), closed a $2.15 billion offering (the “2031 6.750% Notes Offering”) of 6.750% senior secured notes due 2031 (the “2031 6.750% Notes”) at an issue price of 98.000% of par. The 2031 6.750% Notes are senior secured obligations of APLD ComputeCo 2 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 6.750% 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 6.750% Notes will mature on March 15, 2031, unless earlier redeemed or repurchased in accordance with their terms. The 2031 6.750% 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 6.750% Notes Offering. The gross proceeds from the 2031 6.750% 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. On June 18, 2026, the escrow release condition was satisfied, and the escrowed funds were released into the project accounts to fund the development and construction of the facilities.
Bridge Facility
On May 1, 2026, APLD ComputeCo 3 LLC ("APLD ComputeCo 3"), a subsidiary of the Company, and APLD ComputeCo 3's wholly owned subsidiaries as subsidiary guarantors entered into a Credit and Guaranty Agreement with Goldman Sachs Bank USA, as administrative agent and as collateral agent (in such capacity, the “Bridge Facility Collateral Agent”) and the Lenders party thereto, providing for a bridge loan facility in an aggregate principal amount of $300 million (the “Bridge Facility”).
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Proceeds of the Bridge Facility were used to (i) pay transaction expenses in connection with the Loan Documents (as defined therein), (ii) fund the construction and improvement of ELN-04, (iii) fund the purchase of equipment expected to be installed and used for the improvements of ELN-04, and (iv) pay other costs, fees, expenses or amounts related to or in connection with the development and construction of ELN-04.
The Bridge Facility bears interest at a rate per annum equal to, depending on the Type of Loans under any Borrowing, either Daily Simple SOFR plus 2.75% per annum or the Base Rate plus 1.75% per annum, and matures on April 30, 2027.
In connection with the Bridge Facility, (i) APLD ComputeCo 3 and the subsidiary guarantors have entered into a Collateral Agency, Security and Depositary Agreement, as grantors thereunder, in favor of the Bridge Facility Collateral Agent, pursuant to which APLD ComputeCo 3 and the subsidiary guarantors pledged a continuing security interest in substantially all of their respective assets, (ii) APLD HPC Holdings 2 LLC, a Delaware limited liability company, as parent of APLD ComputeCo 3, entered into a Pledge Agreement in favor of the Bridge Facility Collateral Agent, pursuant to which it pledged the equity interests in APLD ComputeCo 3, and (iii) the Company provided a full recourse parent guarantee (the “Parent Guarantee”) in favor of the Bridge Facility Collateral Agent.
Subsequent to the end of the fiscal year, APLD ComputeCo 3 refinanced the Bridge Facility with the closing of the 2031 7.000% Notes Offering (as defined below). See further discussion in Note 21 - Subsequent Events.
2026 Revolving Credit Facility
On May 29, 2026, APLD Intermediate HoldCo LLC, a Delaware limited liability company and a first-tier subsidiary of the Company ("APLD Intermediate HoldCo"), and certain other subsidiaries of the Company as subsidiary guarantors entered into a Credit Agreement (the “Revolving Credit Agreement”) with First National Bank of Omaha, as administrative agent and collateral agent (in such capacity, the “Revolving Credit Collateral Agent”), and the lenders and issuing banks party thereto, providing for a revolving credit facility in an initial aggregate principal amount of $350.0 million with an additional accordion option of up to $200 million (the “2026 Revolving Credit Facility”).
Proceeds of the 2026 Revolving Credit Facility will be used (i) on the closing date, to repay or refinance existing indebtedness, (ii) for general corporate purposes and (iii) for ongoing working capital needs of APLD Intermediate HoldCo and its subsidiaries.
The 2026 Revolving Credit Facility bears interest at a rate per annum equal to, at APLD Intermediate HoldCo’s election, either Term SOFR plus 2.25% or the Alternate Base Rate plus 1.25%, and matures on the earlier of (i) May 29, 2029 and (ii) the date that is ninety-one (91) days prior to a specified date in Section 10.01(a)(i) of that certain Preferred Equity Purchase Agreement.
In connection with the 2026 Revolving Credit Facility, (i) the Company, APLD Intermediate HoldCo, and certain of the Company's subsidiaries (collectively, the “Revolving Credit Loan Parties”) entered into a Collateral Agreement in favor of the Revolving Credit Collateral Agent, pursuant to which the Revolving Credit Loan Parties pledged a continuing security interest in substantially all of their respective assets (subject to the exclusions specified in the Revolving Credit Agreement), and (ii) the Revolving Credit Loan Parties entered into a Guarantee Agreement in favor of the Revolving Credit Collateral Agent, guaranteeing the obligations of the other Revolving Credit Loan Parties under the Revolving Credit Agreement. APLD ComputeCo 3 and its subsidiaries are not (i) Revolving Credit Loan Parties, (ii) “restricted subsidiaries” under the 2026 Revolving Credit Facility, (iii) required to provide any credit support for the 2026 Revolving Credit Facility, or (iv) subject to any covenants or other restrictions in the 2026 Revolving Credit Facility.
Recent Developments
Cloud SAFE Payoff
During the fiscal year ended May 31, 2025, we entered into two Simple Agreements for Future Equity (“SAFEs”) with an investor for equity in Cloud, which was, at that time, our wholly-owned subsidiary, for aggregate proceeds of $12.0 million. On June 2, 2026, following an agreement reached with the investor, we paid off all amounts outstanding under the SAFEs, totaling $13.3 million.
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Delta Forge 2 Lease
On June 5, 2026, we entered into an approximately 15-year lease (with three five-year renewal options) with a high investment-grade hyperscaler at our Delta Forge 2 210 MW critical IT load campus located in our 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.
$1.59 Billion Senior Secured Notes due 2031
On June 16, 2026, APLD ComputeCo 3 refinanced the Bridge Facility with the closing of a $1.59 billion offering (the “2031 7.000% Notes Offering”) of 7.000% senior secured notes due 2031 (the “2031 7.000% Notes”) at an issue price of 100.000% of par. 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 principal amount of the 2031 7.000% Notes will amortize on a semi-annual basis on June 15 and December 15 of each year, in amounts set forth in the Indenture. The 2031 7.000% Notes will mature on June 15, 2031, unless earlier redeemed or repurchased in accordance with their terms. The 2031 7.000% Notes are fully and unconditionally guaranteed by the subsidiary guarantors, all of which are wholly owned subsidiaries of APLD ComputeCo 3. The Company provided a customary completion guarantee for the 2031 7.000% Notes Offering.
Series G
On June 17, 2026 and June 22, 2026, we issued an aggregate of 154,500 shares of Series G Preferred Stock for total gross proceeds of $150.0 million. Of the 154,500 shares of Series G Preferred Stock issued, 81,346 shares have been converted into an aggregate of 1,787,825 shares of our common stock and 73,154 shares remain outstanding.
On June 26, 2026, we entered into 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 $1.59 billion to $2.0 billion.
Satisfaction of Escrow Release Condition for 6.750% Senior Secured Notes due 2031
On June 18, 2026, APLD ComputeCo 2 satisfied the escrow release condition under the escrow agreement for 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 of 2026 Revolving Credit Facility
On June 26, 2026, in connection with the 2026 Revolving Credit Facility, the Company, APLD Intermediate HoldCo, and the subsidiary guarantors party to the Revolving Credit Agreement entered into an Incremental Assumption Agreement No. 1 (the “Assumption Agreement”), with the Revolving Credit Collateral Agent and the lenders and issuing banks party thereto, providing for an Incremental Revolving Facility Commitment in an aggregate principal amount of up to $80,000,000 (the “Incremental Revolving Financing”). After giving effect to the Assumption Agreement, the aggregate revolving commitments under the 2026 Revolving Credit Facility increased to $430.0 million, with an additional $120 million accordion option remaining. The Incremental Revolving Financing constitutes a part of the 2026 Revolving Credit Facility and is subject to the terms and conditions of the Revolving Credit Agreement and the other loan documents entered into in connection therewith.
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 a related Promissory Note in favor of Texas Capital in the stated principal amount of $58.5 million (the "Texas Capital Note"). The Texas Capital Loan Agreement contains standard terms, conditions and covenants. Interest is payable on the Texas Capital Note at the sum of an adjusted term SOFR plus an applicable margin. The Texas Capital Note matures on June 30, 2031.
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ChronoScale Holding Company Transaction
On July 1, 2026, ChronoScale, our majority owned public subsidiary, completed a holding company formation transaction (the “Holding Company Transaction”) that created a new parent holding company as the public company, called ChronoScale Holdings Corporation, a Nevada corporation (“ChronoScale Holdings”), with its operating companies as wholly-owned subsidiaries. The holding company structure better reflects ChronoScale’s individual operating businesses, allows for and can accommodate future growth from internal operations and generally provides for greater administrative and operational flexibility. ChronoScale Holdings has the exact same classes and number of shares outstanding after the Holding Company Transaction as ChronoScale had outstanding immediately before the Holding Company Transaction, and as such, the shareholders of ChronoScale were not be diluted as a result of the Holding Company Transaction. Following the Holding Company Transaction, ChronoScale Holdings became the successor issuer to ChronoScale and continues to trade on Nasdaq under the ticker symbol “CHRN” with the same CUSIP.
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Results of Operations
Results of Operations for the fiscal year ended May 31, 2026 compared to fiscal years ended May 31, 2025 and May 31, 2024
The following table sets forth key components of the results of operations (in thousands) during the fiscal years ended May 31, 2026, 2025, and 2024.
| Fiscal Year Ended | |||||||||||||||||
| May 31, 2026 | May 31, 2025 | May 31, 2024 | |||||||||||||||
| Revenues: | |||||||||||||||||
| Services revenue | $ | 496,609 | $ | 226,643 | $ | 150,814 | |||||||||||
| Data center rental and other revenue | 114,702 | — | — | ||||||||||||||
| Related party revenue | — | 1,926 | 14,761 | ||||||||||||||
| Total revenue | 611,311 | 228,569 | 165,575 | ||||||||||||||
| Costs and expenses: | |||||||||||||||||
| Services cost of revenue | 396,858 | 216,759 | 148,340 | ||||||||||||||
| Data center rental and other cost of revenue | 56,771 | — | — | ||||||||||||||
Selling, general and administrative (1) | 332,096 | 107,877 | 97,776 | ||||||||||||||
Loss (gain) on classification as held for sale (2) | 59,650 | (24,616) | 15,417 | ||||||||||||||
| Loss on abandonment of assets | 2,398 | 724 | — | ||||||||||||||
| Loss from legal settlement | — | — | 2,380 | ||||||||||||||
| Total costs and expenses | 847,773 | 300,744 | 263,913 | ||||||||||||||
| Operating loss | (236,462) | (72,175) | (98,338) | ||||||||||||||
Interest expense, net (3) | 29,516 | 32,139 | 27,517 | ||||||||||||||
| Gain on change in fair value of derivatives | (75,818) | — | — | ||||||||||||||
| Gain on change in fair value of investments | (10,840) | — | — | ||||||||||||||
| Loss on conversion of debt | — | 33,612 | — | ||||||||||||||
| Loss on change in fair value of debt | — | 85,439 | 7,401 | ||||||||||||||
| Loss on change in fair value of related party debt | — | — | 8,116 | ||||||||||||||
| Loss on extinguishment of debt | — | 1,177 | — | ||||||||||||||
| Loss on extinguishment of related party debt | — | — | 2,507 | ||||||||||||||
| Loss on change in fair value of warrants | 2,212 | 6,421 | — | ||||||||||||||
| Loss on change in fair value of related party warrants | — | — | 5,696 | ||||||||||||||
| Net loss from continuing operations before income tax expenses | (181,532) | (230,963) | (149,575) | ||||||||||||||
| Income tax expense | 1,787 | 102 | 96 | ||||||||||||||
| Net loss from continuing operations | (183,319) | (231,065) | (149,671) | ||||||||||||||
| Net loss from discontinued operations | (1,020) | — | — | ||||||||||||||
| Net loss | (184,339) | (231,065) | (149,671) | ||||||||||||||
| Net loss attributable to noncontrolling interest and redeemable noncontrolling interest | (59,665) | — | (397) | ||||||||||||||
| Preferred dividends | (6,259) | (2,615) | — | ||||||||||||||
| Net loss attributable to common stockholders | $ | (250,263) | $ | (233,680) | $ | (149,274) | |||||||||||
| Net loss attributable to common stockholders | |||||||||||||||||
| Continuing operations | $ | (249,243) | $ | (233,680) | $ | (149,274) | |||||||||||
| Discontinued operations | (1,020) | — | — | ||||||||||||||
| Net loss | $ | (250,263) | $ | (233,680) | $ | (149,274) | |||||||||||
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| Basic and diluted net loss per share attributable to common stockholders | |||||||||||||||
| Continuing operations | $ | (0.91) | $ | (1.16) | $ | (1.31) | |||||||||
| Discontinued operations | — | — | — | ||||||||||||
| Basic and diluted net loss per share | $ | (0.91) | $ | (1.16) | $ | (1.31) | |||||||||
| Basic and diluted weighted average number of shares outstanding | 275,194,755 | 201,194,451 | 114,061,414 | ||||||||||||
Adjusted Amounts (4) | |||||||||||||||
| Adjusted revenue | $ | 539,707 | $ | 144,193 | $ | 136,618 | |||||||||
| Adjusted operating income (loss) | $ | 57,796 | $ | 2,384 | $ | 4,752 | |||||||||
| Adjusted operating margin | 11% | 2% | 3% | ||||||||||||
| Adjusted net income (loss) from continuing operations attributable to common stockholders | $ | 36,076 | $ | (12,458) | $ | (13,052) | |||||||||
| Adjusted net income (loss) from continuing operations attributable to common stockholders per diluted share | $ | 0.11 | $ | (0.06) | $ | (0.11) | |||||||||
Other Financial Data (4) | |||||||||||||||
| EBITDA | $ | (65,540) | $ | (126,204) | $ | (35,095) | |||||||||
| as a percentage of adjusted revenue | (11)% | (55)% | (21)% | ||||||||||||
| Adjusted EBITDA | $ | 107,229 | $ | 19,628 | $ | 21,922 | |||||||||
| as a percentage of adjusted revenue | 18% | 9% | 13% | ||||||||||||
| Net operating income | $ | 90,388 | $ | — | $ | — | |||||||||
| Net operating income margin | 91% | —% | —% | ||||||||||||
(1)Includes related party selling, general and administrative expense of $0.3 million, $0.3 million, and $0.6 million for the fiscal years ended May 31, 2026, May 31, 2025, and May 31, 2024 respectively.
(2)For the fiscal year ended May 31, 2026, amount includes a loss on classification of held for sale of $59.7 million representing the write down of the cloud business assets to their carrying value as of February 15, 2026 when it no longer qualified as held for sale. For the fiscal year ended May 31, 2025, amount includes $25 million received in connection with the sale of our Garden City facility once conditional approval requirements were met and escrowed funds were released. The fiscal year ended May 31, 2024 includes $15.4 million loss on classification of held for sale related to the sale of the Garden City facility.
(3)For the fiscal year ended May 31, 2026, amount includes related party income of $0.1 million. For the fiscal year ended May 31, 2024, amount includes related party interest expense of $5.7 million.
(4)Adjusted Amounts and Other Financial Data are non-GAAP performance measures. A reconciliation of reported amounts to adjusted amounts can be found in the "Non-GAAP Measures and Reconciliation" section of Management's Discussion and Analysis.
Commentary on Results of Operations for the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025
Revenues
Services revenue increased $270.0 million, or 119%, from $226.6 million for the fiscal year ended May 31, 2025 to $496.6 million for the fiscal year ended May 31, 2026. Our HPC Hosting Business commenced operations during the current fiscal year with the first HPC data center at our Polaris Forge 1 campus resulting in the recognition of approximately $270.6 million related to tenant fit-out services. Additionally, there was an increase of $12.1 million in revenue generated by our Data Center Hosting Business due to performance improvements compared to the fiscal year ended May 31, 2025.
These increases were slightly offset by a decrease of $12.4 million in revenue generated from ChronoScale during the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025 primarily due to a reduction in rates for cloud services.
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Data center rental and other revenue was $114.7 million for the fiscal year ended May 31, 2026, which is the period during which our HPC Hosting Business commenced operations. This revenue consisted of approximately $99.8 million related to base rent and $14.9 million related to tenant recoveries.
Related party revenue decreased $1.9 million, or 100%, from $1.9 million for the fiscal year ended May 31, 2025 to no related party revenue recognized for the fiscal year ended May 31, 2026, driven by certain related parties terminating their contracts during the first fiscal quarter of fiscal year 2025.
Cost of revenues
Services cost of revenue increased by $180.1 million, or 83%, from $216.8 million for the fiscal year ended May 31, 2025 to $396.9 million for the fiscal year ended May 31, 2026. The increase was due to the following changes:
•approximately $258.1 million in expenses associated with tenant fit-out services for our HPC Hosting Business which we began providing during the current fiscal year;
•approximately $2.1 million increase in energy costs associated with our Data Center Hosting Business; and
•approximately $1.0 million increase in other expenses directly attributable to generating revenue primarily related to repairs and maintenance, security, and property insurance associated with our data centers.
These increases were partially offset by decreases of approximately $62.3 million in depreciation and amortization expense and approximately $17.2 million in lease and related expense primarily due to the renegotiations of certain of our leases during fiscal year ended May 31, 2026 as well as due to our cloud services business (the “Cloud Services Business”) being classified as held for sale until February 15, 2026, which resulted in decreased depreciation and amortization recorded and a decrease of $1.2 million in personnel expenses due to the closing of the Cloud transaction.
Data center rental and other cost of revenue was $56.8 million for the fiscal year ended May 31, 2026, which is when we commenced our data center rental operations within our HPC Hosting Business. The primary components of data center rental and other cost of revenue were categorized as follows:
•approximately $32.2 million in depreciation and amortization expenses associated with our HPC Hosting Business;
•approximately $14.9 million in expenses which are reimbursable as tenant recoveries;
•approximately $8.5 million in rental property operating expenses, which are not eligible for recovery from our tenant;
•approximately $0.7 million in property insurance expenses associated with our HPC Hosting Business; and
•approximately $0.2 million in property tax expenses associated with our HPC Hosting Business.
Selling, general and administrative expense
Selling, general and administrative expense increased by $224.2 million, or 208%, from $107.9 million for the fiscal year ended May 31, 2025 to $332.1 million for the fiscal year ended May 31, 2026. The increase was primarily due to the overall growth in the business, categorized as follows:
•approximately $198.3 million increase in stock-based compensation primarily due to an increase in shares awarded related to the increase in headcount as well as performance stock awards granted during the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025;
•approximately $16.0 million increase in professional service expenses primarily related to legal services provided on discrete transactions and projects as well as general support of the business;
•approximately $15.4 million increase in personnel expenses largely driven by increases in headcount to support the business; and
•approximately $6.2 million increase in other selling, general, and administrative expense primarily related to travel, computer and software expenses.
These increases were partially offset by a decrease of approximately $11.2 million in lease and related expenses and a decrease of approximately $0.5 million in depreciation and amortization expense for the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025, primarily due to the renegotiations of certain of our leases during fiscal
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year ended May 31, 2026 as well as due to the Cloud Services Business being classified as held for sale until February 15, 2026, which resulted in decreased depreciation and amortization recorded.
Loss (gain) on classification as held for sale
Loss (gain) on classification of held for sale changed by $84.3 million, or 342%, from a gain of $24.6 million for the fiscal year ended May 31, 2025 to a loss of $59.7 million for the fiscal year ended May 31, 2026. The loss during the fiscal year ended May 31, 2026 was primarily due to 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. Comparatively, the gain during the fiscal year ended May 31, 2025 was due to the receipt of $25.0 million of funds received in connection with the sale of our Garden City facility as conditional approval requirements were met and escrowed funds were released.
Loss on abandonment of assets
Loss on abandonment of assets increased by $1.7 million, or 231%, from $0.7 million for the fiscal year ended May 31, 2025 to $2.4 million for the fiscal year ended May 31, 2026, driven by the write down of certain assets to their fair value upon disposal.
Interest expense, net
Interest expense, net decreased $2.6 million, or 8%, from $32.1 million for the fiscal year ended May 31, 2025 to $29.5 million for the fiscal year ended May 31, 2026. As we entered into more debt arrangements during the current fiscal year, there was an increase of approximately $53.3 million in interest expense, approximately $3.3 million in loan issuance cost, and approximately $2.1 million in interest expense issuance discount.
These increases were partially offset by an increase of $52.6 million in interest income due to an increase in funds held in interest-bearing demand deposit accounts as well as a decrease of $8.7 million in finance lease interest due to renegotiations of certain of our leases during the fiscal year 2026.
Gain on change in fair value of derivatives
Gain on change in fair value of derivatives was $75.8 million for the fiscal year ended May 31, 2026, due to an increase of $89.2 million in fair value of our Babcock & Wilcox Enterprises, Inc. (“BWE”) common stock warrant offset by a decrease of $13.3 million in fair value of the derivative assets related to the preferred units and corresponding common units held by APLD HPC TopCo 2’s noncontrolling interest. There was no such gain recorded in the prior fiscal year.
Gain on change in fair value of investments
Gain on change in fair value of investment was $10.8 million for the fiscal year ended May 31, 2026, due to an increase of $8.8 million in fair value of our investment in BWE common stock and an increase of $2.0 million in fair value of our investment in Base Electron, a related party. There was no such gain recorded in the prior fiscal year.
Loss on extinguishment of debt
Loss on extinguishment of debt was $1.2 million for the fiscal year ended May 31, 2025, due to unamortized loan issuance costs related to the Macquarie Promissory Note that was repaid in the fiscal year ended May 31, 2025. There was no such loss recorded in the current fiscal year.
Loss on conversion of debt
Loss on conversion of debt was $33.6 million for the fiscal year ended May 31, 2025, due to the difference in the fair value compared to the price at which the promissory notes, totaling $92.1 million, entered into with YA II PN, LTD in the year ended May 31, 2024 (the “YA Notes") were converted. There was no such loss recorded in the current fiscal year.
Loss on change in fair value of debt
Loss on change in fair value of debt was $85.4 million for the fiscal year ended May 31, 2025, primarily due to a loss of approximately $89.6 million related to the change in fair value of the conversion option derivative of the Convertible Note during the two week period in which we did not have sufficient authorized shares to settle such conversion fully in shares.
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This loss was partially offset by a gain of approximately $4.1 million related to the change in the fair value of the YA Notes. There was no such loss recorded in the current fiscal year.
Loss on change in fair value of warrants
Loss on change in fair value of warrants was $2.2 million for the fiscal year ended May 31, 2026 due to revaluation of warrants issued by ChronoScale to third parties. Comparatively, loss on change in fair value of warrants was $6.4 million for the fiscal year ended May 31, 2025 primarily due to the initial valuation of the STB Warrants issued during the fiscal year ended May 31, 2025.
Income tax expense
Income tax expense increased $1.7 million, or 1652%, from $0.1 million for the fiscal year ended May 31, 2025 to a $1.8 million expense for the fiscal year ended May 31, 2026. This change was driven by an increase in current state and federal income tax expense during the current fiscal year.
Net loss from discontinued operations
Net loss from discontinued operations was $1.0 million for the fiscal year ended May 31, 2026 and represents the income statement activity related to the Ekso business at ChronoScale classified as held for sale and discontinued operations. There was no such activity in the prior fiscal year.
Comparative Segment Data for the fiscal year ended May 31, 2026 compared to fiscal years ended May 31, 2025 and May 31, 2024:
The following table sets forth the operating profit for each of our segments during the fiscal years ended May 31, 2026, 2025, and 2024 (in thousands):
| Fiscal Year Ended | |||||||||||||||||
| May 31, 2026 | May 31, 2025 | May 31, 2024 | |||||||||||||||
| Segment profit | |||||||||||||||||
Data Center Hosting Business | $ | 48,337 | $ | 63,927 | $ | 4,812 | |||||||||||
HPC Hosting Business | 39,127 | (12,086) | (4,811) | ||||||||||||||
| Total segment profit | $ | 87,464 | $ | 51,841 | $ | 1 | |||||||||||
Commentary on Segment Data Comparative Results for the fiscal year ended May 31, 2026 compared to fiscal year ended May 31, 2025 and May 31, 2024:
Data Center Hosting Business
Operating Profit
Data Center Hosting Business operating profit decreased $15.6 million, or 24%, from $63.9 million for the fiscal year ended May 31, 2025 to $48.3 million for the fiscal year ended May 31, 2026. This decrease was primarily due to the recognition of a $25.0 million gain on classification of held for sale due to the release of escrowed funds related to the sale of the Garden City facility in the prior fiscal year as well as an increase of $2.2 million in cost of revenues due to increases in power, payroll, and repair and maintenance expenses. Offsetting this decrease was an increase of $10.2 million in revenue as performance improved at the sites.
HPC Hosting Business
Operating Profit
Recent insider activity
| Date | Insider | Role | Action | Shares | Price | Value |
|---|---|---|---|---|---|---|
| 2026-08-04 | Nottenburg Richard N | Director | Sell | -75,000 | $31.15 | -$2,336,250 |
Source: SEC Form 4 filings.
Next expected filings
- ~2026-10-09 10-Q expected by 2026-10-09 (in 45 days)
- ~2027-01-08 10-Q expected by 2027-01-08 (in 136 days)
- ~2027-04-08 10-Q expected by 2027-04-08 (in 226 days)
- ~2027-07-15 10-K expected by 2027-07-27 (in 324 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-07-29 10-K Annual Report
- 2026-07-27 8-K Earnings Release; Financial Statements and Exhibits
- 2026-06-26 8-K Material Agreement Entered; Material Financial Obligation; Unregistered Equity Sale; Financial Statements and Exhibits
- 2026-06-17 8-K/A Material Agreement Entered
- 2026-06-16 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits
- 2026-06-09 8-K Regulation FD Disclosure; Other Events; Financial Statements and Exhibits
- 2026-06-09 8-K Other Events; Financial Statements and Exhibits
- 2026-05-05 8-K Material Agreement Entered; Completion of Acquisition/Disposition; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-04-16 8-K Officer/Director Change
- 2026-04-08 10-Q Quarterly Report
- 2026-04-08 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-01 8-K/A Material Agreement Entered; Financial Statements and Exhibits
- 2026-03-13 8-K/A Officer/Director Change; Financial Statements and Exhibits
- 2026-03-10 8-K Material Agreement Entered; Material Financial Obligation; Officer/Director Change; Financial Statements and Exhibits
- 2026-03-04 8-K Material Agreement Entered; Material Financial Obligation; Financial Statements and Exhibits