Applied Digital Corp. Files 2024 10-K

Ticker: APLD · Form: 10-K · Filed: Aug 30, 2024 · CIK: 1144879

Sentiment: neutral

Topics: 10-K, annual-report, financials

TL;DR

APLD filed its 2024 10-K. Check financials.

AI Summary

Applied Digital Corp. filed its 10-K for the fiscal year ending May 31, 2024, reporting on its operations in computer processing and data preparation. The company, formerly known as Applied Blockchain, Inc., is based in Dallas, Texas. This filing provides a comprehensive overview of its financial performance and business activities for the period.

Why It Matters

This 10-K filing provides investors and stakeholders with a detailed look at Applied Digital Corp.'s financial health and strategic direction for the fiscal year 2024.

Risk Assessment

Risk Level: medium — The filing is a standard annual report and does not inherently indicate new risks.

Key Players & Entities

FAQ

What is the primary business of Applied Digital Corp. as indicated in the filing?

The filing indicates Applied Digital Corp. is in the SERVICES-COMPUTER PROCESSING & DATA PREPARATION sector, with SIC code 7374.

When does the reported fiscal year end?

The Conformed Period of Report is 20240531, indicating the fiscal year ended on May 31, 2024.

What was the company's former name?

The company was formerly known as Applied Blockchain, Inc., with a date of name change on 20210423.

Where is Applied Digital Corp. located?

The company's business and mailing address is 3811 Turtle Creek Blvd., Suite 2100, Dallas, TX 75219.

What is the SEC file number for this filing?

The SEC file number is 001-31968.

Filing Stats: 4,359 words · 17 min read · ~15 pages · Grade level 14.8 · Accepted 2024-08-30 07:03:36

Key Financial Figures

Filing Documents

Risk Factors

Item 1A. Risk Factors 11

Unresolved Staff Comments

Item 1B. Unresolved Staff Comments 43 I tem 1C. Cybersecurity 43

Properties

Item 2. Properties 44

Legal Proceedings

Item 3. Legal Proceedings 44

Mine Safety Disclosures

Item 4. Mine Safety Disclosures 45 Part II

Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 46

[Reserved]

Item 6. [Reserved] 46

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 47

Quantitative and Qualitative Disclosures About Market Risk

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 63

Financial Statements and Supplementary Data

Item 8. Financial Statements and Supplementary Data 64

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 93

Controls and Procedures

Item 9A. Controls and Procedures 93

Other Information

Item 9B. Other Information 94

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections 95 Part III

Directors, Executive Officers and Corporate Governance

Item 10. Directors, Executive Officers and Corporate Governance 95

Executive Compensation

Item 11. Executive Compensation 101

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 106

Certain Relationships and Related Transactions, and Director Independence

Item 13. Certain Relationships and Related Transactions, and Director Independence 109

Principal Accounting Fees and Services

Item 14. Principal Accounting Fees and Services 110 Part IV

Exhibits, Financial Statement Schedules

Item 15. Exhibits, Financial Statement Schedules 111

Form 10-K Summary

Item 16. Form 10-K Summary 115

Signatures

Signatures 116 3 Part I

FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS This Annual Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that involve substantial risks and uncertainties. You can identify these forward-looking statements through our use of words such as "may," "can," "anticipate," "assume," "should," "indicate," "would," "believe," "contemplate," "expect," "seek," "estimate," "continue," "plan," "point to," "project," "predict," "could," "intend," "target," "potential" and other similar words and expressions of the future. Statements that contain these words and other statements that are forward-looking in nature should be read carefully because they discuss future expectations, contain projections of future results of operations or of financial positions, or state other "forward-looking" information. These statements are based on our management's beliefs and assumptions, which are based on currently available information. Our actual results, and the assumptions on which we relied, could prove materially different from our expectations. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. There are a number of important factors that could cause our actual results to differ materially from those expressed in any forward-looking statement made by us. These factors include, but are not limited to: our ability to complete construction of the Ellendale HPC data center; availability of financing to continue to grow our business; labor and other workforce shortages and challenges; power or other supply disruptions and equipment failures; our dependence on principal customers; the addition or loss of significant customers or

Business

Item 1. Business Overview Our Business We are a United States ("U.S.") designer, developer, and operator of next-generation digital infrastructure across North America. We provide digital infrastructure solutions and cloud services to the rapidly growing industries of High-Performance Computing ("HPC") and Artificial Intelligence ("AI"). We operate in three distinct business segments, 4 including, Blockchain data center hosting (the "Data Center Hosting Business"), cloud services through a wholly owned subsidiary (the "Cloud Services Business") and HPC data center hosting (the "HPC Hosting Business"), as further discussed below. We completed our initial public offering in April 2022 and our common stock began trading on the Nasdaq Global Select Market ("Nasdaq") on April 13, 2022. In November 2022, we changed our name from Applied Blockchain, Inc. to Applied Digital Corporation. 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 seven crypto mining customers, all of which have entered into contracts with us ranging from three to five years. This business segment accounts for the majority of the revenue we generate from our operations (approximately 83% for the fiscal year ended May 31, 2024). We currently operate sites in Jamestown and Ellendale, North Dakota, with a total hosting capacity of approximately 286 MW: Jamestown, North Dakota: 106 MW facility. Ellendale, North Dakota: 180 MW facility. In March 2021, we executed a strategy planning and portfolio advisory services agreement (the "Services Agreement") with GMR Limited, a British Virgin Island limited liability company ("GMR"), Xsquared Holding Limited, a British Virgin Island limited liability company ("SparkPool") and Valuefinder, a British Virgin Islands limited liability company ("Valuefinder" an

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