Applied Digital Corp. Reports Material Definitive Agreement & Equity Sales

TL;DR

APLD inked a new deal, sold some stock, and has other news. Watch this space.

AI Summary

Applied Digital Corp. entered into a material definitive agreement on May 24, 2024, related to a direct financial obligation. The company also reported on unregistered sales of equity securities and other events. This filing details significant financial and operational updates for the company.

Why It Matters

This filing indicates new financial obligations and equity transactions, which could impact the company's financial structure and shareholder value.

Risk Assessment

Risk Level: medium — The filing involves material definitive agreements and unregistered sales of equity, which can introduce financial risks and dilution concerns.

Key Players & Entities

• Applied Digital Corp. (company) — Registrant
• Nevada (jurisdiction) — State of incorporation
• May 24, 2024 (date) — Date of earliest event reported

FAQ

Key Financial Figures

• $42,131,579 — PPA, the Investor has agreed to advance $42,131,579 to the Company pursuant to a convertibl
• $40 m — of a cash payment from the Investor of $40 million, representing five percent origin
• $25,000 — ginal issue discount and deduction of a $25,000 due diligence fee. The Promissory Note
• $0 — f the Company's Common Stock, par value $0.001, per share (the "Common Shares").
• $8.00 — ce per share equal to the lower of: (a) $8.00 (the "Fixed Price") and (b) 95% of the
• $3 — conversion, subject to a floor price of $3.00, which floor price may be reduced fr
• $8 — the Company (the "Floor Price"). Below $8.00, the Investor is limited to converti
• $16.0 million — r is limited to converting no more than $16.0 million per month in the aggregate across the P
• $9.0 million — to the Investor equal to the sum of (i) $9.0 million of principal amount of the Promissory N
• $40 million — ch 27, 2024, in the principal amount of $40 million (the "First Promissory Note") and the s
• $10 million — il 24, 2024, in the principal amount of $10 million (the "Second Promissory Note" and toget
• $16 million — aximum monthly amount of conversions to $16 million per month in the aggregate across the P

Filing Documents

• apld-20240524.htm (8-K) — 48KB
• apld-prepaidadvanceagreeme.htm (EX-10.1) — 406KB
• apld-promissorynotemay2024.htm (EX-10.2) — 142KB
• apld-globalguarantyagreeme.htm (EX-10.3) — 32KB
• apld-amendmentno1tonotesma.htm (EX-10.4) — 22KB
• apld-form8xkoaklawniiex991.htm (EX-99.1) — 10KB
• image_0.jpg (GRAPHIC) — 11KB
• image_1a.jpg (GRAPHIC) — 0KB
• 0001144879-24-000140.txt ( ) — 932KB
• apld-20240524.xsd (EX-101.SCH) — 2KB
• apld-20240524_lab.xml (EX-101.LAB) — 22KB
• apld-20240524_pre.xml (EX-101.PRE) — 13KB
• apld-20240524_htm.xml (XML) — 3KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. Prepaid Advance Agreement On May 24, 2024, Applied Digital Corporation, a Nevada corporation (the "Company") entered into a Prepaid Advance Agreement (the "PPA") with YA II PN, LTD., a Cayman Islands exempt limited partnership (the "Investor"). In accordance with the terms of the PPA, the Investor has agreed to advance $42,131,579 to the Company pursuant to a convertible unsecured promissory note (the "Promissory Note"). The Company issued the Promissory Note on May 24, 2024, in the principal amount of $42,131,579, in consideration of a cash payment from the Investor of $40 million, representing five percent original issue discount and deduction of a $25,000 due diligence fee. The Promissory Note is convertible into shares of the Company's Common Stock, par value $0.001, per share (the "Common Shares"). Pursuant to the terms of the PPA, the Company is obligated to prepare and file with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-1, registering the resale of the Common Shares underlying the Promissory Note (the "Registration Statement"), to be declared effective by the SEC no later than July 1, 2024. The PPA includes customary representations, warranties and covenants, a material breach of which by the Company constitutes an event of default under the Promissory Note. As previously disclosed, this financing is part of the Company's ongoing efforts to obtain financing for its Ellendale data center hosting facility . Promissory Note The Promissory Note bears interest at an annual rate of zero percent (0%), provided, however, that for so long as an Event of Default (as defined in the Promissory Note) has occurred and remains uncured, the interest on the principal outstanding balance under the outstanding Promissory Note shall accrue at an annual rate of eighteen percent (18%). The Promissory Note matures on June 6, 2025. Pursuant to the terms of the Promissory Note, a

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities The information set forth in "Item 1.01 Entry into a Material Definitive Agreement" relating to the issuance of the Common Shares is incorporated by reference herein in its entirety. The offer and sale of the Common Shares pursuant to the PPA and the Promissory Note is and will be made in reliance upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended and/or Rule 506(b) of Regulation D promulgated thereunder. This Current Report on Form 8-K shall not constitute an offer to sell or the solicitation of any offer to buy the Common Shares, nor shall there be an offer, solicitation or sale of the Common Shares in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such state.

01 Other Events

Item 8.01 Other Events. On May 24, 2024, the Company issued a press release (the "Press Release") announcing the entry into the PPA and the Promissory Note, which Press Release is attached as Exhibit 99.1 hereto and incorporated by reference into this Item 8.01.

Forward-Looking Statements

Forward-Looking Statements This Current Report on Form 8-K and other reports filed by Registrant from time to time with the Securities and Exchange Commission contains "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance, product development, market position, business strategy and objectives and the closing of the transaction described herein. These statements use words, and variations of words, such as "continue," "build," "future," "increase," "drive," "believe," "look," "ahead," "confident," "deliver," "outlook," "expect," "project" and "predict." Other examples of forward-looking statements may include, but are not limited to, (i) statements of Company plans and objectives, including our evolving business model, or estimates or predictions of actions by suppliers, (ii) statements of future economic performance and (iii) statements of assumptions underlying other statements and statements about the Company or its business. You are cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company's expectations and projections. These risks, uncertainties, and other factors include: decline in demand for our products and services; the volatility of the crypto asset industry; the inability to comply with developments and changes in regulation; cash flow and access to capital; and maintenance of third party relationships. Information in this release is as of the dates and time periods indicated herein, and the Company does not undertake to update any of the information contained in these materials, except as required by law.

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (d) Exhibits. Exhibit No. Description 10.1 Prepaid Advance Agreement by and between Applied Digital Corporation and YA II PN, LTD., dated May 24, 2024. 10.2 Convertible Promissory Note issued by Applied Digital Corporation and payable to YA II PN, LTD., dated May 24, 2024. 10.3 Guaranty made by APLD-ELN-02 LLC in favor of YA II PN, LTD., dated May 24, 2024. 10.4 Amendment by and between the Company and YA II PN, LTD., dated May 24, 2024. 99.1 Press Release dated May 24, 2024. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). SIGNATURE Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: May 24, 2024 By: /s/ David Rench Name: David Rench Title: Chief Financial Officer

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View this 8-K filing on SEC EDGAR