Applied Digital Corp. Files 8-K: Material Agreement & Equity Sales

TL;DR

Applied Digital just filed an 8-K detailing a new material agreement and equity sales. Watch closely.

AI Summary

Applied Digital Corp. entered into a material definitive agreement on June 7, 2024, related to a direct financial obligation. The company also disclosed unregistered sales of equity securities and provided other events and financial statements. This filing follows a name change from Applied Blockchain, Inc. in 2021.

Why It Matters

This 8-K filing indicates new financial obligations and equity transactions for Applied Digital Corp., which could impact its financial structure and shareholder value.

Risk Assessment

Risk Level: medium — The filing involves new financial obligations and unregistered equity sales, which can introduce financial and market risks.

Key Players & Entities

• Applied Digital Corp. (company) — Registrant
• Applied Blockchain, Inc. (company) — Former company name
• June 7, 2024 (date) — Date of earliest event reported

FAQ

Key Financial Figures

• $15 million — te provides for an initial borrowing of $15 million (the "First Borrowing"), which was draw
• $110 million — 024, and subsequent borrowings of up to $110 million (the "Subsequent Tranches") will be ava
• $40 Million — wing for Subsequent Tranches. The final $40 Million of the Subsequent Tranche will be funde
• $75 million — eature that permits up to an additional $75 million of borrowings subject to the mutual agr
• $4.8005 — Warrants will have an exercise price of $4.8005 per share, which exercise price may be
• $3.00 — onditionally lower the floor price from $3.00 to $2.00 if the daily VWAP is less than
• $2.00 — lly lower the floor price from $3.00 to $2.00 if the daily VWAP is less than $3.00 pe
• $2.5 million — in equal weekly installments of either $2.5 million in cash or $5.0 million in Common Share
• $5.0 million — ments of either $2.5 million in cash or $5.0 million in Common Shares as determined by YA in
• $5 m — a number of Common Shares equal to (x) $5 million, divided by (y) an amount equal t

Filing Documents

• apld-20240607.htm (8-K) — 39KB
• apld-pressreleasexfinal6624.htm (EX-99.1) — 16KB
• image_2.jpg (GRAPHIC) — 11KB
• 0001144879-24-000151.txt ( ) — 206KB
• apld-20240607.xsd (EX-101.SCH) — 2KB
• apld-20240607_lab.xml (EX-101.LAB) — 22KB
• apld-20240607_pre.xml (EX-101.PRE) — 13KB
• apld-20240607_htm.xml (XML) — 3KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. On June 7, 2024, APLD Holdings 2 LLC (the "Borrower"), a Delaware limited liability company and a subsidiary of Applied Digital Corporation, a Nevada corporation (the "Company") entered into a promissory note (the "Promissory Note") with CIM APLD Lender Holdings, LLC, a Delaware limited liability company (the "Lender"). The Promissory Note provides for an initial borrowing of $15 million (the "First Borrowing"), which was drawn on June 7, 2024, and subsequent borrowings of up to $110 million (the "Subsequent Tranches") will be available subject to the satisfaction of certain conditions, including entry into certain account control agreements and the assignment of certain project contracts to the Borrower or affiliate of the Borrower as requested by the Lender. There may not be more than two borrowings for Subsequent Tranches in any calendar month and there must be at least ten Business Days (as defined in the Promissory Note) between each borrowing for Subsequent Tranches. The final $40 Million of the Subsequent Tranche will be funded when, among other conditions, (a) the Borrower has entered into (i) the Long Form Credit Documentation (as defined in the Promissory Note) and (ii) has entered into a hyperscale lease agreement acceptable to the Lenders with respect to the ELN-02 Project (as defined in the Promissory Note), and (b) the Company has issued certain additional common stock purchase warrants to the Lender. The Promissory Note includes an accordion feature that permits up to an additional $75 million of borrowings subject to the mutual agreement of the Borrower and Lender (the "Accordion"). Principal amounts repaid under the Promissory Note will not be available to be re-borrowed. The Company has provided a guarantee (the "Parent Guaranty") in favor of the Lender that includes certain covenants that limit the Company's ability to grant certain liens or, during events of default, pay dividends, repurchas

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 Private Placement Warrants and the underlying Common Shares is incorporated by reference herein in its entirety. 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 Regulation FD Disclosure

Item 7.01 Regulation FD Disclosure. On June 7, 2024, the Company issued a press release (the "Press Release") announcing the entry into the Promissory Note, which Press Release is attached as Exhibit 99.1 hereto and incorporated by reference into this Item 7.01.

01 Other Events

Item 8.01 Other Events. The information set forth in "Item 7.01 Regulation FD Disclosure" is incorporated by reference herein in its entirety.

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 99.1 Press Release dated June 7, 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: June 7, 2024 By: /s/ David Rench Name: David Rench Title: Chief Financial Officer

View Full Filing

View this 8-K filing on SEC EDGAR