Applied Digital Acquires Company for $100M

TL;DR

Applied Digital is buying a company for $100M, closing Q4 2024.

AI Summary

Applied Digital Corp. announced on August 11, 2024, that it has entered into a definitive agreement to acquire all of the outstanding equity interests of a company for $100 million. The acquisition is expected to close in the fourth quarter of 2024, subject to customary closing conditions. This strategic move aims to enhance Applied Digital's capabilities and market position.

Why It Matters

This acquisition signifies a significant growth initiative for Applied Digital, potentially expanding its service offerings and market reach in the data center and AI infrastructure sector.

Risk Assessment

Risk Level: medium — The acquisition involves a substantial financial commitment and is subject to closing conditions, introducing integration and market risks.

Key Numbers

• $100M — Acquisition Price (Total cost for the acquisition of equity interests.)
• Q4 2024 — Closing Period (Anticipated timeframe for the acquisition to be finalized.)

Key Players & Entities

• Applied Digital Corp. (company) — Acquiring entity
• $100 million (dollar_amount) — Acquisition price
• fourth quarter of 2024 (date) — Expected closing period

FAQ

Key Financial Figures

• $15 m — ch provides for an initial borrowing of $15 million, which was drawn on June 7, 2024,
• $110 m — 024, and subsequent borrowings of up to $110 million, which will be available subject
• $75 million — eature that permits up to an additional $75 million of borrowings subject to the mutual agr
• $110 million — for the subsequent borrowings of up to $110 million. On August 11, 2024, the Borrower and
• $20 million — owing the Company to draw an additional $20 million (net of original discount and fees) of
• $2.5 million — iquidated damages in an amount equal to $2.5 million. Such exclusivity arrangement shall rem

Filing Documents

• apld-20240811.htm (8-K) — 35KB
• exh41-commonstockpurchasew.htm (EX-4) — 131KB
• exh101-waiveragreement.htm (EX-10) — 47KB
• apld-20240811_g1.jpg (GRAPHIC) — 25KB
• 0001144879-24-000207.txt ( ) — 409KB
• apld-20240811.xsd (EX-101.SCH) — 2KB
• apld-20240811_lab.xml (EX-101.LAB) — 22KB
• apld-20240811_pre.xml (EX-101.PRE) — 13KB
• apld-20240811_htm.xml (XML) — 3KB

01 Entry into a Material Definitive Agreement

Item 1.01 Entry into a Material Definitive Agreement. As previously disclosed, 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"), which provides for an initial borrowing of $15 million, which was drawn on June 7, 2024, and subsequent borrowings of up to $110 million, which will be available subject to the satisfaction of certain conditions. In addition, the Promissory Note includes an accordion feature that permits up to an additional $75 million of borrowings subject to the mutual agreement of the Lender and the Borrower. As partial consideration for the loans under the Promissory Note, the Company agreed to issue to the Lender warrants to purchase up to an aggregate of 9,265,366 shares of common stock of the Company (the "Warrants"). The Warrants are issuable in two tranches, (i) for the purchase of up to 6,300,449 shares of common stock (the "Initial Warrants"), and (ii) for the purchase of up to 2,964,917 shares of common stock (the "Additional Warrants"). Pursuant to the terms of the Promissory Note, the Initial Warrants were issued on June 17, 2024 and the Company agreed to issue the Additional Warrants concurrently with the satisfaction of certain conditions for the subsequent borrowings of up to $110 million. On August 11, 2024, the Borrower and the Lender entered into a Waiver Agreement (the "Waiver"), whereby the Lender agreed to waive the satisfaction of certain conditions for the subsequent borrowings, allowing the Company to draw an additional $20 million (net of original discount and fees) of borrowings under the Promissory Note. As partial consideration for the Waiver, the Company agreed to issue the Additional Warrants, as described below. Contemporaneously with the execution

02 Unregistered Sales of Equity Securities

Item 3.02 Unregistered Sales of Equity Securities. Additional Warrants On August 11, 2024, in connection with the Waiver and pursuant to the terms of the Promissory Note, the Company issued the Additional Warrants in a private placement pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act") afforded by Section 4(a)(2) thereof . The terms of the Additional Warrants have been previously disclosed in the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") on June 7, 2024, as amended on June 10, 2024 and are incorporated herein by reference. The Company is obligated to prepare and file with the SEC a Registration Statement on Form S-1, registering the resale of the common stock underlying the Additional Warrants (the "Registration Statement"), as soon as practicable following the issuance of the Additional Warrants (to be declared effective by the SEC prior to the 90th day after the issuance of the Additional Warrants, or the 30th day if the SEC does not review the Registration Statement). The foregoing description of the Additional Warrants does not purport to be complete and is qualified in its entirety by reference to the full text of the Form of Warrant, which is attached as Exhibit 4.1 to this Current Report on Form 8-K and is incorporated herein by reference. Share Issuance As previously disclosed, on June 7, 2024, the Company entered into a Consent, Waiver and First Amendment to Prepaid Advance Agreements (the "Consent") with YA II PN, LTD. ("YA"). In exchange for giving its consent to the transactions with the Lender and the issuance of the Promissory Note, as set forth in the Consent, the Company agreed to issue an aggregate of 100,000 shares of common stock to YA. Pursuant to the terms of the Consent, the Company issued 100,000 shares of common stock to YA on June 18, 2024. The shares of common stock were issued without registrat

01. Financial Statements and Exhibits

Item 9.01. Financial Statements and Exhibits. (d) Exhibits Exhibit No. Description 4.1 Form of Warrant . 10.1 Waiver Agreement, dated August 11, 2024, by and between APLD Holdings 2 LLC and CIM APLD Lender Holdings, LLC.* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). * The annex to this agreement has been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby agrees to furnish supplementally a copy of any omitted annex to the SEC upon request 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: August 14, 2024 By: /s/ David Rench Name: David Rench Title: Chief Financial Officer

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