Revenue and Financial Performance - Total revenue for the three months ended August 31, 2024, was $60.7 million, a 67.1% increase compared to $36.3 million in the same period in 2023[14] - Net loss attributable to common stockholders improved to $4.3 million for the three months ended August 31, 2024, compared to a net loss of $11.5 million in the same period in 2023[14] - Basic and diluted net loss per share improved to $0.03 for the three months ended August 31, 2024, compared to $0.11 in the same period in 2023[14] - Operating income for the three months ended August 31, 2024, was $9.5 million, compared to an operating loss of $7.4 million in the same period in 2023[14] - Net loss decreased to $4.247 million in August 2024 from $11.854 million in August 2023, showing a significant improvement in financial performance[22] - Revenue increased by $26.6 million (83%) from $32.1 million in Q3 2023 to $58.8 million in Q3 2024, driven by increased data center capacity and the launch of Cloud Services[179] - Adjusted EBITDA was $19.993 million in Q3 2024, representing 33% of revenues, compared to $9.864 million (27% of revenues) in Q3 2023[176] - Adjusted EBITDA for the three months ended August 31, 2024, was $19.9 million, compared to $9.8 million for the same period in 2023[200] - Adjusted operating loss for the three months ended August 31, 2024, was $14.3 million, compared to an adjusted operating income of $1.6 million for the same period in 2023, reflecting a significant decline in performance[199] - Adjusted net loss attributable to Applied Digital Corporation for the three months ended August 31, 2024, was $21.6 million, compared to a net loss of $129,000 for the same period in 2023[199] Costs and Expenses - Cost of revenues increased to $61.1 million for the three months ended August 31, 2024, compared to $25.2 million in the same period in 2023[14] - Cost of revenues increased by $35.8 million (142%) from $25.2 million in Q3 2023 to $61.1 million in Q3 2024, primarily due to higher depreciation, lease expenses, and personnel costs[180] - Selling, general, and administrative expenses decreased by $1.8 million (11%) from $16.2 million in Q3 2023 to $14.3 million in Q3 2024, mainly due to reduced stock-based compensation[182] - Depreciation and amortization expenses increased to $34.316 million in August 2024 from $7.86 million in August 2023[22] - Depreciation expense for the three months ended August 31, 2024, was $3.0 million, compared to $2.2 million for the same period in 2023[45] - Total net lease cost for the three months ended August 31, 2024, was $44.643 million, including $8.962 million in operating lease cost and $35.626 million in finance lease cost[103] - Interest expense, net increased by $5.2 million (243%) from $2.1 million in Q3 2023 to $7.3 million in Q3 2024, driven by higher finance leases and interest-bearing loans[185] Cash Flow and Liquidity - Cash flow from operating activities was negative at $75.89 million in August 2024, compared to a positive $4.517 million in August 2023[22] - Cash flow from financing activities increased to $163.365 million in August 2024 from $23.663 million in August 2023, driven by borrowings and stock issuances[22] - Total cash, cash equivalents, and restricted cash increased to $86.557 million in August 2024 from $31.688 million in May 2024[42] - The company had a working capital deficit of $302.6 million, raising substantial doubt about its ability to continue as a going concern, but subsequent events alleviated this doubt[43] - As of August 31, 2024, the company had unrestricted cash and cash equivalents of $58.2 million and negative working capital of $302.6 million[201] - The company expects to have sufficient liquidity to support operations and meet working capital needs for at least the next 12 months[209] - Liquidity sources include cash on hand, customer payments, debt financing, and access to public capital markets[209] - The company may face challenges in raising additional funds on favorable terms, which could negatively impact financial conditions[209] - Failure to secure necessary financing could force delays, reductions, or termination of operations and development plans[209] - The company's liquidity estimates are based on assumptions that may prove incorrect, potentially leading to faster capital depletion[209] - If capital resources are used sooner than expected, the company may need to seek additional financing earlier than projected[209] - Additional financing may not be available on acceptable terms or at all, posing risks to the company's financial stability[209] - The inability to raise capital as needed would negatively impact the company's ability to pursue its business strategy[209] Debt and Equity Transactions - The company issued 6.1 million shares in an offering, net of costs, during the three months ended August 31, 2024[18] - The company converted $56.2 million of debt into equity during the three months ended August 31, 2024[18] - The company issued $60.726 million in preferred stock in August 2024, with issuance costs of $5.444 million[22] - Long-term debt increased to $106.2 million as of August 31, 2024, up from $79.5 million as of May 31, 2024, primarily due to the CIM Promissory Loan of $105.0 million[59] - Remaining principal payments on long-term debt total $156.7 million, with $112.7 million due in FY28 and $12.0 million from SAFE agreements[60] - During the three months ended August 31, 2024, $48.0 million of Yorkville Convertible Debt was converted into approximately 11.4 million shares of common stock[63] - The CIM Promissory Note balance was $105.0 million as of August 31, 2024, with warrants issued to purchase up to 9,265,366 shares of Common Stock[64] - CIM Warrants were issued in two tranches: 6,300,449 Common Shares (Initial Warrants) at $4.8005 per share and 2,964,917 Common Shares (Additional Warrants) at the same price, with a five-year term[65] - The fair value of the Initial Warrants and Additional Warrants was $4.36 and $3.04 per warrant, respectively, totaling $36.5 million[67] - The Company entered into two SAFE agreements totaling $12.0 million, which may convert into preferred stock or entitle the investor to proceeds in liquidity or dissolution events[70][71] - The Company sold approximately 3.1 million shares for net proceeds of $14.6 million under a $25 million "at the market" sale agreement with Roth Capital Partners[76] - The Company entered into a Sales Agreement allowing the sale of up to $125,000,000 in shares of common stock, with $16.4 million net proceeds from 3.0 million shares sold as of August 31, 2024[77] - The Company entered into a Standby Equity Purchase Agreement (SEPA) with YA Fund, allowing the sale of up to $250.0 million of common stock, with a $2,125,000 commitment fee paid in 456,287 shares of common stock[78][79] - The Company issued approximately 9.6 million shares of common stock under equity incentive plans, with $(2.9) million and $5.6 million of stock-based compensation recognized in the three months ended August 31, 2024 and 2023, respectively[80] - The Company sold 301,673 shares of Series E Redeemable Preferred Stock for proceeds of $6.9 million, with a fixed dividend rate of 9.0% per annum[87][88] - The Series E Preferred Stock has a $25.00 per share liquidation value, with optional redemption fees ranging from 9.00% to 0.00% based on the redemption timing[91] - Series F Convertible Preferred Stock private placement closed on August 30, 2024, for total proceeds of $50.0 million, with a 3.5% fee paid to Northland Securities, Inc.[93] - Series F Convertible Preferred Stock holders are entitled to cumulative preferential dividends at an annual rate of 8.0% of the Stated Value of $1,000 per share[93] - The fair value of Yorkville convertible debt was $30.463 million as of August 31, 2024, calculated on an as-converted basis using quoted market prices[98][99] - The Company recorded a loss on the change in fair value of debt of $6.4 million in its unaudited condensed consolidated statements of operations[99] - The company completed a private placement on September 5, 2024, issuing 49.4 million shares of common stock at $3.24 per share, raising approximately $160 million in gross proceeds[128] - The company received the final $20.0 million of funding associated with the CIM Promissory Note on October 8, 2024, bringing the total balance outstanding under the note to approximately $125 million[131] - The company entered into a Dealer Manager Agreement on September 23, 2024, to offer up to 2.5 million shares of Series E-1 Redeemable Preferred Stock at $25.00 per share[130] - The company converted $17.8 million of Initial YA Notes into approximately 5.8 million shares of common stock and $4.1 million of the May Note into approximately 1.4 million shares of common stock, leaving $6.2 million outstanding across all YA Notes[129] - The company borrowed $125 million under the CIM Promissory Note as of August 31, 2024[202] - During the quarter ended August 31, 2024, the company sold approximately 3.1 million shares for net proceeds of $14.6 million[203] - The company entered into a securities purchase agreement for the private placement of Series F Convertible Preferred Stock, raising $50.0 million[206] - The company closed a private placement of common stock, raising approximately $160 million in gross proceeds[207] - The company received $17.4 million in payments for future cloud services and $26.9 million in payments for future data center hosting services during the three months ended August 31, 2024[207] Segment Performance - Total revenue for the three months ended August 31, 2024, was $60.7 million, with the data center hosting segment contributing $34.8 million and the cloud services segment contributing $25.9 million[118] - The data center hosting segment reported a segment profit of $35.9 million, while the cloud services segment reported a segment loss of $15.8 million for the three months ended August 31, 2024[119] - Total segment profit for the three months ended August 31, 2024, was $17.1 million, compared to $0.8 million for the same period in 2023[119] - Data Center Hosting segment operating profit increased by $26.9 million (298%) from $9.0 million in Q3 2023 to $35.9 million in Q3 2024, largely due to the Garden City facility sale[189] - Cloud Services segment operating loss increased by $8.4 million from $7.4 million in Q3 2023 to $15.8 million in Q3 2024, driven by higher amortization and occupancy costs[190] - HPC Hosting segment operating loss increased by $2.2 million (290%) from $0.8 million in Q3 2023 to $2.9 million in Q3 2024, due to stock-based compensation and payroll expenses[191] - Data Center Hosting Business operates at full capacity with 106 MW in Jamestown and 180 MW in Ellendale, North Dakota as of August 31, 2024[147] - Cloud Services Business recognized $25.9 million in revenue during the fiscal quarter ended August 31, 2024[149] - HPC Hosting Business is negotiating a 400 MW capacity lease with a US-based hyperscaler, including a 100 MW facility under construction in Ellendale, North Dakota[150] Asset and Liability Management - Total stockholders' equity increased to $241.8 million as of August 31, 2024, compared to $127.9 million as of August 31, 2023[18][19] - The company received $25 million in connection with the sale of its Garden City facility[14] - Restricted cash related to letters of credit totaled $28.3 million, held in money market funds[39] - Property and equipment increased to $495.6 million as of August 31, 2024, up from $354.8 million as of May 31, 2024, driven by construction in progress which rose to $313.6 million from $190.2 million[45] - Deferred revenue balance decreased to $16.9 million as of August 31, 2024, from $39.4 million at the beginning of the period, primarily due to revenue recognition of $60.4 million[48] - Customer deposits balance decreased to $13.7 million as of August 31, 2024, from $15.4 million at the beginning of the period, with $2.8 million received and $1.5 million refunded during the quarter[49] - The Company had letters of credit totaling $28.3 million as of August 31, 2024, with restricted cash held in separate accounts[61] - Future minimum lease payments as of August 31, 2024, total $318.554 million, with $150.292 million for operating leases and $168.262 million for finance leases[105] - The Company has a minimum commitment of approximately $68.1 million related to the energy services agreement for its Jamestown, North Dakota co-hosting facility[108] - The Company has entered into leases which are executed but not yet commenced with total minimum payments of approximately $18.9 million[106] - As of August 31, 2024, the company had total assets of $937.7 million, with the data center hosting segment accounting for $143.1 million and the cloud services segment accounting for $338.8 million[124] - The company received the remaining $25 million of the purchase price held in escrow related to the sale of its Garden City hosting facility, which was included in the gain on classification of held for sale[116] - Company sold Garden City hosting facility for up to $87.3 million, with $25 million released from escrow after meeting conditional approval requirements[147][148][161] Legal and Regulatory Matters - The Company is involved in a putative securities class action lawsuit, with potential material impact on results of operations if an unfavorable outcome occurs[111][112] - A derivative action was dismissed without prejudice on June 5, 2024, with no pending or threatened lawsuits as of August 31, 2024, that could materially affect the Company's operations[114][115] Revenue Recognition and Customer Contributions - Revenue recognition for data center hosting and cloud services is based on fixed rates over the term of agreements, with advanced payments recorded as deferred revenue[32][33] - Revenue from Customer A decreased to 48% of total revenue for the three months ended August 31, 2024, down from 68% in the same period in 2023, while Customer G contributed 16% of revenue in 2024[47] - Gain on classification of held for sale was $24.8 million in Q3 2024, primarily due to $25.0 million released from escrow funds related to the sale of the Garden City facility[183] Stock-Based Compensation and Equity Plans - Stock-based compensation expense was $2.9 million for the three months ended August 31, 2024[18] - The Company issued approximately 9.6 million shares of common stock under equity incentive plans, with $(2.9) million and $5.6 million of stock-based compensation recognized in the three months ended August 31, 2024 and 2023, respectively[80] Future Commitments and Agreements - The Company entered into a CIM Promissory Note for initial borrowing of $15 million, with potential subsequent borrowings of up to $110 million and an additional $75 million accordion feature[151][153] - YA Fund converted $64.0 million of YA Notes into 16.2 million shares of common stock, with $6.2 million principal amount outstanding as of August 31, 2024[155] - Company entered into a Standby Equity Purchase Agreement with YA Fund for up to $250.0 million of common stock, with a commitment fee of $2,125,000 paid in shares[162][163] - Series F Preferred Stock offering closed on August 30, 2024, raising $50.0 million with an annual dividend rate of 9.0%[165][166]

Financial Performance - Revenues for the fiscal first quarter 2025 were $60.7 million, representing a 67% increase compared to the same period last year[2] - The net loss for the fiscal first quarter 2025 was $4.2 million, or $0.03 per basic and diluted share, an improvement from a net loss of $11.5 million, or $0.11 per share, in the prior year[11] - Adjusted net loss for the fiscal first quarter 2025 was $21.6 million, with an adjusted net loss per diluted share of $0.15, impacted by $4.4 million in expenses related to non-revenue generating facilities[12] - Adjusted EBITDA for the fiscal first quarter 2025 was $20.0 million, up from $9.9 million in the same quarter of the previous year[13] - Total revenue for the three months ended August 31, 2024, was $60.704 million, a 67.2% increase from $36.323 million in the same period last year[31] - Operating income for the same period was $9.483 million, compared to an operating loss of $7.368 million in the prior year[31] - Net loss attributable to common stockholders decreased to $4.291 million, down from $11.457 million year-over-year[31] - Adjusted operating loss income (Non-GAAP) for the three months ended August 31, 2024, was $(14,323) thousand, compared to $1,607 thousand for the same period in 2023[35] - Adjusted operating margin decreased to (24)% for the three months ended August 31, 2024, from 4% in the prior year[35] - Net loss attributable to Applied Digital Corporation (GAAP) improved to $(4,247) thousand for the three months ended August 31, 2024, compared to $(11,457) thousand in the same period last year[35] - EBITDA (Non-GAAP) for the three months ended August 31, 2024, was $37,422 thousand, a significant increase from $(1,312) thousand in the prior year[38] - Adjusted EBITDA (Non-GAAP) rose to $19,993 thousand for the three months ended August 31, 2024, compared to $9,864 thousand in the same period of 2023[38] Cash and Assets - As of August 31, 2024, the Company had $86.6 million in cash and equivalents, up from $31.7 million at the end of fiscal 2024[14] - Total current assets increased to $84.110 million from $30.262 million as of May 31, 2024[26] - Cash and cash equivalents at the end of the period were $58.215 million, up from $3.339 million[26] - The company reported a significant gain of $24.808 million on the classification of held-for-sale assets[31] Expenses and Liabilities - The company incurred depreciation and amortization expenses of $34.316 million, compared to $7.860 million in the prior year[32] - Cash flow used in operating activities was $(75.890) million, a decrease from $4.517 million in the same period last year[32] - The company raised $60.726 million from the issuance of preferred stock during the quarter[32] - Total liabilities rose slightly to $640.604 million from $638.037 million[27] Business Operations - Two additional clusters were added to the Cloud Services Business, increasing the total to six clusters, each with 1,024 GPUs, contributing to $25.9 million in revenue from this segment[7] - The Company is finalizing a lease agreement for a 100 MW facility under construction, with plans to expand total capacity to 400 MW through additional buildings[4][8] - The Company’s 106 MW facility in Jamestown and 180 MW facility in Ellendale are operating at full capacity, with a recent sale of a facility generating $25 million in escrow funds[9] Management and Organizational Changes - Management announced executive changes to enhance the Company's growth management, with new appointments effective October 14, 2024[6] Research and Development - Research and development expenses decreased to $36 thousand for the three months ended August 31, 2024, from $184 thousand in the prior year[35] Other Expenses - Stock-based compensation expense was $(3,072) thousand for the three months ended August 31, 2024, down from $5,641 thousand in the same period last year[35] - Diligence, acquisition, disposition, and integration expenses were $2,888 thousand for the three months ended August 31, 2024, compared to $10 thousand in the same period last year[35] - Loss on abandonment of assets was $628 thousand for the three months ended August 31, 2024, with no comparable figure in the prior year[35] - Gain on classification of held for sale was $(24,808) thousand for the three months ended August 31, 2024, with no comparable figure in the prior year[35]

Applied Digital Corporation APLD will release earnings results for its first quarter, after the closing bell on Wednesday, Oct. 9.Analysts expect the Dallas, Texas-based company to report a quarterly loss at 29 cents per share, versus a year-ago loss of 12 cents per share. Applied Digital projects to report revenue of $54.85 million for the quarter, according to data from Benzinga Pro.On Sept. 5, Applied Digital entered agreements for a $160 million private placement financing priced at market, from a group ...

Core Viewpoint - Applied Digital Corporation (APLD) is anticipated to report a year-over-year decline in earnings despite an increase in revenues for the quarter ending August 2024, with the earnings report set to be released on October 9, 2024 [1] Revenue and Earnings Estimates - The company is expected to post a quarterly loss of $0.28 per share, reflecting a year-over-year change of -180% [2] - Revenues are projected to be $54.03 million, representing a 48.8% increase from the same quarter last year [2] Estimate Revisions - The consensus EPS estimate has been revised 14.6% higher in the last 30 days, indicating a reassessment by covering analysts [3] - A positive Earnings ESP of +53.15% suggests that analysts have recently become more optimistic about the company's earnings prospects [6][7] Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that a positive reading is a strong predictor of an earnings beat, especially when combined with a Zacks Rank of 1, 2, or 3 [5] - The current Zacks Rank for Applied Digital Corporation is 3, indicating a potential for beating the consensus EPS estimate [7] Historical Performance - In the last reported quarter, the company was expected to post a loss of $0.23 per share but actually reported a loss of $0.52, resulting in a surprise of -126.09% [8] - The company has not beaten consensus EPS estimates in any of the last four quarters [8] Conclusion - While the company is positioned as a compelling earnings-beat candidate, other factors should also be considered when evaluating the stock ahead of its earnings release [9]

Core Insights - The investment will enable Applied Digital to construct data centers that are specifically optimized for high-performance computing [1] Company Analysis - The news is significant for Nvidia (NVDA) and Applied Digital (APLD) stock investors, indicating potential growth opportunities for both companies [1]

Group 1 - Applied Digital Corporation (APLD) shares increased by 65.7% to close at $5.37, following a notable trading volume compared to typical sessions, despite a 16.9% loss over the past four weeks [1] - The surge in share price is linked to a $160 million funding announcement from institutional and accredited investors, including NVIDIA [1] - APLD is expected to report a quarterly loss of $0.29 per share, reflecting a year-over-year change of -190%, while revenues are projected to be $51.84 million, a 42.7% increase from the previous year [1] Group 2 - The consensus EPS estimate for APLD has been revised 38.8% higher in the last 30 days, indicating a positive trend that typically leads to price appreciation [2] - APLD currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [2] - In the same industry, Alerus (ALRS) closed 0.5% lower at $21.44, with a consensus EPS estimate of $0.44, unchanged over the past month, representing a -2.2% change from the previous year [2]

Group 1: Company Developments - Applied Digital raised $160 million in a financing round with backing from Nvidia, indicating strong investor interest in AI-related ventures [1] - The company builds and leases data center space and has launched an AI cloud-computing operation powered by Nvidia's chips [1] - The new funding will be used to support growth, manage debt-financing for a data center project in North Dakota, and expand its cloud-computing business [1] Group 2: Industry Trends - Other companies in the AI space, such as CoreWeave, have also seen increased valuations following investments from Nvidia [2] - The generative AI market in the automotive sector is projected to grow from $335 million in 2023 to $2.6 billion by 2033, with a compound annual growth rate of 23% [3] - A PYMNTS report indicates that 93% of auto industry stakeholders believe generative AI will significantly impact their field, and 75% plan to integrate it into operations this year [2][3]

Core Viewpoint - Applied Digital Corporation has announced a private financing arrangement, issuing $53.2 million in convertible preferred stock for net proceeds of $50 million, aimed at supporting growth initiatives and expansion plans in the high-performance computing (HPC) sector [1]. Financing Details - The convertible preferred stock has a stated value of $1,000 per share and an interest rate of 8%, payable in kind (PIK) or cash [1]. - The investor received 53,191 shares, with 3,191 shares representing a 6% original discount [1]. - Upon shareholder approval, the preferred stock can be converted into common stock at an initial conversion price of $7.00 per share, which is over 80% premium to the latest common stock price [1]. Use of Proceeds - The proceeds from this investment will be utilized to fund various growth initiatives across the company's business segments, particularly to support the ongoing Ellendale HPC buildout and finalize a long-term hyperscaler lease [1]. Company Overview - Applied Digital designs, develops, and operates next-generation data centers across North America, focusing on providing digital infrastructure solutions for the rapidly growing HPC industry [4].

Core Viewpoint - Applied Digital (NASDAQ: APLD) has experienced significant stock decline since its IPO in April 2022, with shares down 56% and a recent drop of 13.38% to $3.82, despite a bullish average price target of $8.20 indicating a potential upside of 110% [1][2][8]. Company Overview - Applied Digital specializes in high-performance computing (HPC) and operates data centers, providing hosting services for both AI tasks and cryptocurrency mining [4][6]. - The company initially focused on cryptocurrency mining but rebranded from Applied Blockchain to Applied Digital in November 2022 due to poor performance and a need to diversify its offerings [5][6]. Financial Performance - In the latest earnings report, Applied Digital reported revenue of $47.3 million, nearly doubling from the previous year but remaining flat compared to the prior quarter, surpassing analyst expectations of $39.1 million [7][8]. - The company posted an adjusted loss of $0.36 per share, which is a larger loss than the previous quarter and worse than the expected loss of $0.22 per share [7][8]. Margin and Cost Challenges - The gross margin has been negative for two consecutive quarters, attributed to high energy costs, depreciation, and personnel expenses, raising concerns about the sustainability of profitability [8][10]. - The current negative gross margin may be influenced by unusually high electricity prices, but the company has not provided guidance on future energy costs [10]. Strategic Developments - Applied Digital has signed a letter of intent (LOI) with a U.S. hyperscaler customer for 400 MW of capacity for its cloud business, although this agreement is non-binding and did not positively impact the share price [9].

Data Center Hosting Business - Data Center Hosting Business operated at full capacity with 106 MW in Jamestown, North Dakota, and resolved power outage issues at the 180 MW Ellendale facility, now operating at full capacity[254] - The Garden City hosting facility was sold for $87.3 million in cash, with an additional $10.0 million consideration, resulting in a $15.4 million loss[255] - Data Center Hosting Business revenue increased to $136.6 million in FY 2024 from $55.4 million in FY 2023[341] - Revenue recognition for Data Center Hosting is based on a fixed rate over the term of agreements, with advanced payments recorded as deferred revenue[339] Cloud Services Business - Cloud Services Business generated $29.0 million in revenue during fiscal year 2024 from two customers[258] - Cloud Services revenue is recognized based on a fixed rate over the term of agreements, net of any credits for non-performance[340] HPC Hosting Business - HPC Hosting Business broke ground on a 100 MW HPC data center in Ellendale, North Dakota, with a 369,000-square-foot building expected to support HPC applications[259] - The company entered into a 400 MW capacity lease with a US-based hyperscaler, including the 100 MW facility under construction and two forthcoming buildings in Ellendale[260] Financial Performance and Revenue Growth - Revenue increased by $109.8 million (268%) from $41.0 million in FY2023 to $150.8 million in FY2024, driven by increased capacity and the launch of Cloud Services Business[301] - Related party revenue increased by $0.4 million (2%) from $14.4 million in FY2023 to $14.8 million in FY2024, primarily due to increased uptime at the Jamestown facility[301] - Adjusted EBITDA was $24.5 million in FY2024, representing 15% of revenues, compared to $0.8 million (1% of revenues) in FY2023[298] - Adjusted EBITDA (Non-GAAP) for May 31, 2024 was $24.46 million, compared to $0.81 million in 2023[318] Costs and Expenses - Cost of revenues increased by $104.0 million (234%) from $44.4 million in FY2023 to $148.3 million in FY2024, driven by growth in business and increased energy costs[303] - Selling, general and administrative expenses increased by $43.4 million (79%) from $55.1 million in FY2023 to $98.5 million in FY2024, due to growth in business and increased depreciation and amortization[302] - The company expects general and administrative expenses and operating expenditures to increase as it continues to expand operations[328] Losses and Impairments - Loss on classification of held for sale was $15.4 million in FY2024 due to the write-down of Garden City assets[303] - Loss on change in fair value of debt was $7.4 million in FY2024 due to valuation associated with Yorkville Advisors Loan[306] - Loss on change in fair value of related party debt was $13.8 million in FY2024, with $8.1 million due to AI Bridge Loan and $5.7 million due to warrants issued to AI Bridge Funding LLC[307] - The company recorded impairment expense on long-lived assets of $0.5 million in FY 2024, compared to $0.2 million in FY 2023[346] Debt and Financing Activities - The AI Bridge Loan was issued for up to $20.0 million, with $15.0 million funded immediately, bearing an interest rate of 12.5% per annum[272] - The company recognized a $13.8 million loss on the change in fair value of the AI Bridge Loan during fiscal year 2024[274] - The company issued 8,421,146 shares of common stock to extinguish the $20.0 million principal balance of the AI Bridge Loan[274] - Vantage Transformer Loan: $3.7 million term loan with a 6.50% annual interest rate, fully repaid as of the report date[276] - B. Riley Loan: $50 million term loan with a 9.00% annual interest rate, early repayment of $44.5 million with a $2.5 million loss on debt extinguishment[277][278] - Cornerstone Bank Loan: $16.0 million term loan with an 8.59% annual interest rate, $15.6 million outstanding as of May 31, 2024[279] - Yorkville Convertible Debt: Initial YA Notes totaling $50 million, $26.0 million converted into 7.4 million shares of common stock[280][281] - May Note: $42.1 million convertible note, $38.0 million converted into 8.8 million shares of common stock[282][283] - CIM Promissory Note: Initial borrowing of $15 million, total outstanding balance of $105 million as of the report date[287] Equity and Stock Issuances - The company sold 18.9 million shares for net proceeds of $121.2 million under an at-the-market sale agreement with Craig-Hallum Capital Group LLC[261] - The company entered into a Dealer Manager Agreement for the offering of up to 2,000,000 shares of Series E Preferred Stock at $25.00 per share, with no shares sold as of May 31, 2024[264] - Series E Preferred Stock: 301,673 shares sold for net proceeds of $6.9 million[286] - At-the-Market Sales Agreement: 2.9 million shares of common stock issued for proceeds of $16.4 million[292] - SEPA Agreement: Option to sell up to $250.0 million of common stock to YA Fund, with a $2.125 million commitment fee paid in shares[294][295] Cash Flow and Liquidity - As of May 31, 2024, the company had unrestricted cash and cash equivalents of $3.3 million and negative working capital of $355.3 million[320] - During the fiscal year ended May 31, 2024, the company received $148.1 million in payments for future data center hosting services[323] - The company sold approximately 18.9 million shares under an "at the market" sales agreement, generating net proceeds of $121.2 million[322] - The company received net cash proceeds of approximately $61.1 million from the sale of its data center facility in Garden City, Texas[323] - Net cash provided by operating activities decreased by $44.9 million, or 77%, from $58.7 million in 2023 to $13.8 million in 2024[332] - The company expects to have sufficient liquidity to support ongoing operations for at least the next 12 months[327] - Net cash used in investing activities increased by $40.3 million, from $132.1 million in FY 2023 to $172.4 million in FY 2024, primarily due to increased lease prepayments for hosting equipment to support the Cloud Services Business[333] - Net cash provided by financing activities increased by $76.1 million (108%), from $70.6 million in FY 2023 to $146.8 million in FY 2024, driven by net proceeds from common stock offerings and related party debt[334] Business Segments and Operations - The company operates three reportable business segments: Data Center Hosting Business, Cloud Services Business, and HPC Hosting Business[337] - The company assesses going concern uncertainty quarterly, evaluating cash, working capital, and projected cash expenditures to ensure operational viability for at least one year[347] Fair Value and Valuation Models - The fair value of the YA Notes was estimated at $80.2 million, with a loss on the change in fair value of debt recorded at $7.4 million[344] - The company uses a Black-Scholes Option Pricing model to determine the fair value of AI Warrants, with Level 3 inputs including expected share-price volatility and risk-free interest rate[343] Net Loss and Adjusted Operating Loss - Net loss attributable to Applied Digital Corporation was $149.3 million in FY2024, compared to $44.6 million in FY2023[298] - Adjusted operating loss (Non-GAAP) for May 31, 2024 was $50.99 million, compared to $7.32 million in 2023, with an adjusted operating margin of (31)% versus (13)% in 2023[316] - Net loss attributable to Applied Digital Corporation (GAAP) for May 31, 2024 was $149.27 million, compared to $44.65 million in 2023[318]