Applied Digital Corporation has recently released its 10-K report, providing a comprehensive overview of the company's financial performance and operations. The company, based in Dallas, Texas, designs, develops, and operates data centers in North America, offering digital infrastructure solutions to the high-performance computing industry, including artificial intelligence cloud services, high-performance computing data center hosting, and crypto data center hosting services.
In the 10-K report, Applied Digital Corporation's Management's Discussion and Analysis of Financial Condition and Results of Operations details the company's performance across its three distinct business segments. The Data Center Hosting Business saw its 106 MW facility in Jamestown, North Dakota operate at full capacity during the fiscal year ended May 31, 2024. However, the 180 MW facility in Ellendale, North Dakota experienced a power outage, which was resolved with the installation of new transformers. The company also entered into a purchase and sale agreement with Mara Garden City LLC, selling its Garden City hosting facility for total cash consideration of up to $87.3 million, recognizing a loss of approximately $15.4 million in connection with the closing.
The Cloud Services Business successfully brought approximately four clusters online during the fiscal fourth quarter, generating $29.0 million in revenue during fiscal year 2024. Applied Digital's HPC Hosting Business broke ground on its first 100 MW HPC data center facility in Ellendale, North Dakota, and is in advanced discussions with traditional financing counterparties for a 400 MW capacity lease with a US-based hyperscaler.
Applied Digital Corporation also made significant financial moves, completing sales of common stock under an "at the market" sale agreement with Craig-Hallum Capital Group LLC, selling approximately 18.9 million shares for net proceeds of approximately $121.2 million. The company also extinguished a noncontrolling interest in 1.21 Gigawatts LLC, and issued warrants to purchase up to 3,000,000 shares of common stock, resulting in a loss of $5.7 million on the fair value of the warrants.
Additionally, the company entered into a Dealer Manager Agreement with Preferred Capital Securities, LLC for the offering of up to 2,000,000 shares of Series E Redeemable Preferred Stock, and began sales of common stock under a new "at the market" sale agreement with Roth Capital Partners, LLC, selling approximately 2.7 million shares for net proceeds of approximately $9.6 million.
Applied Digital Corporation also engaged in debt financing, including a $15.0 million term loan with Starion Bank and a $15.0 million loan with Vantage Bank Texas, both secured by its hosting facilities. The company also issued an unsecured promissory note for up to $20.0 million, resulting in a $13.8 million loss on change in fair value of debt during the fiscal year ended May 31, 2024. This note was subsequently converted into common stock.
The 10-K report offers a detailed insight into Applied Digital Corporation's business operations, financial performance, and strategic moves, providing valuable information for investors and stakeholders. As a result of these announcements, the company's shares have moved -13.4% on the market, and are now trading at a price of $3.82. For the full picture, make sure to review Applied Digital's 10-K report.
