Exhibit 99.1
APPLIED DIGITAL CORPORATION
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited pro forma condensed consolidated financial statements consist of the unaudited pro forma condensed consolidated statements of operations for the nine-month period ended February 28, 2025 and the fiscal years ended May 31, 2024 and 2023 and the unaudited pro forma condensed consolidated balance sheet as of February 28, 2025. The unaudited pro forma condensed consolidated financial statements are based on, and should be read in conjunction with, the audited consolidated financial statements of the Company included in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2024, as well as the unaudited condensed consolidated financial statements of the Company included in the Company’s Quarterly Report on Form 10-Q for the nine months ended February 28, 2025, as filed with the Securities and Exchange Commission. The unaudited pro forma condensed consolidated financial statements are included to illustrate the potential effect of the sale of the Company’s Cloud Services Business.
The unaudited pro forma condensed consolidated statements of operations for the nine-month period ended February 28, 2025 and the fiscal years ended May 31, 2024 and 2023 give effect to the sale of the Cloud Services Business as if it had occurred on June 1, 2022, the first day of fiscal year 2023. The unaudited pro forma condensed consolidated balance sheet gives effect to the sale of the Cloud Services Business as if it had occurred on February 28, 2025, the Company’s latest balance sheet date. All adjustments and disclosures have been prepared in accordance with Article 11 of Regulation S-X.
The sale of the Cloud Services Business is subject to adjustments as the sale has not yet been finalized. Accordingly, the transaction accounting adjustments are preliminary, and have been made solely for the purpose of providing pro forma financial statements as required by Securities and Exchange Commission rules. Differences between these preliminary estimates and the final sale accounting may be material. The unaudited pro forma condensed consolidated financial information has been provided for informational purposes only and does not purport to project the future or historical financial position or results of operations, cash flows, liquidity or financial condition of the Company, or the Cloud Services Business on a stand-alone basis. The actual results of the Company may differ significantly from those reflected herein.
APPLIED DIGITAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(In thousands, except share and par value data)
| As of February 28, 2025 | ||||||||||||||
| APLD Total | Potential Sale of Cloud Segment Adjustments | APLD Proforma | ||||||||||||
| ASSETS | ||||||||||||||
| Current assets: | ||||||||||||||
| Cash and cash equivalents | 68,742 | (13 | ) | (2) | 68,729 | |||||||||
| Restricted cash | 185,482 | — | 185,482 | |||||||||||
| Accounts receivable | 14,619 | (12,918 | ) | (2) | 1,701 | |||||||||
| Prepaid expenses and other current assets | 5,416 | (669 | ) | (2) | 4,747 | |||||||||
| Current assets held for sale | — | 386,608 | 386,608 | |||||||||||
| Total current assets | 274,259 | 647,267 | ||||||||||||
| Property and equipment, net | 1,002,206 | (12,742 | ) | (2) | 989,464 | |||||||||
| Operating lease right of use assets, net | 153,434 | (152,328 | ) | (2) | 1,106 | |||||||||
| Finance lease right of use assets, net | 235,203 | (209,658 | ) | (1) | 25,545 | |||||||||
| Other assets | 42,243 | 1,720 | (2) | 43,963 | ||||||||||
| TOTAL ASSETS | 1,707,345 | 1,707,345 | ||||||||||||
| LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY | ||||||||||||||
| Current liabilities: | ||||||||||||||
| Accounts payable | 170,517 | (7,170 | ) | (2) | 163,347 | |||||||||
| Accrued liabilities | 19,268 | (417 | ) | (2) | 18,851 | |||||||||
| Current portion of operating lease liability | 27,496 | (26,827 | ) | (2) | 669 | |||||||||
| Current portion of finance lease liability | 140,135 | (126,372 | ) | (2) | 13,763 | |||||||||
| Current portion of debt | 10,138 | — | 10,138 | |||||||||||
| Current customer deposits | 16,125 | — | 16,125 | |||||||||||
| Current deferred revenue | 4,879 | (4,252 | ) | (2) | 627 | |||||||||
| Current liabilities held-for-sale | — | 301,008 | 301,008 | |||||||||||
| Due to customer | 4,807 | — | 4,807 | |||||||||||
| Other current liabilities | 216 | — | 216 | |||||||||||
| Total current liabilities | 393,580 | 529,550 | ||||||||||||
| Long-term portion of operating lease liability | 104,679 | (104,117 | ) | (2) | 562 | |||||||||
| Long-term portion of finance lease liability | 32,232 | (31,853 | ) | (2) | 379 | |||||||||
| Long-term debt | 678,988 | — | 678,988 | |||||||||||
| Total liabilities | 1,209,478 | 1,209,478 | ||||||||||||
| Commitments and contingencies | ||||||||||||||
| Temporary equity | ||||||||||||||
| Series E preferred stock, $0.001 par value, 2,000,000 shares authorized, 301,673 shares issued and outstanding at February 28, 2025 | 6,932 | — | 6,932 | |||||||||||
| Series E-1 preferred stock, $0.001, 62,500 shares authorized, 39,763 shares issued and outstanding at February 28, 2025 | 36,287 | — | 36,287 | |||||||||||
| Shareholders’ equity | ||||||||||||||
| Common stock, $0.001 par value, 400,000,000 shares authorized, 233,682,359 shares issued and 224,391,160 shares outstanding at February 28, 2025 | 229 | — | 229 | |||||||||||
| Treasury stock, 9,291,199 shares at February 28, 2025 | (31,400 | ) | — | (31,400 | ) | |||||||||
| Additional paid in capital | 914,336 | — | 914,336 | |||||||||||
| Accumulated deficit | (428,518 | ) | — | (428,518 | ) | |||||||||
| Total stockholders’ equity attributable to Applied Digital Corporation | 454,648 | 454,648 | ||||||||||||
| TOTAL LIABILITIES, TEMPORARY EQUITY AND SHAREHOLDERS’ EQUITY | 1,707,345 | 1,707,345 | ||||||||||||
APPLIED DIGITAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
| Nine months ended February 28, 2025 | ||||||||||||||
| APLD Total | Potential Sale of Cloud Segment Adjustments | APLD Proforma | ||||||||||||
| Revenues: | ||||||||||||||
| Revenue | 175,567 | (71,313 | ) | (3) | 104,254 | |||||||||
| Related party revenue | 1,926 | — | 1,926 | |||||||||||
| Total revenue | 177,492 | 106,179 | ||||||||||||
| Costs and expenses: | — | |||||||||||||
| Cost of revenues | 162,562 | (91,359 | ) | (3) | 71,204 | |||||||||
| Selling, general and administrative | 66,851 | (21,890 | ) | (3) | 44,962 | |||||||||
| Loss/(gain) on classification of held for sale | (24,616 | ) | — | (24,616 | ) | |||||||||
| Loss on sale of assets | 769 | — | 769 | |||||||||||
| Total costs and expenses | 205,567 | (113,248 | ) | 92,319 | ||||||||||
| Operating income (loss) | (28,075 | ) | (41,935 | ) | 13,861 | |||||||||
| Interest Expense | 23,687 | (13,444 | ) | (3) | 10,244 | |||||||||
| Loss on conversion of debt | 33,612 | — | 33,612 | |||||||||||
| Loss on change in fair value of debt | 85,439 | — | 85,439 | |||||||||||
| Loss on change in fair value of warrants | 6,421 | — | 6,421 | |||||||||||
| Loss on extinguishment of debt | 1,177 | — | 1,177 | |||||||||||
| Net loss before income tax expenses | (178,410 | ) | (123,031 | ) | ||||||||||
| Income tax expense | 118 | — | 118 | |||||||||||
| Net loss from continuing operations | (178,528 | ) | (123,150 | ) | ||||||||||
| Net loss from discontinued operations | (55,379 | ) | (55,379 | ) | ||||||||||
| Net loss | (178,528 | ) | (178,528 | ) | ||||||||||
| Preferred dividends paid | (1,213 | ) | — | (1,213 | ) | |||||||||
| Net loss attributable to common stockholders | (179,741 | ) | (179,741 | ) | ||||||||||
| Basic and diluted net loss per share attributable to continuing operations | $ | (0.93 | ) | $ | (0.64 | ) | ||||||||
| Basic and diluted weighted average number of shares outstanding | 193,405,721 | 193,405,721 | ||||||||||||
APPLIED DIGITAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
| Fiscal year ended May 31, 2024 | ||||||||||||||
| APLD Total | Potential Sale of Cloud Segment Adjustments | APLD Proforma | ||||||||||||
| Revenues: | ||||||||||||||
| Revenue | 150,814 | (28,957 | ) | (4) | 121,857 | |||||||||
| Related party revenue | 14,761 | — | 14,761 | |||||||||||
| Total revenue | 165,574 | 136,617 | ||||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of revenues | 148,340 | (41,687 | ) | (4) | 106,653 | |||||||||
| Selling, general and administrative | 97,776 | (52,756 | ) | (4) | 45,020 | |||||||||
| Loss/(gain) on classification of held for sale | 15,417 | — | 15,417 | |||||||||||
| Loss from legal settlement | 2,380 | — | 2,380 | |||||||||||
| Total costs and expenses | 263,913 | (94,443 | ) | 169,470 | ||||||||||
| Operating income (loss) | (98,339 | ) | (65,486 | ) | (32,853 | ) | ||||||||
| Interest Expense | 27,515 | (9,809 | ) | (4) | 17,707 | |||||||||
| Loss on change in fair value of debt | 7,401 | — | 7,401 | |||||||||||
| Loss on change in fair value of related party debt | 8,116 | — | 8,116 | |||||||||||
| Loss on change in fair value of warrants issued to related parties | 5,696 | — | 5,696 | |||||||||||
| Loss on extinguishment of debt | 2,507 | — | 2,507 | |||||||||||
| Net loss before income tax expenses | (149,574 | ) | (74,279 | ) | ||||||||||
| Income tax expense | 96 | — | 96 | |||||||||||
| Net loss from continuing operations | (149,670 | ) | (74,375 | ) | ||||||||||
| Net loss from discontinued operations | — | (75,295 | ) | (75,295 | ) | |||||||||
| Net loss | (149,670 | ) | (149,670 | ) | ||||||||||
| Net loss attributable to noncontrolling interest | (397 | ) | — | (397 | ) | |||||||||
| Net loss attributable to common stockholders | (149,273 | ) | (149,273 | ) | ||||||||||
| Basic and diluted net loss per share attributable to continuing operations | $ | (1.31 | ) | $ | (0.65 | ) | ||||||||
| Basic and diluted weighted average number of shares outstanding | 114,061,414 | 114,061,414 | ||||||||||||
APPLIED DIGITAL CORPORATION AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except share and per share data)
| Fiscal year ended May 31, 2023 | ||||||||||||||
| APLD Total | Potential Sale of Cloud Segment Adjustments | APLD Proforma | ||||||||||||
| Revenues: | ||||||||||||||
| Revenue | 55,392 | — | 55,392 | |||||||||||
| Total revenue | 55,392 | 55,392 | ||||||||||||
| Costs and expenses: | ||||||||||||||
| Cost of revenues | 44,388 | — | 44,388 | |||||||||||
| Selling, general and administrative | 55,006 | (1,091 | ) | (5) | 53,915 | |||||||||
| Total costs and expenses | 99,394 | (1,091 | ) | 98,303 | ||||||||||
| Operating income (loss) | (44,002 | ) | (1,091 | ) | (42,911 | ) | ||||||||
| Interest Expense | 2,034 | (27 | ) | (5) | 2,007 | |||||||||
| Loss on extinguishment of debt | 94 | — | 94 | |||||||||||
| Net loss before income tax expenses | (46,129 | ) | (45,012 | ) | ||||||||||
| Income tax expense | (523 | ) | — | (523 | ) | |||||||||
| Net loss from continuing operations | (45,607 | ) | (44,489 | ) | ||||||||||
| Net loss from discontinued operations | — | (1,117 | ) | (1,117 | ) | |||||||||
| Net loss | (45,607 | ) | (45,607 | ) | ||||||||||
| Net loss attributable to noncontrolling interest | (960 | ) | — | (960 | ) | |||||||||
| Net loss attributable to common stockholders | (44,646 | ) | (44,646 | ) | ||||||||||
| Basic and diluted net loss per share attributable to continuing operations | $ | (0.48 | ) | $ | (0.47 | ) | ||||||||
| Basic and diluted weighted average number of shares outstanding | 93,976,233 | 93,976,233 | ||||||||||||
NOTES TO PRO FORMA FINANCIAL STATEMENTS
Transaction Accounting Adjustments and Assumptions
The adjustments are based on currently available information and certain estimates and assumptions, and therefore the actual effects of these transactions will differ from the transaction accounting adjustments. A general description of these transactions and adjustments is provided as follows:
| (1) | Reflects the removal of finance lease right of use assets associated with the Cloud Services Business. |
| (2) | Reflects the removal of assets and liabilities associated with the Cloud Services Business. |
| (3) | Reflects the removal of revenues, cost of revenues, selling, general and administrative expense, and interest expense related to the Cloud Services Business for the period presented, assuming the business segment met the criteria as held for sale and discontinued operations as of June 1, 2024. |
| (4) | Reflects the removal of revenues, cost of revenues, selling, general and administrative expense, and interest expense related to the Cloud Services Business for the period presented, assuming the business segment met the criteria as held for sale and discontinued operations as of June 1, 2023. |
| (5) | Reflects the removal of selling, general and administrative expense and interest expense related to the Cloud Services Business for the period presented, assuming the business segment met the criteria as held for sale and discontinued operations as of June 1, 2022. |