v3.26.1
Related Party Transactions
 9 Months Ended 12 Months Ended
Feb. 28, 2026
May 31, 2025
Applied Digital Cloud Corporation [Member]    
Restructuring Cost and Reserve [Line Items]    
Related Party Transactions

 

7.Related Party Transactions

 

The Company has not historically operated as a standalone business and the unaudited condensed combined financial statements are derived from the consolidated financial statements and accounting records of the Parent. The following disclosure summarizes activity between the Company and the Parent, including the affiliates of the Parent that are not part of the Proposed Transaction.

 

Cost allocations from Parent

 

The Parent provides shared services, utilizes cash pooling in situations where the Parent pays for an expense associated with the Company. Shared services consist, but are not limited to, financing, payroll, stock-based compensation, and other expenses that are either specifically identifiable or clearly applicable to the Company. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis using an applicable measure of headcount or other allocation methodologies considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during the periods presented. Management considers that such allocations have been made on a reasonable basis; however, these allocations may not be indicative of the actual expense that would have been incurred had the Company operated as an independent, stand-alone public entity.

 

   February 28, 2026   February 28, 2025   February 28, 2026   February 28, 2025 
   Three Months Ended   Nine Months Ended 
   February 28, 2026   February 28, 2025   February 28, 2026   February 28, 2025 
Cost of revenues  $246   $706   $854   $2,181 
Selling, general and administrative   —    —    —    (1,894)
Total costs and expenses  $246   $706   $854   $287 

 

Net Parent Investment

 

Net transfers to Parent are included within Parent company net investment on the unaudited condensed combined statements of changes in parent company net investment and represent the net effect of transactions between the Company and the Parent. The components of Parent company net investment activity are as follows:

 

   February 28, 2026   February 28, 2025 
   Nine Months Ended 
   February 28, 2026   February 28, 2025 
Cash pooling and general financing activities  $(22,279)  $(9,660)
Corporate overhead and other allocations   6,068    94,000 
Net transfers from the Parent as reflected in the Condensed Combined Statements of Cash Flows (unaudited)   (16,211)   84,340 
Stock-based compensation expense   243    (1,529)
Net assets contributed by (distributed to) Parent   74,991    8,376 
Net transfers from the Parent as reflected in the Condensed Combined Statements of Changes in Parent Company Net Investment (unaudited)  $59,023   $91,187 

 

These transactions will not be settled in cash and therefore have been reflected in the unaudited condensed combined balance sheets as Parent company net investment.

 

 

APPLIED DIGITAL CLOUD CORPORATION AND AFFILIATES

Notes to the Condensed Combined Financial Statements (Unaudited)

For the Three and Nine Months Ended February 28, 2026 and February 28, 2025

 

8.Related Party Transactions

 

The Company has not historically operated as a standalone business and the combined financial statements are derived from the consolidated financial statements and accounting records of the Parent. The following disclosure summarizes activity between the Company and the Parent, including the affiliates of the Parent that are not part of the Proposed Transaction.

 

Cost allocations from Parent

 

The Parent provides shared services, utilizes cash pooling in situations where the Parent pays for an expense associated with the Company. Shared services consist, but are not limited to, financing, payroll, stock-based compensation, and other expenses that are either specifically identifiable or clearly applicable to the Company. These expenses have been allocated to the Company on the basis of direct usage when identifiable, with the remainder allocated on a pro rata basis using an applicable measure of headcount or other allocation methodologies considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Company during the periods presented. Management considers that such allocations have been made on a reasonable basis; however, these allocations may not be indicative of the actual expense that would have been incurred had the Company operated as an independent, stand-alone public entity.

 

   May 31, 2025   May 31, 2024 
   Fiscal Year Ended 
   May 31, 2025   May 31, 2024 
Cost of revenues  $2,772   $1,891 
Selling, general and administrative   (1,894)   9,734 
Total costs and expenses  $878   $11,625 

 

Net transactions from Parent

 

Net transfers to Parent are included within Net transactions from parent company on the combined statements of changes in parent company net investment and represent the net effect of transactions between the Company and the Parent. The components of Parent company net investment activity are as follows:

 

   May 31, 2025   May 31, 2024 
   Fiscal Year Ended 
   May 31, 2025   May 31, 2024 
Cash pooling and general financing activities  $27,422   $(16,974)
Corporate overhead and other allocations   86,317    69,639 
Net transfers from the Parent as reflected in the Combined Statements of Cash Flows   113,739    52,665 
Stock-based compensation expense   (1,463)   10,135 
Net assets (distributed to) contributed by Parent   (1,186)   50,064 
Net transfers from the Parent as reflected in the Combined Statements of Changes in Parent Company Net Investment  $111,090   $112,864 

 

These transactions will not be settled in cash and therefore have been reflected in the combined balance sheets as Parent company net investment.

 

 

APPLIED DIGITAL CLOUD CORPORATION AND AFFILIATES

Notes to the Combined Financial Statements

For the Fiscal Years Ended May 31, 2025 and May 31, 2024