On May 5, 2026, the Company completed the separation of its cloud business in a series of transactions that resulted in the Company owning approximately 97% of the issued and outstanding equity of ChronoScale Corporation. On July 1, ChronoScale Corporation completed a holding company transaction, as a result of which the holding company became the public parent, ChronoScale Holdings Corporation ("ChronoScale").

Prior to the transaction close, the Company established a management incentive plan (the "MIP") designed to align the interests of key management personnel of the Company with the long-term performance of ChronoScale. The MIP was established through newly formed entities within the ChronoScale holding structure, including APLD ChronoScale HoldCo

LLC (“HoldCo”) and APLD ChronoScale Management LLC (“Management LLC”). Management LLC was formed solely to hold Class B units of HoldCo and to issue corresponding MIP units to participants. Each MIP unit issued by Management LLC corresponds on a one-for-one basis to a Class B unit held by Management LLC in HoldCo.

The MIP units granted during the year ended May 31, 2026 were fully vested on the grant date of April 9, 2026 and did not contain substantive service, performance, or market conditions. Accordingly, the Company recognized the grant-date fair value of the MIP units as stock-based compensation expense on the grant date. Because the awards are equity-classified, the grant-date fair value is not subsequently remeasured unless the awards are modified. Any future distributions on vested MIP units will be recorded as reductions to retained earnings.

During the year ended May 31, 2026, the Company granted approximately 9,266,082 MIP units with a weighted-average grant-date fair value of $5.17 per unit. The Company recognized stock-based compensation expense of $47.9 million related to the MIP units during the year ended May 31, 2026. As of May 31, 2026, there was no remaining unrecognized compensation cost related to the MIP units as the awards were fully vested on the grant date.

On October 8, 2024, the Company’s Board of Directors approved the Applied Digital Corporation 2024 Omnibus Equity Incentive Plan (the “2024 Plan”), which the Company’s stockholders approved on November 20, 2024. The 2024 Plan provides for grants of various equity awards to eligible employees, officers, non-employee directors and other service providers. Upon stockholder approval of the 2024 Plan, the 2022 Plans (as defined below) were terminated; provided that all awards (as defined in the 2022 Plans) outstanding under the 2022 Plans continued in effect in accordance with their terms.

On November 5, 2025, at the Annual Stockholders’ Meeting, the Company’s stockholders approved an amendment to the 2024 Plan to increase the number of shares of common stock authorized for issuance thereunder by 15 million shares.

On October 9, 2021, the Company’s Board of Directors (the “Board”) approved two equity incentive plans, which the Company’s stockholders approved on January 20, 2022. The two plans consist of the 2022 Incentive Plan, previously referred to in the Company’s SEC filings as the 2021 Incentive Plan (the “Incentive Plan”), which provided for grants of various equity awards to the Company’s employees and consultants, and the 2022 Non-Employee Director Stock Plan previously referred to in the Company’s SEC filings as the 2021 Non-Employee Director Stock Plan (the “Director Plan” and, together with the Incentive Plan, the “2022 Plans”), which provides for grants of restricted stock to non-employee directors and for potential deferral of cash and stock compensation.

As of May 31, 2026, the Company had issued awards of approximately 23.2 million shares of common stock of the Company under the 2022 Plans, 19.7 million shares of common stock under the 2024 Plan, and 600,000 shares of common stock outside of either plan, related to an employment inducement award. As of May 31, 2026, there are approximately 6.0 million shares of common stock available for issuance under the 2024 Plan. During the third fiscal quarter of the year ended May 31, 2026, under the 2024 Plan, the Company issued 100,000 shares to certain consultants in settlement of outstanding awards.

The Company capitalizes a portion of stock-based compensation costs for employees who work directly on construction and development of the Company's data centers. The Company recognized stock-based compensation associated with the 2022 and 2024 Plans as follows (in thousands):


	May 31, 2026		May 31, 2025		May 31, 2024
Services cost of revenue	$	3,202	$	2,936	$	1,955
Data center rental and other cost of revenue	519		$	—	$	—
Selling, general, and administrative	216,402		18,094		15,153
Capitalized (1)	5,012		1,465		207
Total stock-based compensation	$	225,135	$	22,495	$	17,315


	Number of Shares	Weighted Average Grant Date Fair Value Per Share
Outstanding as of June 1, 2025	271,444	$	3.55
Granted	—	—
Vested	(235,722)	3.52
Forfeited	—	—
Outstanding as of May 31, 2026	35,722	$	3.73


	Number of Shares	Weighted Average Grant Date Fair Value Per Share
Outstanding as of June 1, 2025	6,659,830	$	6.56
Granted	6,301,840	26.41
Vested	(4,464,156)	8.85
Forfeited	(531,681)	8.42
Outstanding as of May 31, 2026	7,965,833	$	20.87

Performance stock units (“PSUs”) represent a right to receive a certain number of shares of common stock based on the achievement of performance goals and continued employment during the vesting period (provided that the PSUs may remain outstanding and eligible to vest following certain terminations). PSUs granted by the Company vest depending on the achievement of certain Company and individual performance financial, operational and/or market-price driven measures, which must occur on or prior to the deadline set forth in each applicable PSU award. The fair value of PSUs, except PSUs for which vesting is based on the market price, is based on the closing price on the date of grant. The compensation expense related to these PSUs is recognized over the vesting period when the achievement of the performance conditions becomes probable. The total compensation cost for the PSUs is determined based on the most likely outcome of the performance conditions and the number of awards expected to vest.

On January 6, 2026, the Company granted the CEO 4.5 million PSUs with market-price based and service-based vesting conditions. The awards vest based on the achievement of certain stock price targets, subject to his continued full-time employment with the Company through the applicable vesting date (except that continued employment is not required if his employment is terminated by the Company without “cause,” he resigns for “good reason,” he dies or incurs a “disability,” or the Company elects not to renew his employment term). The total grant date fair value of the awards was determined to be $122.1 million, with each tranche of the awards representing approximately $42.7 million, $40.6 million, and $38.8 million of the total expense, respectively.


	Number of Shares	Weighted Average Grant Date Fair Value Per Share
Outstanding as of June 1, 2025	7,207,500	$	6.59
Awarded	7,485,000	29.42
Vested	—	—
Forfeited	(306,250)	7.23
Outstanding as of May 31, 2026	14,386,250	$	18.45