Applied Digital (APLD) 10-Q 10 Jan 23 2023 Q2 Quarterly report Financial data

Cover

Cover - shares	6 Months Ended
	Nov. 30, 2022	Jan. 10, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Nov. 30, 2022
Document Transition Report	false
Entity File Number	001-31968
Entity Registrant Name	Applied Blockchain, Inc.
Entity Incorporation, State or Country Code	NV
Entity Tax Identification Number	95-4863690
Entity Address, Address Line One	3811 Turtle Creek, Blvd.
Entity Address, Address Line Two	Suite 2100
Entity Address, City or Town	Dallas
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	75219
City Area Code	214
Local Phone Number	556-2465
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	APLD
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		94,474,316
Entity Central Index Key	0001144879
Current Fiscal Year End Date	--05-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q2
Amendment Flag	false

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Nov. 30, 2022	May 31, 2022
Current Assets:
Cash and cash equivalents	$ 18,074	$ 46,299
Accounts receivable	276	227
Prepaid expenses and other current assets	2,397	1,336
Total current assets	20,747	47,862
Property and equipment, net	132,893	64,260
Right of use asset, net	12,353	6,408
Utility deposits	1,450	1,450
TOTAL ASSETS	167,443	119,980
Current Liabilities:
Accounts payable and accrued liabilities	7,472	13,260
Current portion of lease liability	3,664	1,004
Current portion of term loan	4,122	1,333
Customer deposits	24,689	9,524
Current deferred revenue	29,394	3,877
Sales and use tax payable	865	0
Total current liabilities	70,206	28,998
Deferred tax liability	260	540
Long-term portion of lease liability	8,631	5,310
Long-term term loan	16,376	5,897
Total liabilities	95,473	40,745
Commitments and contingencies
Stockholders' equity (deficit):
Common stock, $0.001 par value, 166,666,667 shares authorized, 93,982,650 shares issued and 93,946,353 shares outstanding at November 30, 2022, and 97,837,703 shares issued and 97,801,406 shares outstanding at May 31, 2022	94	98
Additional paid in capital	150,695	128,293
Treasury stock, 36,300 shares at November 30, 2022 and May 31, 2022, at cost	(62)	(62)
Accumulated deficit	(87,218)	(56,070)
Total stockholders’ equity attributable to Applied Digital Corporation	63,509	72,259
Noncontrolling interest	8,461	6,976
Total Stockholders' equity (deficit) including noncontrolling interest	71,970	79,235
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 167,443	$ 119,980

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Nov. 30, 2022	May 31, 2022
Statement of Financial Position [Abstract]
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	166,666,667	166,666,667
Common stock, shares issued (in shares)	93,982,650	97,837,703
Common stock, shares outstanding (in shares)	93,946,353	97,801,406
Treasury stock, (in shares)	36,300	36,300

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Revenues:
Hosting revenue	$ 12,340	$ 0	$ 19,264	$ 0
Cost of revenues	11,812	0	17,905	0
Gross profit	528	0	1,359	0
Costs and expenses:
Selling, general and administrative	26,502	1,181	31,212	14,216
Depreciation and amortization	703	174	1,001	177
Total costs and expenses	27,205	1,355	32,213	14,393
Operating loss	(26,677)	(1,355)	(30,854)	(14,393)
Other income (expense):
Interest Expense	(385)	0	(741)	0
Loss on extinguishment of debt	0	0	(94)	(1,342)
Total other expense, net	(385)	0	(835)	(1,342)
Net loss from continuing operations before income tax expenses	(27,062)	(1,355)	(31,689)	(15,735)
Income tax benefit (expense)	312	(214)	280	(214)
Net loss from continuing operations	(26,750)	(1,569)	(31,409)	(15,949)
Net gain from discontinued operations, net of income taxes	0	1,398	0	1,681
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(26,750)	(171)	(31,409)	(14,268)
Net loss attributable to noncontrolling interest	(133)	0	(261)	0
Net Income (Loss) Attributable to Parent, Total	$ (26,617)	$ (171)	$ (31,148)	$ (14,268)
Basic and diluted net (loss) gain per share:
Continuing Operations - basic ( in dollars per share)	$ (0.29)	$ (0.03)	$ (0.34)	$ (0.32)
Continuing Operations - diluted ( in dollars per share)	(0.29)	(0.03)	(0.34)	(0.32)
Discontinued Operations - basic ( in dollars per share)	0	0.03	0	0.03
Discontinued Operations - diluted ( in dollars per share)	0	0.03	0	0.03
Basic net loss per share (in dollars per share)	(0.29)	0	(0.34)	(0.29)
Diluted net loss per share (in dollars per share)	$ (0.29)	$ 0	$ (0.34)	$ (0.29)
Basic weighted average number of shares outstanding (in shares)	93,422,427	53,396,920	93,263,266	49,143,981
Diluted weighted average number of shares outstanding (in shares)	93,422,427	53,396,920	93,263,266	49,143,981

Condensed Consolidated Statem_2

Condensed Consolidated Statement of Changes in Stockholders' Equity (Unaudited) - USD ($) $ in Thousands	Total	Parent	Common Stock	Additional Paid in Capital	Treasury Stock	Accumulated deficit	Noncontrolling Interest	Series C Convertible Redeemable Preferred Stock	Series D Convertible Redeemable Preferred Stock	Series A and B Preferred Stock	Series A and B Preferred Stock Common Stock	Series A and B Preferred Stock Additional Paid in Capital	Series A Preferred Stock Preferred Stock	Series B Preferred Stock Preferred Stock
Beginning balance (in shares) at May. 31, 2021								660,000	0
Beginning balance at May. 31, 2021	$ 15,135							$ 15,135	$ 0
Increase (Decrease) in Temporary Equity [Roll Forward]
Issuance of Preferred Stock (in shares)									1,380,000
Issuance of Preferred Stock	34,500								$ 34,500
Issuance Costs of Preferred Stock	(2,926)								$ (2,926)
Ending balance (in shares) at Nov. 30, 2021								660,000	1,380,000
Ending balance at Nov. 30, 2021	46,709							$ 15,135	$ 31,574
Beginning balance, common stock (in shares) at May. 31, 2021			1,511,061
Beginning balance, preferred stock (in shares) at May. 31, 2021													27,195	17,087
Beginning balance at May. 31, 2021	(2,583)		$ 1	$ 13,882	$ (62)	$ (21,623)							$ 3,370	$ 1,849
Beginning balance at May. 31, 2021	12,552
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Extinguishment of Debt (in shares)			5,083,828
Extinguishment of Debt	3,478		$ 5	3,473
Issuance of Dividends to Preferred Stock (in shares)													60,822	29,772
Stock Issued During Period, Value, Stock Dividend	115					(8,946)							$ 6,082	$ 2,979
Conversion of Preferred Stock (in shares)											28,765,308		88,017	46,859
Conversion of Preferred Stock										$ 0	$ 29	$ 14,251	$ (9,452)	$ (4,828)
Service agreement stock compensation (in shares)			18,036,723
Service agreement stock compensation	12,337		$ 18	12,319
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(14,268)					(14,268)
Ending balance, preferred stock (in shares) at Nov. 30, 2021													0	0
Ending balance, common stock (in shares) at Nov. 30, 2021			53,396,920
Ending balance at Nov. 30, 2021	(921)		$ 53	43,925	(62)	(44,837)							$ 0	$ 0
Ending balance at Nov. 30, 2021	45,788
Beginning balance (in shares) at Aug. 31, 2021								660,000	1,304,000
Beginning balance at Aug. 31, 2021	45,037							$ 15,135	$ 29,902
Increase (Decrease) in Temporary Equity [Roll Forward]
Issuance of Preferred Stock (in shares)									76,000
Issuance of Preferred Stock	1,900								$ 1,900
Issuance Costs of Preferred Stock	(228)								$ (228)
Ending balance (in shares) at Nov. 30, 2021								660,000	1,380,000
Ending balance at Nov. 30, 2021	46,709							$ 15,135	$ 31,574
Beginning balance, common stock (in shares) at Aug. 31, 2021			53,396,920
Beginning balance at Aug. 31, 2021	(750)		$ 53	43,925	(62)	(44,666)
Beginning balance at Aug. 31, 2021	44,287
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(171)					(171)
Ending balance, preferred stock (in shares) at Nov. 30, 2021													0	0
Ending balance, common stock (in shares) at Nov. 30, 2021			53,396,920
Ending balance at Nov. 30, 2021	(921)		$ 53	43,925	(62)	(44,837)							$ 0	$ 0
Ending balance at Nov. 30, 2021	$ 45,788
Beginning balance, common stock (in shares) at May. 31, 2022	97,801,406		97,837,703
Beginning balance at May. 31, 2022	$ 79,235	$ 72,259	$ 98	128,293	(62)	(56,070)	$ 6,976
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (in shares)			1,110,379
Stock-based compensation	22,398	22,398	$ 1	22,397
Capital contribution to noncontrolling interest	1,746						1,746
Stock cancellation (in shares)			(4,965,432)
Stock Cancellation	0		$ (5)	5
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ (31,409)	(31,148)				(31,148)	(261)
Ending balance, common stock (in shares) at Nov. 30, 2022	93,946,353		93,982,650
Ending balance at Nov. 30, 2022	$ 71,970	63,509	$ 94	150,695	(62)	(87,218)	8,461
Beginning balance, common stock (in shares) at Aug. 31, 2022			92,872,271
Beginning balance at Aug. 31, 2022	76,901	68,307	$ 93	128,877	(62)	(60,601)	8,594
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Stock-based compensation (in shares)			1,110,379
Stock-based compensation	21,819	21,819	$ 1	21,818
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	$ (26,750)	(26,617)				(26,617)	(133)
Ending balance, common stock (in shares) at Nov. 30, 2022	93,946,353		93,982,650
Ending balance at Nov. 30, 2022	$ 71,970	$ 63,509	$ 94	$ 150,695	$ (62)	$ (87,218)	$ 8,461

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021
CASH FLOW FROM OPERATING ACTIVITIES
Net Income (Loss) Attributable to Parent, Total	$ (31,148)	$ (14,268)
Net loss from discontinued operations, net of income taxes	0	1,681
Net loss attributable to noncontrolling interest	(261)	0
Net loss from continuing operations	(31,409)	(15,949)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and Amortization	2,704	177
Loss on extinguishment of debt	94	1,342
Stock-Based Compensation	22,398	12,337
Lease Expense	97	28
Deferred Tax	(280)	214
Changes in assets and liabilities:
Accounts receivable	(49)	0
Prepaid expenses and other current assets	(1,061)	(1,644)
Customer deposits	15,165	0
Deferred revenue	25,517	0
Accounts payable and accrued liabilities	(5,745)	5,254
Sales and use tax payable	865	0
Lease Assets and Liabilities	(317)	(25)
Net cash provided by operating activities of continuing operations	27,979	1,734
Net cash provided by operating activities of discontinued operations	0	600
NET CASH PROVIDED BY OPERATING ACTIVITIES	27,979	2,334
CASH FLOW FROM INVESTING ACTIVITIES
Purchases of property and equipment	(70,305)	(10,314)
Deposit on equipment	0	(23,230)
Net cash used in investing activities of continuing operations	(70,305)	(33,544)
Net cash provided by investing activities of discontinued operations	0	1,931
NET CASH USED IN INVESTING ACTIVITIES	(70,305)	(31,613)
CASH FLOW FROM FINANCING ACTIVITIES
Issuance of preferred stock	0	34,500
Repayment of finance leases	(778)	0
Preferred issuance costs	0	(2,926)
Term loan payoff	(7,056)	0
Proceeds from issuance of term loan	21,711	0
Term Loan Issuance Costs	(378)	0
Loan Payments	(1,102)	0
Payments of employee restricted stock tax withholdings	(43)	0
Equity contributions to subsidiaries	1,747	0
Net cash provided by financing activities of continuing operations	14,101	31,574
Net cash provided by financing activities of discontinued operations	0	0
CASH FLOW PROVIDED BY FINANCING ACTIVITIES	14,101	31,574
NET (DECREASE ) INCREASE IN CASH AND CASH EQUIVALENTS	(28,225)	2,295
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	46,299	11,750
CASH AND CASH EQUIVALENTS, END OF PERIOD	18,074	14,045
Less: cash and cash equivalents of discontinued operations	0	0
Cash and cash equivalents of continuing operations	18,074	14,045
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest Paid	707	0
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Right-of-use asset obtained by lease obligation	6,925	1,291
Fixed assets in accounts payable	$ 3,466	$ 513

BUSINESS AND ORGANIZATION

BUSINESS AND ORGANIZATION	6 Months Ended
	Nov. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
BUSINESS AND ORGANIZATION	BUSINESS AND ORGANIZATION Applied Digital Corporation, f/k/a Applied Blockchain, Inc. (the “Company”), is a builder and operator of next-generation data centers across North America, which provide substantial computing power to high power computing applications such as blockchain infrastructure, nature language processing, and artificial intelligence. The Company has a colocation business model where customers place hardware they own into the Company’s facilities and the Company provides full operational and maintenance services for a fixed fee. The Company typically enters into long term fixed rate contracts with its customers. On April 12, 2022, the Company effected a one-for-six (1:6) reverse split (the “Reverse Stock Split”) of shares of the Company’s common stock, par value $0.001 per share (the “Common Stock”). All references to Common Stock, options to purchase common stock, restricted stock units, share data, per share data and related information contained in the condensed consolidated financial statements have been retrospectively adjusted to reflect the effect of the Reverse Stock Split for all periods presented. No fractional shares of the Company’s common stock were issued in connection with the Reverse Stock Split. Any fractional share resulting from the Reverse Stock Split was rounded down to the nearest whole share and the affected holder received cash in lieu of such fraction share. On September 1, 2022, Company entered into a joint venture agreement with GMR Limited (“GMR”) to form Highland Digital Holdings, LLC (“Highland Digital”), which may acquire mining hardware and digital infrastructure assets. The Company and GMR each have a 50% ownership stake in Highland Digital. GMR is the controlling partner and will consolidate the results of Highland Digital in its financial statements. The Company will not consolidate Highland Digital in its financial statements, but will account for the entity under the equity method. As of November 30, 2022, the Company had a firm commitment of $0.6 million to Highland Digital.

LIQUIDITY AND FINANCIAL CONDITI

LIQUIDITY AND FINANCIAL CONDITION	6 Months Ended
	Nov. 30, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
LIQUIDITY AND FINANCIAL CONDITION	LIQUIDITY AND FINANCIAL CONDITIONAs of November 30, 2022, the Company had approximate cash and cash equivalents of $18.1 million and negative working capital of $49.5 million. Historically the Company has incurred losses and has relied on equity financings to fund its operations. Based on an analysis of cash flows, current net working capital, and expected operations revenue, the Company believes its current cash on hand is sufficient to meet its operating and capital requirement for at least next twelve months from the date these financial statements are issued.

BASIS OF PRESENTATION AND SIGNI

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Nov. 30, 2022
Accounting Policies [Abstract]
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES	BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation: The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of May 31, 2022 has been derived from the audited consolidated financial statements as of that date, but does not include all disclosures required for audited annual financial statements. For further information, please refer to and read these interim unaudited condensed Consolidated Financial Statements in conjunction with the Company's audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 2022 filed with the SEC on August 29, 2022. Significant Accounting Policies and Use of Estimates: There were no material changes in the Company’s significant accounting policies for the three and six months ended November 30, 2022 as compared to the year ended May 31, 2022. See Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2022, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates the valuation allowance associated with the Company’s deferred tax assets. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. The Company’s cash equivalents in excess of federally insured limits potentially subject us to concentrations of credit risk, although the Company believes it is subject to minimal risk. The Company has restricted cash related to its letter of credit. The Company is required to keep this balance in a separate account for the duration of the letter of credit agreement, which lasts through January 2024. The Company also has restricted cash related to its Starion Term Loan buy-down (as defined below). The following tables reconciles cash and cash equivalents and restricted cash to presentation on the balance sheet as of November 30, 2022, and May 31, 2022. (in thousands) November 30, 2022 May 31, 2022 Net Cash & Equivalents $ 10,512 $ 38,798 Restricted Cash $ 7,562 $ 7,501 Total Cash & Cash Equivalents $ 18,074 $ 46,299 Recent Accounting Pronouncements

PROPERTY AND EQUIPMENT

PROPERTY AND EQUIPMENT	6 Months Ended
	Nov. 30, 2022
Property, Plant and Equipment [Abstract]
PROPERTY AND EQUIPMENT	PROPERTY AND EQUIPMENT Property and equipment consisted of the following as of November 30, 2022, and May 31, 2022: (in thousands) Estimated Useful Life November 30, May 31, Hosting Equipment Electric Generation and Transformers 15 years $ 4,519 $ 4,338 Other Equipment and Fixtures 5 years-7 years 718 588 Construction in Progress 83,290 18,305 Information Systems and Software 5 years 11,116 9,608 Land & Building Land 2,152 1,074 Land Improvements 15 years 1,259 1,180 Building 39 years 32,519 30,176 Total cost of property and equipment 135,572 65,269 Accumulated Depreciation (2,679) (1,009) Property Plant and Equipment, Net $ 132,893 $ 64,260

REVENUE FROM CONTRACTS WITH CUS

REVENUE FROM CONTRACTS WITH CUSTOMERS	6 Months Ended
	Nov. 30, 2022
Revenue from Contract with Customer [Abstract]
REVENUE FROM CONTRACTS WITH CUSTOMERS	REVENUE FROM CONTRACTS WITH CUSTOMERS The Company recognizes revenue when promised services are transferred to customers in an amount that reflects the consideration to which the Company expects to be received in exchange for those services. The Company notes all revenue recognized from continuing operations during the quarter was received through hosting revenue. Below is a summary of the Company’s revenue concentration by major customer for the three and six months ended November 30, 2022 and 2021, respectively. Three Months Ended November 30, Customer 2022 2021 Customer A 32.6 % — % Customer B 26.5 % — % Customer C 16.2 % — % Customer D 13.0 % — % Customer E 11.8 % — % Six Months Ended November 30, Customer 2022 2021 Customer A 33.7 % — % Customer B 21.5 % — % Customer C 17.9 % — % Customer D 14.2 % — % Customer E 12.7 % — % Remaining Performance Obligations As of November 30, 2022, the Company had $29.4 million in deferred revenue, which represents the Company’s remaining performance obligations. The Company expects to recognize $29.4 million within the next 12 months. Deferred Revenue Changes in the Company's deferred revenue balances from hosting operations for the three and six months ended November 30, 2022 and 2021, respectively, are shown in the following table: (in thousands) (in thousands) Three Months Ended November 30, 2022 Three Months Ended November 30, 2021 Balance at August 31, 2022 $ 19,193 Balance at May 31, 2021 $ — Advance billings 22,406 Advance billings — Revenue recognized (12,340) Revenue recognized — Other adjustments $ 135 Other adjustments $ — Balance at November 30, 2022 $ 29,394 Balance at November 30, 2021 $ — (in thousands) (in thousands) Six Months Ended November 30, 2022 Six Months Ended November 30, 2021 Balance at May 31, 2022 3,877 Balance at May 31, 2021 $ — Advance billings 44,646 Advance billings — Revenue recognized (19,264) Revenue recognized — Other adjustments $ 135 Other adjustments $ — Balance at November 30, 2022 $ 29,394 Balance at November 30, 2021 $ — Customer Deposits Changes in the Company's customer deposits balances for the three and six months ended November 30, 2022 and 2021, respectively, are shown in the following table: (in thousands) (in thousands) Three Months Ended November 30, 2022 Three Months Ended November 30, 2021 Balance at August 31, 2022 $ 14,111 Balance at August 31, 2021 $ — Customer deposits received 10,713 Customer deposits received — Customer deposits refunded — Customer deposits refunded — Other adjustments $ (135) Other adjustments $ — Balance at November 30, 2022 $ 24,689 Balance at November 30, 2021 $ — (in thousands) (in thousands) Six Months Ended November 30, 2022 Six Months Ended November 30, 2021 Balance at May 31, 2022 $ 9,524 Balance at May 31, 2021 $ — Customer deposits received 15,300 Customer deposits received — Customer deposits refunded — Customer deposits refunded — Other adjustments $ (135) Other adjustments $ — Balance at November 30, 2022 $ 24,689 Balance at November 30, 2021 $ —

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Nov. 30, 2022
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	RELATED PARTY TRANSACTIONS Related Party Policy Parties are considered related to the Company if the parties, directly or indirectly, through one or more intermediaries, control, are controlled by, or are under common control with the Company. Related parties also include principal owners of the Company, its management, members of the immediate families of principal owners of the Company and its management and other parties with which the Company may deal if one party controls or can significantly influence the management or operating policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate interests. The Company discloses all material related party transactions. Related Party Note Payable During the period ended November 30, 2021, a related party note payable was held by the CEO of the Company. During this period, the outstanding debt principal of $0.5 million and accrued interest of $1.6 million were converted to 5.1 million shares of Common Stock with a fair value of $0.75 per share which resulted in a loss on extinguishment of $1.3 million. Upon the consummation of an exchange agreement, the note payable was surrendered and cancelled, and all rights including rights to accrued interest due were extinguished. Related Party Revenue The Company has material transactions with two related parties Company A is a customer and is also the parent company of the minority member of the 1.21 Gigawatts joint venture.. Company B is a customer and is also the controlling member of the Highland Digital joint venture. Company B became a related party during September 2022. The following tables illustrate related party revenue for the three and six months ended November 30, 2022 and November 30, 2021. Revenue for the Three Months ended (in thousands) November 30, 2022 November 30, 2021 Customer A $ 4,016 $ — Customer B $ 5,043 $ — Revenue for the Six Months ended (in thousands) November 30, 2022 November 30, 2021 Customer A $ 6,469 $ — Customer B $ 8,622 $ — The following tables illustrate related party deferred revenue and deposits balances as of November 30, 2022 and May 31, 2022. Customer A Balances as of (in thousands) November 30, 2022 May 31, 2022 Deferred revenue $ 700 $ 1,721 Customer Deposits $ 1,584 $ 1,719 Customer B Balances as of (in thousands) November 30, 2022 May 31, 2022 Deferred revenue $ 2,279 $ 888 Customer Deposits $ 7,024 $ 6,508

DEBT

DEBT	6 Months Ended
	Nov. 30, 2022
Debt Disclosure [Abstract]
DEBT	DEBT Letter of Credit As of November 30, 2022 and May 31, 2022, the Company had a letter of credit totaling $7.5 million. As discussed in Footnote 3, the Company is required to maintain this amount in a separate cash balance, and therefore the cash is restricted. Further, the Company has no unused lines of credit as of November 30, 2022 or May 31, 2022, respectively. Starion Term Loan On July 25, 2022, APLD Hosting, LLC (the “Borrower”), a wholly-owned subsidiary of Applied Digital Corporation, entered into a Loan Agreement with Starion Bank (“Starion Lender”) and the Company as Guarantor (the “Starion Loan Agreement”). The Starion Loan Agreement provides for a term loan (the “Starion Term Loan”) in the principal amount of $15 million with a maturity date of July 25, 2027. The Starion Loan Agreement provides for an interest rate of 6.50% per annum. The Starion Loan Agreement contains customary covenants, representations and warranties and events of default. The Company is not subject to financial covenants until May 31, 2024. At that time, the Company will be subject to a debt service coverage ratio. Deferred financing costs related to the Starion Term Loan total $0.1 million. The City of Jamestown, North Dakota and Stutsman County’s Economic Development Fund provides a multimillion-dollar economic development program, available to assist with expanding or relocating businesses. As part of financial packages, the Jamestown Stutsman Development Corporation (JSDC) makes direct loans, equity investments, and interest buy-downs to businesses. The Company has entered into an agreement with JDSC and Starion Bank which buys down the Company’s interest rate to 1.5% for a period of 13 months through a loan and community bond. The loan totals $0.2 million and bears an interest rate of 2%, and the bond totals $0.5 million. In connection with the Starion Loan Agreement, the Company repaid all of the outstanding balance on the March 11, 2022 agreement between the Company and Vantage Bank Texas. This agreement included a promissory note agreement for $7.5 million for a five year term with an interest rate of 5% per annum. Vantage Garden City Loan On November 7, 2022, APLD – Rattlesnake Den I, LLC (the “Borrower”), a wholly-owned subsidiary of the Company, entered into a Loan Agreement with Vantage Bank Texas (“Vantage Lender”) and the Company, as guarantor, which agreement provides for a term loan in the principal amount of $15 million (the “Vantage Garden City Loan Agreement”). The Vantage Garden City Loan Agreement will be advanced in 16 installments for working capital needs for the Borrower’s datacenter in Garden City, Texas, with each installment not exceeding approximately $0.9 million for the costs and expenses of a building at the Company’s hosting facility in Garden City, Texas (the “Garden City Facility”). The unpaid principal amount of the Vantage Garden City Loan Agreement will bear interest at a fixed rate of 6.15% per annum, and the Borrower may prepay the Vantage Garden City Loan Agreement, in whole or in part, without the payment of any fee or penalty. The Vantage Garden City Loan Agreement matures April 26, 2028. The Vantage Garden City Loan Agreement contains customary representations, warranties, covenants and events of default. As of the date of this report, an aggregate amount of $6.6 million has been advanced under the Vantage Garden City Loan Agreement. Total deferred costs related to the issuance of this loan total are $0.2 million. Below is a summary of the remaining principal payments due over the life of the Starion Loan Agreement and Vantage Garden City Loan Agreement notes as of November 30, 2022. Year Principal Payments (in thousands) FY23 $ 1,537 FY24 5,415 FY25 5,783 FY26 4,033 FY27 3,373 Thereafter 526 Total Term Loan Remaining Payments $ 20,667 Below is a summary of Starion Loan Agreement Vantage Garden City Loan Agreement term loan balances, including current debt and deferred financing fees as of November 30, 2022 and May 31, 2022. (in thousands) November 30, 2022 May 31, 2022 Term Loan Balance $20,667 $7,324 Less: Deferred Issuance Costs (240) (94) Less: Current portion of Term Loan (4,076) (1,333) Long-term Portion of Term Loan $16,351 $5,897

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT)	6 Months Ended
	Nov. 30, 2022
Equity [Abstract]
STOCKHOLDERS' EQUITY (DEFICIT)	STOCKHOLDERS’ EQUITY (DEFICIT) Common Stock The Company is authorized to issue 166,666,667 shares of Common Stock at $0.001 par value per share. As of November 30, 2022, 93,982,650 shares of Common Stock were issued and 93,946,353 shares were outstanding and as of May 31, 2022, 97,837,703 shares of Common Stock were issued and 97,801,406 shares were outstanding. All shares of Common Stock in this report reflect the one-for-six reverse stock split disclosed in Note 1 - Business and Organization. Restricted Stock Awards The Company has granted restricted stock awards to officers and directors. Each of the awards vests upon the completion of service conditions for specified times and a performance condition for the occurrence of an effective registration statement covering the resale of the shares of Common Stock comprising the stock award with the Securities and Exchange Commission (the “SEC”). The Company will recognize the cost of the restricted stock-based on the grant date fair value of the awards over the related vesting terms using a straight-line method when it is probable that the performance condition for the reserved underlying shares will be met. The following is a summary of the activity and balances for unvested restricted stock awards granted for the six months ended November 30, 2022: Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of May 31, 2022 $ 1,366,666 $ 8.04 Granted 77,500 $ 2.04 Vested (952,500) $ 7.55 Forfeited — $ — Outstanding as of November 30, 2022 491,666 $ 8.04 As of November 30, 2022, total expense to be recognized related to these awards was $0.9 million and the weighted average remaining recognition period for the unvested awards was 3 months. Restricted Stock Units The Company has granted restricted stock unit awards (“RSUs”) to certain consultants, in all cases as compensatory grants for consulting services rendered to the Company, which contain performance conditions that affect vesting. The Company will recognize the cost of these RSUs based on the grant date fair value of the awards when it is probable that the performance conditions will be achieved over the related vesting terms. Equity Plans On October 9, 2021, the Company’s board of directors 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 provides 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 “Plans”), which provides for grants of restricted stock to non-employee directors and for deferral of cash and stock compensation if such deferral provisions are activated at a future date. As of November 30, 2022, the Company had issued approximately 8.0 million awards under the plans. The following is a summary of the activity and balances for unvested restricted stock units granted for the six months ended November 30, 2022: Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of May 31, 2022 1,791,666 $ 8.04 Granted 7,897,907 $ 2.32 Vested (179,166) $ 8.04 Forfeited (445,749) $ 7.65 Outstanding as of November 30, 2022 9,064,658 $ 3.07 As of November 30, 2022, total expense to be recognized related to these awards was $17.7 million and the weighted average remaining recognition period for the unvested awards was 23 months. Share Forfeiture

LEASES

LEASES	6 Months Ended
	Nov. 30, 2022
Leases [Abstract]
LEASES	LEASES During the six months ended November 30, 2022, the Company entered into 18 new leases, bringing the total number of leases to 39. The Company considered the nature of the leases under ASC 842 Leases
LEASES	LEASES During the six months ended November 30, 2022, the Company entered into 18 new leases, bringing the total number of leases to 39. The Company considered the nature of the leases under ASC 842 Leases

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	6 Months Ended
	Nov. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES Commitments As of November 30, 2022, the Company has commitments related to its term loan and lease agreements , which have been disclosed in Note 7 - Debt and Note 9 - Leases, respectively. Energy Commitment The Company also has a commitment of approximately $24.2 million related to the energy services agreement for its Jamestown, North Dakota cohosting facility as of November 30, 2022. The minimum term of this agreement is five years, and will remain in effect on a year-to-year basis unless terminated by either party by notice given at least 365 calendar days in advance of termination. The commitment is fully due within the next year, as the Company commits to specific power consumption on an annual basis as part of the energy services agreement. The Company purchased approximately $10.3 million and zero in power under the energy services agreement during the three months ended November 30, 2022 and 2021, respectively. The Company purchased approximately $15.1 million and zero in power under the energy services agreement during the six months ended November 30, 2022 and 2021, respectively. Claims and Litigation

EARNINGS PER SHARE

EARNINGS PER SHARE	6 Months Ended
	Nov. 30, 2022
Earnings Per Share [Abstract]
EARNINGS PER SHARE	EARNINGS PER SHARE Basic net income (loss) per share (“EPS”) of Common Stock is computed by dividing the Company’s net earnings (loss) by the weighted average number of shares of Common Stock outstanding during the period. Diluted EPS reflects the potential dilution that could occur if the securities or other contracts to issue Common Stock were exercised or converted into Common Stock or resulted in the issuance of Common Stock that then shared in the earnings of the entity. Potentially dilutive securities are excluded from the computation of diluted net loss per share as their inclusion would be anti-dilutive. The table below shows the calculation for this quarter’s earnings per share: Basic and diluted loss per share: Three Months Ended Six Months Ended November 30, 2022 November 30, 2021 November 30, 2022 November 30, 2021 Net loss from continuing operations $ (26,750) $ (1,569) $ (31,409) $ (15,949) Net loss from discontinued operations, net of income taxes — 1,398 — 1,681 Net loss including noncontrolling interests (26,750) (171) (31,409) (14,268) Net loss attributable to noncontrolling interest (133) — (261) — Net loss attributable to Applied Digital Corporation $ (26,617) $ (171) $ (31,148) $ (14,268) Basic and diluted net (loss) gain per share: Continuing Operations $ (0.29) $ (0.03) $ (0.34) $ (0.32) Discontinued Operations $ — $ 0.03 $ — $ 0.03 Basic and diluted net loss per share $ (0.29) $ — $ (0.34) $ (0.29) Basic and diluted weighted average number of shares outstanding 93,422,427 53,396,920 93,263,266 49,143,981

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS	6 Months Ended
	Nov. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]
DISCONTINUED OPERATIONS	DISCONTINUED OPERATIONS During February 2022, the Company implemented plans to cease all cryptomining operations and start the sale process of all cryptomining equipment. The Company ceased all crypto mining operations and completed the sale of the assets during the year ended May 31, 2022. The Company has no plans to return to crypto mining operations in the future as the Company grows. The results of these operations have been displayed as discontinued operations.Operating results of discontinued operations are summarized below: Three Months Ended Six Months Ended in thousands November 30, 2022 November 30, 2021 November 30, 2022 November 30, 2021 Cryptoasset mining revenue, net $ — $ 1,426 $ — $ 2,038 Cost of sales — 433 — 782 Gross profit — 993 — 1,256 Impairment of cryptocurrency assets — (145) — (165) Gain on Extinguishment of Accounts Payable — 285 — 325 Gain on Sale of Fixed Assets 265 265 Net gain from discontinued operations $ — $ 1,398 $ — $ 1,681

BASIS OF PRESENTATION AND SIG_2

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Nov. 30, 2022
Accounting Policies [Abstract]
Principles of Consolidation	Principles of Consolidation: The accompanying interim unaudited condensed consolidated financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"), including the instructions to Form 10-Q and Article 10 of Regulation S-X. Certain information and footnote disclosures normally included in the Company's annual consolidated financial statements on Form 10-K have been condensed or omitted. The condensed consolidated balance sheet as of May 31,
Significant Accounting Policies and Use of Estimates	Significant Accounting Policies and Use of Estimates: There were no material changes in the Company’s significant accounting policies for the three and six months ended November 30, 2022 as compared to the year ended May 31, 2022. See Note 3 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended May 31, 2022, as filed with the SEC, for additional information regarding the Company’s significant accounting policies and use of estimates. The preparation of the unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ significantly from those estimates. The most significant accounting estimates inherent in the preparation of the Company’s financial statements include estimates the valuation allowance associated with the Company’s deferred tax assets.
Cash and Cash Equivalents	Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity of three months or less at the date of acquisition to be cash equivalents. The Company’s cash equivalents in excess of federally insured limits potentially subject us to concentrations of credit risk, although the Company believes it is subject to minimal risk.
Recent Accounting Pronouncements	Recent Accounting PronouncementsThe Company continually assesses any new accounting pronouncements to determine their applicability. When it is determined that a new accounting pronouncement affects the Company’s financial reporting, the Company undertakes a study to determine the consequences of the change to its consolidated financial statements and assures that there are proper controls in place to ascertain that the Company’s consolidated financial statements properly reflect the change.
Revenue Recognition	The Company recognizes revenue when promised services are transferred to customers in an amount that reflects the consideration to which the Company expects to be received in exchange for those services. The Company notes all revenue recognized from continuing operations during the quarter was received through hosting revenue.

BASIS OF PRESENTATION AND SIG_3

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables)	6 Months Ended
	Nov. 30, 2022
Accounting Policies [Abstract]
Schedule of Cash and Cash Equivalents	The following tables reconciles cash and cash equivalents and restricted cash to presentation on the balance sheet as of November 30, 2022, and May 31, 2022. (in thousands) November 30, 2022 May 31, 2022 Net Cash & Equivalents $ 10,512 $ 38,798 Restricted Cash $ 7,562 $ 7,501 Total Cash & Cash Equivalents $ 18,074 $ 46,299

PROPERTY AND EQUIPMENT (Tables)

PROPERTY AND EQUIPMENT (Tables)	6 Months Ended
	Nov. 30, 2022
Property, Plant and Equipment [Abstract]
Schedule of Property and Equipment, Net	Property and equipment consisted of the following as of November 30, 2022, and May 31, 2022: (in thousands) Estimated Useful Life November 30, May 31, Hosting Equipment Electric Generation and Transformers 15 years $ 4,519 $ 4,338 Other Equipment and Fixtures 5 years-7 years 718 588 Construction in Progress 83,290 18,305 Information Systems and Software 5 years 11,116 9,608 Land & Building Land 2,152 1,074 Land Improvements 15 years 1,259 1,180 Building 39 years 32,519 30,176 Total cost of property and equipment 135,572 65,269 Accumulated Depreciation (2,679) (1,009) Property Plant and Equipment, Net $ 132,893 $ 64,260

REVENUE FROM CONTRACTS WITH C_2

REVENUE FROM CONTRACTS WITH CUSTOMERS (Tables)	6 Months Ended
	Nov. 30, 2022
Revenue from Contract with Customer [Abstract]
Schedules of Concentration of Risk, by Risk Factor	Below is a summary of the Company’s revenue concentration by major customer for the three and six months ended November 30, 2022 and 2021, respectively. Three Months Ended November 30, Customer 2022 2021 Customer A 32.6 % — % Customer B 26.5 % — % Customer C 16.2 % — % Customer D 13.0 % — % Customer E 11.8 % — % Six Months Ended November 30, Customer 2022 2021 Customer A 33.7 % — % Customer B 21.5 % — % Customer C 17.9 % — % Customer D 14.2 % — % Customer E 12.7 % — %
Schedule of Deferred Revenue	Changes in the Company's deferred revenue balances from hosting operations for the three and six months ended November 30, 2022 and 2021, respectively, are shown in the following table: (in thousands) (in thousands) Three Months Ended November 30, 2022 Three Months Ended November 30, 2021 Balance at August 31, 2022 $ 19,193 Balance at May 31, 2021 $ — Advance billings 22,406 Advance billings — Revenue recognized (12,340) Revenue recognized — Other adjustments $ 135 Other adjustments $ — Balance at November 30, 2022 $ 29,394 Balance at November 30, 2021 $ — (in thousands) (in thousands) Six Months Ended November 30, 2022 Six Months Ended November 30, 2021 Balance at May 31, 2022 3,877 Balance at May 31, 2021 $ — Advance billings 44,646 Advance billings — Revenue recognized (19,264) Revenue recognized — Other adjustments $ 135 Other adjustments $ — Balance at November 30, 2022 $ 29,394 Balance at November 30, 2021 $ —
Schedule of Customer Deposits	Changes in the Company's customer deposits balances for the three and six months ended November 30, 2022 and 2021, respectively, are shown in the following table: (in thousands) (in thousands) Three Months Ended November 30, 2022 Three Months Ended November 30, 2021 Balance at August 31, 2022 $ 14,111 Balance at August 31, 2021 $ — Customer deposits received 10,713 Customer deposits received — Customer deposits refunded — Customer deposits refunded — Other adjustments $ (135) Other adjustments $ — Balance at November 30, 2022 $ 24,689 Balance at November 30, 2021 $ — (in thousands) (in thousands) Six Months Ended November 30, 2022 Six Months Ended November 30, 2021 Balance at May 31, 2022 $ 9,524 Balance at May 31, 2021 $ — Customer deposits received 15,300 Customer deposits received — Customer deposits refunded — Customer deposits refunded — Other adjustments $ (135) Other adjustments $ — Balance at November 30, 2022 $ 24,689 Balance at November 30, 2021 $ —

RELATED PARTY TRANSACTIONS (Tab

RELATED PARTY TRANSACTIONS (Tables)	6 Months Ended
	Nov. 30, 2022
Related Party Transactions [Abstract]
Schedule of Related Party Transactions	The following tables illustrate related party revenue for the three and six months ended November 30, 2022 and November 30, 2021. Revenue for the Three Months ended (in thousands) November 30, 2022 November 30, 2021 Customer A $ 4,016 $ — Customer B $ 5,043 $ — Revenue for the Six Months ended (in thousands) November 30, 2022 November 30, 2021 Customer A $ 6,469 $ — Customer B $ 8,622 $ — The following tables illustrate related party deferred revenue and deposits balances as of November 30, 2022 and May 31, 2022. Customer A Balances as of (in thousands) November 30, 2022 May 31, 2022 Deferred revenue $ 700 $ 1,721 Customer Deposits $ 1,584 $ 1,719 Customer B Balances as of (in thousands) November 30, 2022 May 31, 2022 Deferred revenue $ 2,279 $ 888 Customer Deposits $ 7,024 $ 6,508

DEBT (Tables)

DEBT (Tables)	6 Months Ended
	Nov. 30, 2022
Debt Disclosure [Abstract]
Schedule of Maturities of Long-Term Debt	Below is a summary of the remaining principal payments due over the life of the Starion Loan Agreement and Vantage Garden City Loan Agreement notes as of November 30, 2022. Year Principal Payments (in thousands) FY23 $ 1,537 FY24 5,415 FY25 5,783 FY26 4,033 FY27 3,373 Thereafter 526 Total Term Loan Remaining Payments $ 20,667
Schedule of Long-Term Debt Instruments	Below is a summary of Starion Loan Agreement Vantage Garden City Loan Agreement term loan balances, including current debt and deferred financing fees as of November 30, 2022 and May 31, 2022. (in thousands) November 30, 2022 May 31, 2022 Term Loan Balance $20,667 $7,324 Less: Deferred Issuance Costs (240) (94) Less: Current portion of Term Loan (4,076) (1,333) Long-term Portion of Term Loan $16,351 $5,897

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT) (Tables)	6 Months Ended
	Nov. 30, 2022
Equity [Abstract]
Share-Based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity	The following is a summary of the activity and balances for unvested restricted stock awards granted for the six months ended November 30, 2022: Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of May 31, 2022 $ 1,366,666 $ 8.04 Granted 77,500 $ 2.04 Vested (952,500) $ 7.55 Forfeited — $ — Outstanding as of November 30, 2022 491,666 $ 8.04 The following is a summary of the activity and balances for unvested restricted stock units granted for the six months ended November 30, 2022: Number of Shares Weighted Average Grant Date Fair Value Per Share Outstanding as of May 31, 2022 1,791,666 $ 8.04 Granted 7,897,907 $ 2.32 Vested (179,166) $ 8.04 Forfeited (445,749) $ 7.65 Outstanding as of November 30, 2022 9,064,658 $ 3.07

EARNINGS PER SHARE (Tables)

EARNINGS PER SHARE (Tables)	6 Months Ended
	Nov. 30, 2022
Earnings Per Share [Abstract]
Schedule of Earnings Per Share, Basic and Diluted	The table below shows the calculation for this quarter’s earnings per share: Basic and diluted loss per share: Three Months Ended Six Months Ended November 30, 2022 November 30, 2021 November 30, 2022 November 30, 2021 Net loss from continuing operations $ (26,750) $ (1,569) $ (31,409) $ (15,949) Net loss from discontinued operations, net of income taxes — 1,398 — 1,681 Net loss including noncontrolling interests (26,750) (171) (31,409) (14,268) Net loss attributable to noncontrolling interest (133) — (261) — Net loss attributable to Applied Digital Corporation $ (26,617) $ (171) $ (31,148) $ (14,268) Basic and diluted net (loss) gain per share: Continuing Operations $ (0.29) $ (0.03) $ (0.34) $ (0.32) Discontinued Operations $ — $ 0.03 $ — $ 0.03 Basic and diluted net loss per share $ (0.29) $ — $ (0.34) $ (0.29) Basic and diluted weighted average number of shares outstanding 93,422,427 53,396,920 93,263,266 49,143,981

DISCONTINUED OPERATIONS (Tables

DISCONTINUED OPERATIONS (Tables)	6 Months Ended
	Nov. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]
Discontinued Operations	Operating results of discontinued operations are summarized below: Three Months Ended Six Months Ended in thousands November 30, 2022 November 30, 2021 November 30, 2022 November 30, 2021 Cryptoasset mining revenue, net $ — $ 1,426 $ — $ 2,038 Cost of sales — 433 — 782 Gross profit — 993 — 1,256 Impairment of cryptocurrency assets — (145) — (165) Gain on Extinguishment of Accounts Payable — 285 — 325 Gain on Sale of Fixed Assets 265 265 Net gain from discontinued operations $ — $ 1,398 $ — $ 1,681

BUSINESS AND ORGANIZATION - Nar

BUSINESS AND ORGANIZATION - Narrative (Details) $ / shares in Units, $ in Millions		6 Months Ended
	Apr. 12, 2022 $ / shares	Nov. 30, 2022 USD ($) $ / shares	Oct. 13, 2022	Sep. 01, 2022	May 31, 2022 $ / shares
Noncontrolling Interest [Line Items]
Stock split	0.1667	0.1667
Common stock, par value (in dollars per share) | $ / shares	$ 0.001	$ 0.001			$ 0.001
Highland Digital Holdings, LLC
Noncontrolling Interest [Line Items]
Ownership percentage				50%
Highland Digital Holdings, LLC | GMR Limited
Noncontrolling Interest [Line Items]
Ownership percentage				50%
Highland Digital Holdings, LLC
Noncontrolling Interest [Line Items]
Committed amount | $		$ 0.6
SAI Computing, LLC
Noncontrolling Interest [Line Items]
Ownership percentage by parent			98%

LIQUIDITY AND FINANCIAL CONDI_2

LIQUIDITY AND FINANCIAL CONDITION (Details) - USD ($) $ in Thousands	Nov. 30, 2022	May 31, 2022	Nov. 30, 2021
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash and cash equivalents of continuing operations	$ 18,074	$ 46,299	$ 14,045
Negative working capital	$ (49,500)

BASIS OF PRESENTATION AND SIG_4

BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES - Schedule of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	Nov. 30, 2022	May 31, 2022	Nov. 30, 2021
Accounting Policies [Abstract]
Cash and cash equivalents	$ 10,512	$ 38,798
Restricted Cash	7,562	7,501
Cash and cash equivalents	$ 18,074	$ 46,299	$ 14,045

PROPERTY AND EQUIPMENT - Schedu

PROPERTY AND EQUIPMENT - Schedule of Property and Equipment, Net (Details) - USD ($) $ in Thousands	6 Months Ended
	Nov. 30, 2022	May 31, 2022
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 135,572	$ 65,269
Accumulated Depreciation	(2,679)	(1,009)
Property Plant and Equipment, Net	$ 132,893	64,260
Electric Generation and Transformers
Property, Plant and Equipment [Line Items]
Estimated Useful Life	15 years
Total cost of property and equipment	$ 4,519	4,338
Other Equipment and Fixtures
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 718	588
Other Equipment and Fixtures | Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Other Equipment and Fixtures | Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life	7 years
Construction in Progress
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 83,290	18,305
Information Systems and Software
Property, Plant and Equipment [Line Items]
Estimated Useful Life	5 years
Total cost of property and equipment	$ 11,116	9,608
Land
Property, Plant and Equipment [Line Items]
Total cost of property and equipment	$ 2,152	1,074
Land Improvements
Property, Plant and Equipment [Line Items]
Estimated Useful Life	15 years
Total cost of property and equipment	$ 1,259	1,180
Building
Property, Plant and Equipment [Line Items]
Estimated Useful Life	39 years
Total cost of property and equipment	$ 32,519	$ 30,176

PROPERTY AND EQUIPMENT - Narrat

PROPERTY AND EQUIPMENT - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Property, Plant and Equipment [Abstract]
Depreciation and amortization	$ 800	$ 200	$ 1,700	$ 200

REVENUE FROM CONTRACTS WITH C_3

REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Concentration Risk by Major Customer (Details) - Customer Concentration Risk - Revenue Benchmark	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Customer A
Concentration Risk [Line Items]
Concentration risk	32.60%	0%	33.70%	0%
Customer B
Concentration Risk [Line Items]
Concentration risk	26.50%	0%	21.50%	0%
Customer C
Concentration Risk [Line Items]
Concentration risk	16.20%	0%	17.90%	0%
Customer D
Concentration Risk [Line Items]
Concentration risk	13%	0%	14.20%	0%
Customer E
Concentration Risk [Line Items]
Concentration risk	11.80%	0%	12.70%	0%

REVENUE FROM CONTRACTS WITH C_4

REVENUE FROM CONTRACTS WITH CUSTOMERS - Narrative (Details) $ in Millions	Nov. 30, 2022 USD ($)
Revenue, Major Customer [Line Items]
Revenue, remaining performance obligation, amount	$ 29.4
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-12-01
Revenue, Major Customer [Line Items]
Revenue, remaining performance obligation, amount	$ 29.4
Revenue, remaining performance obligation, expected timing of satisfaction, period	12 months

REVENUE FROM CONTRACTS WITH C_5

REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Movement in Deferred Revenue [Roll Forward]
Beginning balance	$ 19,193	$ 0	$ 3,877	$ 0
Advance billings	22,406	0	44,646	0
Revenue recognized	(12,340)	0	(19,264)	0
Other adjustments	135	0	135	0
Ending balance	$ 29,394	$ 0	$ 29,394	$ 0

REVENUE FROM CONTRACTS WITH C_6

REVENUE FROM CONTRACTS WITH CUSTOMERS - Schedule of Customer Deposits (Details) - USD ($)	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Customer Deposits [Roll Forward]
Balance, beginning of period	$ 14,111,000	$ 0	$ 9,524,000	$ 0
Customer deposits received	10,713,000	0	15,300,000	0
Customer deposits refunded	0	0	0	0
Other adjustments	(135,000)	0	(135,000)	0
Balance, ending of period	$ 24,689,000	$ 0	$ 24,689,000	$ 0

RELATED PARTY TRANSACTIONS - Na

RELATED PARTY TRANSACTIONS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Note Payable [Line Items]
Loss on extinguishment of debt	$ 0	$ 0	$ 94	$ 1,342
Affiliated Entity
Note Payable [Line Items]
Notes payable, related parties		$ 500		$ 500
Debt conversion, converted instrument, shares issued, fair value, per share (in dollars per share)		$ 0.75		$ 0.75
Loss on extinguishment of debt		$ 1,300
Affiliated Entity | Convertible Common Stock
Note Payable [Line Items]
Debt conversion, converted instrument, shares issued (in shares)		5,100,000
Affiliated Entity | Interest Payable
Note Payable [Line Items]
Customer Deposits		$ 1,600		$ 1,600

RELATED PARTY TRANSACTIONS - Re

RELATED PARTY TRANSACTIONS - Related Party Revenue (Details) - Affiliated Entity - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021	May 31, 2022
Customer A
Related Party Transaction [Line Items]
Revenue from related parties	$ 4,016	$ 0	$ 6,469	$ 0
Deferred revenue	700		700		$ 1,721
Customer Deposits	1,584		1,584		1,719
Customer B
Related Party Transaction [Line Items]
Revenue from related parties	5,043	$ 0	8,622	$ 0
Deferred revenue	2,279		2,279		888
Customer Deposits	$ 7,024		$ 7,024		$ 6,508

DEBT - Narrative (Details)

DEBT - Narrative (Details) $ in Thousands		6 Months Ended
	Mar. 11, 2022 USD ($)	Nov. 30, 2022 USD ($)	Nov. 07, 2022 USD ($) installment	Jul. 25, 2022 USD ($)	May 31, 2022 USD ($)
Medium-term Notes
Debt Instrument [Line Items]
Debt issuance costs, net		$ 240			$ 94
The Starion Loan Agreement | Medium-term Notes
Debt Instrument [Line Items]
Promissory note amount				$ 15,000
Interest rate				6.50%
Debt issuance costs, net		100
Vantage Bank Texas (VBT) Promissory Note | Medium-term Notes
Debt Instrument [Line Items]
Promissory note amount	$ 7,500
Interest rate	5%
Term	5 years
Jamestown Stutsman Development Corporation Interest Buy Down | Medium-term Notes
Debt Instrument [Line Items]
Promissory note amount		$ 200
Interest rate		2%
Buy down, new percentage		1.50%
Buy down term		13 months
Jamestown Stutsman Development Corporation Interest Buy Down | Bonds
Debt Instrument [Line Items]
Promissory note amount		$ 500
Vantage Garden City Loan Agreement | Medium-term Notes
Debt Instrument [Line Items]
Promissory note amount			$ 15,000
Interest rate			6.15%
Debt issuance costs, net		200
Number of loan advance installments | installment			16
Loan advances, installment maximum			$ 900
Loan advances to date		6,600
Letter of Credit
Debt Instrument [Line Items]
Line of credit, maximum borrowing capacity		$ 7,500			$ 7,500

DEBT - Schedule of Maturities o

DEBT - Schedule of Maturities of Long-Term Debt (Details) - Starion Loan and Vantage Garden City Loan Agreements - Medium-term Notes $ in Thousands	Nov. 30, 2022 USD ($)
Debt Instrument [Line Items]
FY23	$ 1,537
FY24	5,415
FY25	5,783
FY26	4,033
FY27	3,373
Thereafter	526
Total Term Loan Remaining Payments	$ 20,667

DEBT - Schedule of Long-Term De

DEBT - Schedule of Long-Term Debt Instruments (Details) - Medium-term Notes - USD ($) $ in Thousands	Nov. 30, 2022	May 31, 2022
Debt Instrument [Line Items]
Term Loan Balance	$ 20,667	$ 7,324
Less: Deferred Issuance Costs	(240)	(94)
Less: Current portion of Term Loan	(4,076)	(1,333)
Long-term Portion of Term Loan	$ 16,351	$ 5,897

STOCKHOLDERS' EQUITY (DEFICIT_2

STOCKHOLDERS' EQUITY (DEFICIT) - Additional Information (Details) $ / shares in Units, $ in Millions			6 Months Ended
	Jun. 06, 2022 shares	Apr. 12, 2022 $ / shares	Nov. 30, 2022 USD ($) $ / shares shares	May 31, 2022 $ / shares shares	Oct. 09, 2021 plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock, shares authorized (in shares)			166,666,667	166,666,667
Common stock, par value (in dollars per share) | $ / shares		$ 0.001	$ 0.001	$ 0.001
Common stock, shares outstanding (in shares)			93,946,353	97,801,406
Common stock, shares issued (in shares)			93,982,650	97,837,703
Stock split		0.1667	0.1667
Number of equity incentive plans | plan					2
Xsquared Holding Limited
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock forfeited during period (in shares)	4,965,432
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense | $			$ 0.9
Unrecognized stock compensation expense, period for recognition			3 months
Grants in period (in shares)			77,500
Restricted Stock Units (RSUs)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized stock compensation expense | $			$ 17.7
Unrecognized stock compensation expense, period for recognition			23 months
Grants to date (in shares)			8,000,000
Grants in period (in shares)			7,897,907

STOCKHOLDERS' EQUITY (DEFICIT_3

STOCKHOLDERS' EQUITY (DEFICIT) - Schedule of Restricted Stock Awards (Details) - Restricted Stock	6 Months Ended
	Nov. 30, 2022 $ / shares shares
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares) | shares	1,366,666
Grants in period (in shares) | shares	77,500
Vested (in shares) | shares	(952,500)
Forfeited (in shares) | shares	0
Outstanding at end of period (in shares) | shares	491,666
Weighted Average Grant Date Fair Value Per Share
Weighted average grant date fair value, outstanding at beginning of period (in dollars per share) | $ / shares	$ 8.04
Granted (in dollars per share) | $ / shares	2.04
Vested (in dollars per share) | $ / shares	7.55
Forfeited (in dollars per share) | $ / shares	0
Weighted average grant date fair value, outstanding at end of period (in dollars per share) | $ / shares	$ 8.04

STOCKHOLDERS' EQUITY (DEFICIT_4

STOCKHOLDERS' EQUITY (DEFICIT) - Schedule of Restricted Stock Units (Details) - Restricted Stock Units (RSUs) - $ / shares	6 Months Ended
	Nov. 30, 2022	May 31, 2022
Share-Based Compensation Arrangement by Share-Based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding at beginning of period (in shares)	1,791,666
Grants in period (in shares)	7,897,907
Vested (in shares)	(179,166)
Forfeited (in shares)	(445,749)
Outstanding at end of period (in shares)	9,064,658
Weighted Average Grant Date Fair Value Per Share
Weighted average grant date fair value, outstanding at beginning of period (in dollars per share)	$ 3.07	$ 8.04
Granted (in dollars per share)	2.32
Vested (in dollars per share)	8.04
Forfeited (in dollars per share)	7.65
Weighted average grant date fair value, outstanding at end of period (in dollars per share)	$ 3.07

LEASES - Narrative (Details)

LEASES - Narrative (Details) $ in Millions	6 Months Ended
	Nov. 30, 2022 USD ($) lease
Leases [Abstract]
Number of finance leases entered into	18
Total number of leases	39
Weighted average remaining lease term	31 months
Present value of lease liabilities	7.50%
Right-of-use asset obtained in exchange for finance lease liability | $	$ 6.9

COMMITMENTS AND CONTINGENCIES -

COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Cost of revenues	$ 11,812	$ 0	$ 17,905	$ 0
Energy Service
Purchase Commitment, Excluding Long-Term Commitment [Line Items]
Contractual obligation	24,200		$ 24,200
Service contract, term			5 years
Cost of revenues	$ 10,300		$ 15,100

EARNINGS PER SHARE - Schedule o

EARNINGS PER SHARE - Schedule of Earnings Per Share, Basic and Diluted (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Earnings Per Share [Abstract]
Net loss from continuing operations	$ (26,750)	$ (1,569)	$ (31,409)	$ (15,949)
Net gain from discontinued operations, net of income taxes	0	1,398	0	1,681
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest	(26,750)	(171)	(31,409)	(14,268)
Net loss attributable to noncontrolling interest	(133)	0	(261)	0
Net Income (Loss) Attributable to Parent, Total	$ (26,617)	$ (171)	$ (31,148)	$ (14,268)
Continuing Operations - basic ( in dollars per share)	$ (0.29)	$ (0.03)	$ (0.34)	$ (0.32)
Continuing Operations - diluted ( in dollars per share)	(0.29)	(0.03)	(0.34)	(0.32)
Discontinued Operations - basic ( in dollars per share)	0	0.03	0	0.03
Discontinued Operations - diluted ( in dollars per share)	0	0.03	0	0.03
Basic net loss per share (in dollars per share)	(0.29)	0	(0.34)	(0.29)
Diluted net loss per share (in dollars per share)	$ (0.29)	$ 0	$ (0.34)	$ (0.29)
Basic weighted average number of shares outstanding (in shares)	93,422,427	53,396,920	93,263,266	49,143,981
Diluted weighted average number of shares outstanding (in shares)	93,422,427	53,396,920	93,263,266	49,143,981

DISCONTINUED OPERATIONS - Opera

DISCONTINUED OPERATIONS - Operating Results (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Nov. 30, 2022	Nov. 30, 2021	Nov. 30, 2022	Nov. 30, 2021
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Net gain from discontinued operations	$ 0	$ 1,398	$ 0	$ 1,681
Discontinued Operations, Held-for-sale | Mining Segment | Mining Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Cryptoasset mining revenue, net	0	1,426	0	2,038
Cost of sales	0	433	0	782
Gross profit	0	993	0	1,256
Impairment of cryptocurrency assets	0	(145)	0	(165)
Gain on Extinguishment of Accounts Payable	0	285	0	325
Gain on Sale of Fixed Assets		265		265
Net gain from discontinued operations	$ 0	$ 1,398	$ 0	$ 1,681

DISCONTINUED OPERATIONS - Narra

DISCONTINUED OPERATIONS - Narrative (Details) - USD ($) $ in Thousands	Nov. 30, 2022	May 31, 2022
Discontinued Operations, Held-for-sale | Mining Segment | Mining Segment
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Current assets of discontinued operations	$ 0	$ 0