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0001144879
0001144879
2026-01-06
2026-01-06
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
January
6, 2026
(Date
of earliest event reported)
APPLIED
DIGITAL CORPORATION
(Exact
name of registrant as specified in its charter)
| Nevada |
|
001-31968 |
|
95-4863690 |
| (State
or other jurisdiction |
|
(Commission |
|
(IRS
Employer |
| of
incorporation) |
|
File
Number) |
|
Identification
No.) |
| 3811
Turtle Creek Blvd., Suite 2100, Dallas, TX |
|
75219 |
| (Address
of principal executive offices) |
|
(Zip
Code) |
214-427-1704
(Registrant’s
telephone number, including area code)
(Former
name or former address, if changed since last report)
Check
the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under
any of the following provisions (see General Instruction A.2. below):
| |
☐ |
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| |
|
|
| |
☐ |
Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| |
|
|
| |
☐ |
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| |
|
|
| |
☐ |
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate
by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405
of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
☐ Emerging growth company
If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities
registered pursuant to Section 12(b) of the Act:
| Title
of each class |
|
Trading
Symbol(s) |
|
Name
of each exchange on which registered |
| Common
Stock |
|
APLD |
|
Nasdaq
Global Select Market |
Item
5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On
January 6, 2026 (the “Grant Date”), the Board of Directors (the “Board”) of Applied Digital Corporation, a
Nevada corporation (the “Company”), based on the recommendation of the Compensation Committee of the Board (the “
Compensation Committee”), unanimously approved the grant of 4,500,000 performance stock units (“PSUs”) and
1,500,000 restricted stock units (the “RSUs”) to Wes Cummins, Chairman and Chief Executive Officer of the Company, under
the Company’s 2024 Omnibus Equity Incentive Plan (as amended from time to time, the “Plan”). Each PSU and RSU
represents a right to receive one share of the Company’s common stock upon vesting, subject to the terms and conditions
described below. These awards are intended to be in lieu of any future equity awards to Mr. Cummins for the next five years (unless
there are unexpected changes in the Company’s business or other unforeseen factors that the Board or the Compensation
Committee determines would make it in the best interests of the Company and its stockholders to grant additional equity awards to
Mr. Cummins), are structured to further align Mr. Cummins’ total compensation with the Company’s continued growth and
would (in the case of the PSUs) require significant value creation for the Company’s stockholders before any value from the
grant can be realized by Mr. Cummins, as further described below.
Background
Since
the Company’s pivot in its business strategy and becoming one of the leading designers, builders,
and operators of high-performance, sustainably engineered data centers and colocation services for artificial intelligence, cloud, networking,
and blockchain workloads, the Company has delivered strong stockholder returns. The Company’s stock price in calendar year
2025 alone increased by approximately 214%. The Company also reached a significant milestone in 2025, by leasing the full capacity of
its first 400MW high performance computing (HPC) data center in Ellendale, North Dakota to a hyperscaler tenant, as well as signing a
lease for 200MW of its Harwood, North Dakota campus (which is in early construction phases) with an investment grade hyperscaler tenant.
The Company has already begun to recognize revenue with respect to the Ellendale data center and expects its revenue to increase significantly
from its previous levels in calendar year 2026, as additional facilities are brought online. The Board believes that Mr. Cummins’
leadership has been and continues to be a key factor in the Company’s ongoing success, that the Company continues to have tremendous
growth potential, and that a long-term program motivating Mr. Cummins to realize that growth potential is in the best interests of the
Company and its stockholders. In approving the PSUs and RSUs, the Board recognized, among other things, the blend of leadership, experience,
and knowledge of the Company’s industry and business that Mr. Cummins brings to the Company and the continued importance of Mr.
Cummins’ role as the individual who identifies strategic priorities, leads the execution of the Company’s long-term strategy,
and drives long-term value for the Company and its stockholders.
The
Board believes that the PSUs and RSUs are appropriate awards because of the importance of retaining and incentivizing Mr. Cummins to
lead the Company to sustained, long-term financial and operational performance. The Board believes the PSUs and RSUs best align the interests
of Mr. Cummins with those of the Company and its stockholders, as (i) the value, if any, that Mr. Cummins would realize from the PSUs
will require significant value creation for all stockholders; and (ii) the maximum value, if any, that Mr. Cummins would realize
from the RSUs will require Mr. Cummins to remain employed with the Company in a role approved by the Board for the five years after the
Grant Date (other than in connection with certain terminations of employment, as described below). The Board believes that any dilution
to the Company’s stockholders resulting from the vesting of the RSUs is minimal as the RSU award represents less than 0.6% of the
shares outstanding as of the Grant Date, and such dilution is reasonable in light of the benefits to the Company and its stockholders
of retaining Mr. Cummins for the duration of the five-year vesting period. In addition, the Board believes that because the PSU award
represents approximately 1.6% of the shares outstanding as of the Grant Date, the dilutive effect on the stockholders is reasonable
given the increase in stockholder value that would be represented by achievement of the stock price milestones. In designing the PSUs
and RSUs, the Compensation Committee was advised by an independent compensation consultant.
Terms
of the PSUs and RSUs
The
PSUs are eligible to vest based on the achievement of stock price hurdles, measured based on the Company’s average closing price
per share over a 90 consecutive calendar day period (the “Average Closing Price”), as set forth in the table below. The PSUs
will only be earned and vest if the Average Closing Price equals or exceeds the applicable stock price hurdle on a date that is on or
before the five-year anniversary of the Grant Date, subject to Mr. Cummins’ continued full-time employment with the Company
in a role approved by the Board on the applicable vesting date.
| Company Average Closing Price | | |
PSUs Eligible to Vest | |
| $ | 50.00 | | |
| 1,500,000 | |
| $ | 75.00 | | |
| 1,500,000 | |
| $ | 100.00 | | |
| 1,500,000 | |
Upon
a Change in Control, the Average Closing Price will be deemed to be the price per share ascribed to the Company’s common stock
in such Change in Control, as determined by the Compensation Committee, and:
| |
● |
Any
PSUs for which the applicable stock price hurdle has not been met will be automatically forfeited without consideration. |
| |
|
|
| |
● |
Any
PSUs which are unvested and for which the stock price hurdle is met in connection with such Change in Control will accelerate and
vest. |
| |
|
|
| |
● |
If
the Average Closing Price in connection with such Change in Control falls between any two stock price hurdles, the number of PSUs
that will accelerate and vest will be determined by linear interpolation between such hurdles. |
Upon
Mr. Cummins’ termination due to death, Disability, without Cause, for Good Reason, or due to the Company’s non-renewal of
Mr. Cummins’ employment Term (each, as defined in Mr. Cummins’ employment agreement with the Company dated October 10, 2024
(the “Cummins Employment Agreement”)), the PSUs shall remain outstanding and continue to be eligible to vest for twelve
months after Mr. Cummins’ termination, or if earlier, until the five-year anniversary of the grant date, in the event that the
applicable stock price hurdles are achieved, after which the PSUs, to the extent unvested, will be forfeited. In the event of a Change
in Control following any such termination, vesting of any then-unvested PSUs shall be determined as set forth above with respect to a
Change in Control, and any PSUs that do not vest shall be forfeited.
Shares
of common stock issued with respect to the PSUs may not be transferred for two years from the date of issuance, other than shares withheld
in respect of tax withholding obligations, or shares transferred by Mr. Cummins for estate planning purposes.
The
RSUs are subject to vesting as follows: 300,000 of the RSUs shall vest on the one-year anniversary of the Grant Date (the “Cliff
Date”), and the remainder will vest in equal instalments of 150,000 every six months after the Cliff Date, such that the
RSUs will be fully vested on the five-year anniversary of the Grant Date. Upon Mr. Cummins’ termination for Cause, for Good Reason,
or due to the Company’s non-renewal of Mr. Cummins’ employment Term, subject to the terms and conditions of the Cummins Employment
Agreement, 50% of the outstanding and unvested RSUs will accelerate and become vested and the balance will be forfeited or, in the event
of a Change in Control Termination (as defined in the Cummins Employment Agreement), 100% of the outstanding and unvested RSUs will accelerate
and become vested.
The
PSUs and the RSUs shall be subject to forfeiture at the election of the Company, without payment of consideration, in the event Mr. Cummins
breaches Section 5 of the Cummins Employment Agreement (Restrictive Covenants), or any other agreement between Mr. Cummins and the Company
with respect to non-competition, non-solicitation, no-hire, non-disparagement, assignment of inventions and contributions and/or non-disclosure
obligations. The PSUs and RSUs will also be subject to the Company’s Clawback Policy, as in effect from time to time.
The
foregoing description of the PSUs and RSUs does not purport to be complete and is qualified in its entirety by the full text of the Performance
Stock Unit Agreement evidencing the PSUs and Restricted Stock Unit Agreement evidencing the RSUs, copies of which are filed as Exhibits
10.1 and 10.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
Forward-Looking
Statements
This
Current Report on Form 8-K and other reports filed by the Company from time to time with the SEC contains “forward-looking statements”
as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, future operating and financial performance,
product development, market position, business strategy and objectives and future financing plans. These statements use words, and variations
of words, such as “will,” “continue,” “build,” “future,” “increase,”
“drive,” “believe,” “look,” “ahead,” “confident,” “deliver,”
“outlook,” “expect,” “project” and “predict.” Other examples of forward-looking statements
may include, but are not limited to, (i) statements that reflect perspectives and expectations regarding lease agreements and any current
or prospective datacenter campus development, (ii) statements about the high-performance computing (HPC) industry, (iii) statements
of Company plans and objectives, including the Company’s evolving business model, or estimates or predictions of actions by suppliers,
(iv) statements of future economic performance, (v) statements of assumptions underlying other statements and statements about the Company
or its business and (vi) the Company’s plans to obtain future project financing. You are cautioned not to rely on these forward-looking
statements. These statements are based on current expectations of future events and thus are inherently subject to uncertainty. If underlying
assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the Company’s
expectations and projections. These risks, uncertainties, and other factors include, among others: our ability to complete construction
of our data center campuses as planned; the lead time of customer acquisition and leasing decisions and related internal approval processes;
changes to artificial intelligence and high performance compute infrastructure needs and their impact on future plans; costs related
to the HPC operations and strategy; our ability to timely deliver any services required in connection with completion of installation
under the lease agreements; our ability to raise additional capital to fund the ongoing datacenter construction and operations; our ability
to obtain financing of datacenter leases on acceptable financing terms, or at all; our dependence on principal customers, including our
ability to execute and perform our obligations under our leases with key customers, including without limitation, the datacenter leases
with CoreWeave and at our Polaris Forge 2 campus and future tenants; our ability to timely and successfully build new hosting facilities
with the appropriate contractual margins and efficiencies; power or other supply disruptions and equipment failures; the inability to
comply with regulations, developments and changes in regulations; cash flow and access to capital; availability of financing to continue
to grow our business; decline in demand for our products and services; maintenance of third party relationships; and conditions in the
debt and equity capital markets. A further list and description of these risks, uncertainties and other factors can be found in the Company’s
most recently filed Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, including in the sections captioned “Forward-Looking
Statements” and “Risk Factors,” and in the Company’s subsequent filings with the Securities and Exchange Commission.
Copies of these filings are available online at www.sec.gov, on the Company’s website
(www.applieddigital.com) under “Investors,” or on request from the Company.
Information in this Current Report on Form 8-K is as of the dates and time periods indicated herein, and the Company does not undertake
to update any of the information contained in these materials, except as required by law.
Item
9.01. Financial Statements and Exhibits.
(d)
Exhibits.
| Exhibit
No. |
|
Description |
| |
|
|
| 10.1 |
|
Performance Stock Unit Award, dated January 6, 2026, by and between Applied Digital Corporation and Wes Cummins. |
| 10.2 |
|
Restricted Stock Unit Award, dated January 6, 2026, by and between Applied Digital Corporation and Wes Cummins. |
| 104 |
|
Cover
Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURE
Pursuant
to the requirements of Section 13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
| Dated:
January 8, 2026 |
By: |
/s/
Saidal L. Mohmand |
| |
Name: |
Saidal
L. Mohmand |
| |
Title: |
Chief
Financial Officer |
