Applied Digital Corporation (APLD), a datacenter developer serving the high performance computing (HPC), cryptocurrency, and artificial intelligence (AI) sectors, is refusing to name the advisory firm it hired to fix multiple control deficiencies nor is it saying how that firm is being compensated.

Applied Digital acknowledges it lacks the most basic of controls— the company has not even attempted to ensure it can “record, process, summarize, and report financial data”— and has hired an advisory, tax and assurance firm to “assist with process documentation”.

How this consultant is paid should be of interest to investors.

Recently, Applied’s cash burn (CF from Ops less PPE spend) accelerated— it burnt $130 million in the latest quarter and $128 million in the previous fiscal year— hence the necessity for a special equity incentive plan to compensate “employees and consultants”.

Applied’s latest filing does not say how the consultant is being paid.

Investors might question the appropriateness of equity compensation for a consultant assigned to fix issues that could result in the discovery of financial misstatements and negatively impact Applied’s share price.

At minimum, the perception of a conflict of interest would exist.

The company did not immediately respond when DuDil requested it identify the consultant and how the firm is being compensated—in cash or equity.

It’s also unclear whether the consultant is also responsible for fixing Applied’s control deficiencies related to the identification and disclosure of related party transactions.

Last year, Applied paid a family member of the company’s Chief Financial officer for consulting services.

It is currently licensing software from a firm headed by a member of Applied’s Board of Directors.

Likewise, six members of the Chief Executive Officer’s family are on Applied’s payroll.