Chronoscale Corporation
08/19/2026 | Press release | Distributed by Public on 08/19/2026 15:17
Annual Report for Fiscal Year Ending May 31, 2026 (Form 10-K)
Management's Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations together with the consolidated financial statements and the related notes included elsewhere in this Annual Report on Form 10-K. This discussion and other parts of this Annual Report on Form 10-K contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, which are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in or implied by these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Annual Report on Form 10-K titled "Risk Factors." Our historical results are not necessarily indicative of the results to be expected for any period in the future, and results for any interim period should not be construed as an inference of what our results would be for any full year or future period.
Overview
We operate our business through two wholly-owned subsidiaries: ChronoScale Corporation, a Nevada corporation (f/k/a Applied Digital Cloud Corporation, a Nevada corporation) ("Cloud") and Ekso Bionics, Inc., a Delaware corporation ("Legacy Ekso"). Following the Holding Company Transaction (as defined and described below), Applied Digital Cloud Corporation changed its name to ChronoScale Corporation. All references to "Cloud" prior to the Holding Company Transaction are to Applied Digital Cloud Corporation and after the Holding Company Transaction, to ChronoScale Corporation. Through Cloud, we have been providing cloud services to customers at third-party colocation centers located in Colorado, Minnesota and Utah, such as artificial intelligence and machine learning developers, seeking to develop their advanced products (the "Cloud Business"). Customers pay a fixed rate in exchange for an energized space supported by Cloud-provided equipment. Through Legacy Ekso, we design, develop, and market exoskeleton and complementary products that augment human strength, endurance, and mobility (the "Legacy Ekso Business"). On June 4, 2026, we announced that our Board of Directors (the "Board") committed to a plan to divest the Legacy Ekso Business and focus operations solely on our Cloud Business. We expect to complete the divestiture of the Legacy Ekso Business during fiscal year 2027. As such, our Legacy Ekso Business has been designated as "held for sale."
On May 5, 2026, we consummated the previously announced business combination transaction (the "Business Combination") contemplated by that certain Contribution and Exchange Agreement (the "Contribution and Exchange Agreement"), dated February 15, 2026, by and among Ekso Bionics Holdings, Inc., a Nevada corporation ("Ekso"), APLD Intermediate HoldCo LLC, a Delaware limited liability company ("APLD Intermediate"), APLD ChronoScale HoldCo LLC, a Delaware limited liability company and a wholly-owned subsidiary of APLD Intermediate ("Contributor"), each a wholly-owned direct or indirect subsidiary of Applied Digital Corporation, a Nevada corporation ("Applied Parent"), and Cloud, a wholly-owned indirect subsidiary of Applied Parent and a direct subsidiary of Contributor as of immediately prior to the consummation of the Business Combination (the "Closing"). Upon the Closing, Ekso changed its name to "ChronoScale Corporation" and Cloud became a wholly-owned subsidiary of Ekso. Following the Closing, we operated in two distinct business segments: the Cloud Business, which operated through Cloud, and the Legacy Ekso Business, which operated through Legacy Ekso, which is a direct wholly-owned subsidiary of Ekso. On July 1, 2026, we completed a holding company formation transaction (the "Holding Company Transaction"), as further described below, that created a new parent holding company as the public company, called ChronoScale Holdings Corporation, a Nevada corporation ("ChronoScale Holdings"), with its operating companies as wholly-owned subsidiaries. The holding company structure better reflects our individual operating businesses, allows for and can accommodate future growth from internal operations and generally provides for greater administrative and operational flexibility.
On May 29, 2026, our Board determined that the Legacy Ekso Business met the criteria to be classified as "held for sale" on our consolidated balance sheets as the Board committed to a plan to divest Legacy Ekso and the Legacy Ekso Business to focus our operations solely on the Cloud Business. We deem it appropriate to classify a business as a discontinued operation if the business meets all of the following criteria: (i) it is a component of the Company, (ii) the component meets the held-for-sale criteria, and (iii) the disposal of the component represents a strategic shift that has a major effect on the Company's operations and financial results. As of May 31, 2026, we deemed our Legacy Ekso Business to be discontinued operations due to the disposal group meeting all three criteria. As such, we have excluded the results of this business segment from our continuing operations and presented them in discontinued operations on the consolidated statements of operations for all periods presented in our audited consolidated financial statements included in this Annual Report on Form 10-K. The comparative periods have been updated to present the Legacy Ekso Business as held for sale and
discontinued operations as of May 31, 2026. We recognized $0.4 million in revenue from the Legacy Ekso Business during the fiscal year ended May 31, 2026 within discontinued operations.
Unless the context otherwise requires, references to "we," "us," "our," and the "Company" refer to Ekso Bionics Holdings, Inc. prior to the Business Combination, ChronoScale Corporation following the Business Combination and ChronoScale Holdings following the Holding Company Transaction.
Business Updates
Reverse Stock Split
As previously disclosed, on December 12, 2024, Legacy Ekso received a written notice from the Nasdaq Listing Qualifications staff of the Nasdaq Stock Market LLC ("Nasdaq") informing the Company that because the minimum bid price for the Legacy Ekso's common stock listed on the Nasdaq Capital Market was below $1.00 per share over the previous 30 consecutive business days, the Company did not meet the minimum bid price requirement for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(a)(2) (the "Minimum Bid Price Requirement").
Before the opening of the stock market on June 2, 2025, Legacy Ekso effected a 1-for-15 reverse split of its common stock (the "Reverse Stock Split"). As a result, all common stock share amounts pertaining to Legacy Ekso instruments assumed by ChronoScale Holdings Corporation in the Business Combination included in this filing have been retroactively reduced by a factor of fifteen, rounded up to the nearest whole share, and all common stock per share amounts have been increased by a factor of fifteen, with the exception of the Company's common stock par value and the Company's authorized shares. Following the Reverse Stock Split, amounts affected included common stock outstanding, restricted stock units, common stock underlying stock options, and warrants.
The Reverse Stock Split was effected in order to raise the per share trading price of Legacy Ekso's common stock above $1.00 and regain compliance with the Minimum Bid Price Requirement. On June 13, 2025, Legacy Ekso regained compliance with the Minimum Bid Price Requirement.
Business Combination
On May 5, 2026, we completed the Business Combination contemplated by the Contribution and Exchange Agreement.
In connection with the Business Combination and immediately prior to the Closing, (i) we amended and restated our Articles of Incorporation and, in connection therewith, changed our name from "Ekso Bionics Holdings, Inc." to "ChronoScale Corporation" ("ChronoScale"), and (ii) Applied Parent consummated the Applied Parent PIPE Investment (as defined and further described below).
Upon the Closing of the Business Combination, (i) Contributor contributed to us all of its right, title and interest in and to 1.2 shares of common stock of Cloud, constituting 100% of the issued and outstanding equity of Cloud (the "Contributed Shares"), in exchange for 138,217 newly issued shares of our common stock (the "Exchanged Shares"); (ii) we entered into the Investor Rights Agreement with Contributor; (iii) we amended and restated our bylaws; and (iv) we adopted the ChronoScale 2026 Omnibus Equity Incentive Plan. In connection with the Business Combination, the CUSIP number for our common stock changed to 170924 104.
As a result of the Business Combination, Cloud became our wholly-owned subsidiary. Following the consummation of the Applied Parent PIPE Investment and the Closing, Applied Parent and Contributor beneficially owned approximately 97% of our outstanding common stock (resulting in Applied Parent obtaining a controlling interest in the Company) and legacy Ekso shareholders owned approximately 3% of our outstanding common stock.
Fiscal Year End
In connection with the Business Combination, as of the Closing Date, the Company changed its fiscal year end from December 31 to May 31.
Investor Rights Agreement
At the Closing, we entered into an investor rights agreement (the "Investor Rights Agreement") with the Contributor, pursuant to which, the APLD Designator (as defined therein) has the right to designate four (4) of the seven (7) directors on our Board, including the Chairman (each such director, an "APLD Designee"). The initial APLD Designees are Wes Cummins (Chairman), Ella Benson, Douglas Miller and Richard Nottenburg. The remaining Board members are Ying Cenly Chen, our Chief Executive Officer, William M. Clancy, and Scott G. Davis, the Chief Executive Officer of Legacy Ekso.
The Investor Rights Agreement provides that, (i) for so long as the APLD Investors (as defined therein) beneficially own at least 50% of our aggregate outstanding voting securities, the APLD Designator may designate four (4) directors, (ii) if the APLD Investors beneficially own at least 25% of our aggregate outstanding voting securities, the APLD Designator may designate three (3) directors; (iii) if the APLD Investors beneficially own at least 10% (but less than 25%) of our aggregate outstanding voting securities, the APLD Designator may designate two (2) directors; and (iv) if the APLD Investors beneficially own less than 10% of our aggregate outstanding voting securities, the APLD Designator may designate one (1) director. In addition, the Investor Rights Agreement provides that the APLD Designator has the right, but not the obligation, to consent to any individual nominated for election to the Board seat initially occupied by the Chief Executive Officer of the Company, for so long as the APLD Investors collectively beneficially own at least 25% of the aggregate outstanding voting securities of the Company. Additionally, for so long as the APLD Investors continue to beneficially own at least thirty percent (30%) of the aggregate outstanding voting securities of the Company, the Board is prohibited from increasing the total number of directors on the Board to greater than seven (7) and, in no event shall any decrease in the number of directors on the Board, in any instance, eliminate, abridge, or otherwise modify the APLD Designator's designation rights, in each case, without the consent of the APLD Designator.
The Investor Rights Agreement also provides that, for so long as the APLD Investors continue to beneficially own at least 30% of the aggregate outstanding voting securities of the Company, we must obtain the prior written consent of the APLD Designator for certain corporate actions, including, but not limited to, commencing or approving any dissolution, liquidation or winding up of the Company, making any fundamental change in the nature of our business, amending our governing documents, incurring, creating, assuming or guaranteeing any indebtedness (subject to certain exceptions) and making or committing to make any acquisition, joint venture, partnership, strategic alliance or formation of any subsidiary.
Pursuant to the Investor Rights Agreement, the Contributor is entitled to preemptive rights for so long as it beneficially owns at least 10% of the Company's aggregate outstanding voting securities, subject to certain exemptions. When we propose to issue new equity securities, we must provide the Contributor with written notice specifying the securities to be offered, the price, and other material terms. Within 10 days of receiving this notice, the Contributor may elect to purchase up to the lesser of (i) 150% of its pro rata share of outstanding equity securities or (ii) 75% of the new securities being offered, with an oversubscription right for any unsubscribed securities.
In addition, we are required to file a registration statement with the SEC covering the resale of all registrable securities held by the APLD Investors by the date that is sixty (60) days after Closing.
Services Agreement
At the Closing, we entered into a Management Advisory and Corporate Services Agreement (the "Services Agreement") with Applied Parent. Under the Services Agreement, Applied Parent has agreed to provide us with (i) management advisory services, including financial, managerial, and operational advice regarding day-to-day operations and strategic transactions and (ii) certain corporate services to us, including administrative and software services, and various personnel services. Under the Services Agreement, we will pay Applied Parent (i) an amount equal to one percent (1%) of our and our subsidiaries' gross revenue per quarter and (ii) fees for other corporate services provided by Applied Parent to us and our subsidiaries as they are incurred on a monthly basis. The Services Agreement has an initial term of twelve (12) months, with automatic successive one (1)-month renewals unless either party provides at least sixty (60) days' prior written notice of non-renewal prior to the expiration of the initial term or at least twenty (20) days prior to the expiration of the renewal term, and may be terminated by Applied Parent upon thirty (30) days written notice to us or by either party upon an uncured material breach or upon a party's bankruptcy or insolvency.
2026 Plan
Effective upon the Closing, we adopted the 2026 Omnibus Equity Incentive Plan as amended and as adopted by ChronoScale Holdings following the Holding Company Transaction (the "2026 Plan"). The 2026 Plan was approved by the
Board on February 14, 2026, and by the Principal Stockholders on February 20, 2026. An aggregate of 22,500,000 shares of our common stock is authorized for issuance under the 2026 Plan. On July 8, 2026, the Company filed a registration statement on Form S-8 (File No. 333-297323), to register the shares available for grant under the 2026 Plan.
In connection with the Closing of the Business Combination, the Ekso Bionics Holdings, Inc. 2017 Employee Stock Purchase Plan and the Ekso Bionics Holdings, Inc. Amended and Restated 2014 Equity Incentive Plan were terminated immediately prior to the Closing, provided that all outstanding awards under the 2014 Equity Incentive Plan will remain outstanding and will continue to be governed by their existing terms.
Equity Offerings & Changes in Equity
October 2025 Private Placement
On October 28, 2025, Ekso Bionics Holdings, Inc. entered into a securities purchase agreement pursuant to which it issued and sold to certain investors in a private placement 769,490 shares of its common stock (the "2025 Private Placement"). The 2025 Private Placement closed on October 30, 2025. In connection with the 2025 Private Placement, placement agent warrants to purchase up to 15,389 shares of the Company's common stock (the "2025 Placement Agent Warrants") were issued to Lake Street Capital Markets, LLC ("Lake Street"). The 2025 Placement Agent Warrants were assumed by the Company in connection with the Business Combination.
January 2026 Private Placement
On January 20, 2026, Ekso Bionics Holdings, Inc. entered into a securities purchase agreement with certain investors pursuant to which it issued and sold in a private placement (the "2026 Private Placement"): (i) an aggregate of 5,852 shares of Series B Convertible Preferred Stock with a stated value of $1,000 per share ("Series B Preferred Stock"), convertible into an aggregate of 711,922 shares of the Company's common stock, and (ii) warrants to purchase up to an aggregate of 355,960 shares of common stock at an exercise price of $8.22 per share (the "Investor Warrants"). The 2026 Private Placement closed on January 22, 2026. In connection with the 2026 Private Placement, a placement agent warrant to purchase up to 14,238 shares of common stock at an exercise price of $8.22 per share (the "2026 Placement Agent Warrants") was issued to Lake Street. The Investor Warrants and 2026 Placement Agent Warrants were assumed by the Company in connection with the Business Combination.
In connection with the 2026 Private Placement, the investors therein entered into a Registration Rights Agreement, which obligated the Company to file a registration statement for the resale of the Conversion Shares and the shares underlying the Investor Warrants and the 2026 Placement Agent Warrants. The Company filed the registration statement on Form S-3, as amended (File No. 333-297176) with the Securities and Exchange Commission (the "SEC") on June 30, 2026, which registration statement was declared effective by the SEC on July 15, 2026.
Business Combination
Upon the Closing of the Business Combination, (i) Contributor contributed to us all the Contributed Shares, in exchange for the Exchanged Shares; (ii) we entered into the Investor Rights Agreement with Contributor; (iii) we amended and restated our bylaws; and (iv) we adopted the ChronoScale 2026 Omnibus Equity Incentive Plan. As a result of the Business Combination, Cloud became our wholly-owned subsidiary. Following the consummation of the Applied Parent PIPE Investment (as defined below) and the Closing, Applied Parent and Contributor beneficially owned approximately 97% of our outstanding common stock (resulting in Applied Parent obtaining a controlling interest in the Company) and legacy Ekso shareholders beneficially owned approximately 3% of our outstanding common stock.
Applied Parent PIPE Investment
In connection with, and as a condition to the Closing of the Business Combination, on May 1, 2026, we entered into that certain securities purchase agreement (the "Applied Parent SPA") with Applied Parent (the "Applied Parent PIPE Investment"), pursuant to which we issued to Applied Parent 1,311,407 shares of our common stock (the "Private Placement Shares"). The Private Placement Shares were sold at an offering price of $12.01 per share, the closing price of our common stock on April 30, 2026, the date immediately preceding the date of execution of the Applied Parent SPA, for gross proceeds to us of approximately $15.75 million. The closing of the transaction pursuant to the Applied Parent SPA took place on May 5, 2026, immediately prior to the Closing.
Armistice Warrant Exercises
On May 11, 2026, we issued a total of 700,000 shares of common stock upon the exercise of 700,000 common stock warrants held by Armistice Capital, LLC, with an exercise price of $6.36 per common stock warrant, resulting in net proceeds to us of approximately $4.5 million.
Series B Preferred Stock Conversions
On May 13, 2026, we issued a total of 355,961 shares of our common stock upon the conversion of 2,926 shares of Series B Preferred Stock held by one of the holders.
Debt Financings
B. Riley Promissory Note
On May 5, 2026, in connection with the Business Combination, ChronoScale Holdings Corporation assumed a Secured Promissory Note and Security Agreement (the "B. Riley Promissory Note") by and between Legacy Ekso and B. Riley Commercial Capital, LLC ("B. Riley") as lender. The B. Riley Promissory Note provides for a secured term loan in an aggregate principal amount of up to $2.0 million. The B. Riley Promissory Note was measured at its estimated fair value as of the Business Combination acquisition date. The loan matures on the earlier of the receipt of at least $2.4 million in net proceeds from the sale of the equity interests from new equity investors (a "Qualified Financing"), or September 14, 2026 (the "Maturity Date").
Borrowings under the B. Riley Promissory Note bear interest at the rate of 10% per annum, which shall be payable in full on the Maturity Date. On the Maturity Date, we shall pay to B. Riley an exit fee in the amount of 10% of the original principal amount of the loan, which shall in the aggregate be $0.2 million (the "Exit Fee"). We may prepay the obligations under the B. Riley Promissory Note at any time in whole or in part. In connection with such prepayment, we must pay all accrued but unpaid interest on such portion of the principal prepaid, all interest that would have accrued through the Maturity Date on such principal amount prepaid and the portion of the Exit Fee applicable to such principal amount prepaid. B. Riley may elect to convert the obligations under the B. Riley Promissory Note, including the principal, interest, and Exit Fee, into equity securities in connection with a Qualified Financing at the purchase price per share paid by the lead investor thereunder.
In connection with the Closing, we obtained a written consent from B. Riley waiving any notice, consent, approval, acceleration, default-rate, penalty and other remedies under the B. Riley Promissory Note arising from the Business Combination and any related cross-defaults.
As of the date of this report, the aggregate principal amount outstanding under the B. Riley Promissory Note is $2.0 million.
Parker Hannifin Promissory Note
On May 5, 2026, in connection with the Business Combination, ChronoScale Holdings Corporation assumed an unsecured, subordinated promissory note (the "Parker Hannifin Promissory Note") by and between Legacy Ekso and Parker Hannifin Corporation ("Parker"). The Parker Hannifin Promissory Note was measured at its estimated fair value as of the Business Combination acquisition date. The Parker Hannifin Promissory Note, which is subordinate to the B. Riley Promissory Note, bears no interest with principal payable in sixteen equal installments due on the last day of each quarter, which commenced on December 31, 2023 and matures on September 30, 2027.
As of the date of this report, the aggregate principal amount outstanding under the Parker Hannifin Note is $1.6 million.
Recent Developments
Cloud SAFE Payoff
During the fiscal year ended May 31, 2025, Cloud entered into two Simple Agreements for Future Equity ("SAFEs") with an investor for equity in Cloud, which was, at that time, Applied Parent's wholly-owned subsidiary, for aggregate proceeds of $12.0 million. This debt liability of the SAFEs was subsequently transferred from us to Applied Parent during the year ended May 31, 2026.
Applied Parent Grid Note
On June 26, 2026, we, as the borrower, entered into a Demand Grid Promissory Note (the "Grid Note") with Applied Parent, as the lender. The aggregate principal amount available under the Grid Note is up to $100.0 million, reduced by the value of any of our liabilities guaranteed by the lender and a reserve amount determined by the lender. Advances on the Grid Note bear interest at the short-term Applicable Federal Rate, compounded semi-annually, and the Grid Note is payable on demand. On July 1, 2026, the Company drew $7.0 million under the Grid Note. Applied Parent has agreed not to exercise its demand right under the Grid Note prior to August 20, 2027.
Holding Company Transaction
To implement the Holding Company Transaction, on July 1, 2026, the parties entered into the Merger Agreement. As part of the Holding Company Transaction and immediately prior to the Merger (as defined below), ChronoScale contributed all of the outstanding equity interests of its wholly-owned subsidiary, Cloud, to ChronoScale Holdings pursuant to a contribution agreement, resulting in Cloud becoming a direct, wholly-owned subsidiary of ChronoScale Holdings. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into ChronoScale, with ChronoScale continuing as the surviving corporation and a wholly-owned direct subsidiary of ChronoScale Holdings. Immediately after the effective time of the Merger, (i) ChronoScale converted from a Nevada corporation to a Nevada limited liability company and changed its name to "ChronoScale Intermediate LLC" and (ii) Cloud changed its name to "ChronoScale Corporation." Following the Holding Company Transaction, ChronoScale Holdings became the successor issuer to ChronoScale.
Following the Holding Company Transaction, the Cloud Business operates through ChronoScale Corporation, and the Legacy Ekso Business operates through Legacy Ekso, which is a direct wholly-owned subsidiary of ChronoScale Intermediate LLC.
Warrant Exercises
On July 21, 2026, we issued a total of 66,666 shares of our common stock upon the exercise of 66,666 common stock warrants held by an investor, with an exercise price of $15.00 per common stock warrant, resulting in net proceeds of approximately $1.0 million.
Series B Preferred Stock Conversions
On July 21, 2026, we issued a total of 355,961 shares of our common stock upon the conversion of 2,926 shares of Series B Preferred Stock held by one of the holders.
Change of Corporate Headquarters
On August 6, 2026, we changed our principal place of business to 2440 Sand Hill Road, Suite 400, Menlo Park, California 94025.
Microsoft Strategic Partnership
On August 6, 2026, we entered into a two-year strategic partnership with Microsoft to support the planned deployment of approximately 50 megawatts of AI compute capacity. The deployment is expected to utilize NVIDIA GB300 systems and advanced liquid-cooling infrastructure designed to support high-density, next-generation artificial intelligence and accelerated compute workloads. Upon projected completion in the first calendar quarter of 2027, the deployment is expected to expand our available compute capacity and further strengthen our position as a provider of high-performance digital infrastructure supporting AI and cloud computing applications. The deployment is subject to our ability to obtain financing on favorable terms and other customary development, construction, and operational conditions and milestones, for which there could be penalties and other credits available to our counterparty if we do not meet or perform. No assurance can be given about our ability to meet or perform these conditions and milestones, or to obtain financing on favorable terms or at all.
Results of Operations
Results of Operations for the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025
The following table sets forth key components of the results of operations (in thousands) during the fiscal years ended May 31, 2026 and May 31, 2025.
| Fiscal Year Ended | |||||||||||||||||||||||
| May 31, 2026 | May 31, 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenue | $ | 71,604 | $ | 84,376 | $ | (12,772) | (15) | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenues | 88,691 | 115,308 | (26,617) | (23) | % | ||||||||||||||||||
| Selling, general and administrative | 19,812 | 24,813 | (5,001) | (20) | % | ||||||||||||||||||
| Loss (gain) on sale of assets | 598 | (414) | 1,012 | (244) | % | ||||||||||||||||||
| Total costs and expenses | 109,101 | 139,707 | (30,606) | (22) | % | ||||||||||||||||||
| Operating loss: | (37,497) | (55,331) | 17,834 | (32) | % | ||||||||||||||||||
| Interest expense, net | 9,583 | 17,399 | (7,816) | (45) | % | ||||||||||||||||||
| Loss on change in fair value of warrants | 2,212 | - | 2,212 | * | |||||||||||||||||||
| Other expense, net | 8 | - | 8 | * | |||||||||||||||||||
| Net loss before income tax expense | (49,300) | (72,730) | 23,430 | (33) | % | ||||||||||||||||||
| Income tax expense | - | - | - | - | % | ||||||||||||||||||
| Net loss from continuing operations | (49,300) | (72,730) | 23,430 | (32) | % | ||||||||||||||||||
| Net loss from discontinued operations | (1,020) | - | (1,020) | * | |||||||||||||||||||
| Net loss | $ | (50,320) | $ | (72,730) | 22,410 | (31) | % | ||||||||||||||||
(*) Not meaningful
Commentary on Results of Operations for the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025
Revenue
Revenue decreased $12.8 million, or 15%, from $84.4 million for the fiscal year ended May 31, 2025 to $71.6 million for the fiscal year ended May 31, 2026. This decrease was primarily due to the loss of a customer in December 2024 during the fiscal year ended May 31, 2025.
Cost of revenues
Cost of revenues decreased by $26.6 million, or 23%, from $115.3 million for the fiscal year ended May 31, 2025 to $88.7 million for the fiscal year ended May 31, 2026. The decrease was primarily due to the following changes:
•approximately $19.7 million decrease in depreciation and amortization expense primarily due to a decrease in amortization of finance lease right-of-use assets due to the renegotiations of certain of our leases during fiscal year 2026;
•approximately $6.4 million decrease in lease and lease related expenses due to the renegotiations of certain of our leases; and
•approximately $1.8 million decrease in personnel expenses for employee costs directly attributable to generating revenue;
These decreases were partially offset by an approximately $1.3 million increase in energy costs and other expenses directly attributable to generating revenue.
Selling, general and administrative expense
Selling, general and administrative expense decreased by approximately $5.0 million, or 20%, from $24.8 million for the fiscal year ended May 31, 2025, to $19.8 million for the fiscal year ended May 31, 2026. The decrease was primarily due to the following changes:
•approximately $5.3 million decrease in lease and lease related expenses due to the renegotiations of certain of our leases;
•approximately $0.7 million decrease in depreciation and amortization due to a decrease in amortization of finance lease right-of-use assets due to the renegotiations of certain of our leases during fiscal year 2026; and
•approximately $8.7 million decrease in other selling, general, and administrative expenses primarily due to bad debt expense in the prior fiscal year ended May 31, 2025 related to the specific identification of an uncollectible balance from a single counterparty. There is no comparable amount for the fiscal year ended May 31, 2026.
These decreases were also partially offset by an approximately $6.2 million increase in professional services expenses related to legal services primarily provided on discrete transactions and projects, and an approximately $2.8 million increase in stock-based compensation due to a modification of awards that occurred during the current year period and the reversal of expense associated with award forfeitures and cancellations that occurred during the prior year period. These decreases were further offset by an approximately $0.7 million increase in personnel expenses that were not directly attributable to generating revenue.
Loss (gain) on sale of assets
Loss on sale of assets was $0.6 million for the year ended May 31, 2026, driven by the write down of assets to their fair value upon disposal. Gain on sale of assets was $0.4 million for the year ended May 31, 2025, driven by a refund of charges related to a lease termination with a counterparty.
Interest expense, net
Interest expense, net decreased $7.8 million, or 45%, from $17.4 million for the fiscal year ended May 31, 2025 to $9.6 million for the fiscal year ended May 31, 2026. The decrease was primarily driven by a decrease in finance lease interest associated with the renegotiation of the majority of our finance leases during the period.
Loss on change in fair value of warrants
Loss on change in fair value of warrants was $2.2 million for the year ended May 31, 2026, and was associated with the revaluation of the Investor Warrants and 2026 Placement Agent Warrants issued in 2026, which were assumed by ChronoScale Holdings after the consummation of the Holding Company Transaction. There was no comparable amount for the year ended May 31, 2025 due to the Closing taking place on May 5, 2026. Gains and losses on revaluation of warrants are primarily driven by changes in our stock price, as well as stock price volatility, time to maturity, and the risk-free interest rate.
Net loss from discontinued operations
Net loss from discontinued operations was $1.0 million for the year ended May 31, 2026, and represents the statement of operations activity related to the Legacy Ekso Business from May 5, 2026 to May 31, 2026. There was no comparable amount for the year ended May 31, 2025. If the closing of the sale is materially delayed or if circumstances regarding the plan of disposal change, we may incur ongoing operating losses associated with maintaining these operations.
Funding Requirements
We have experienced net losses through the period ended May 31, 2026. Our transition to profitability is dependent on the successful operation of our business. Additionally, any material delay or change in the disposal plan of the Legacy Ekso business could require us to allocate additional working capital to fund the discontinued business.
We expect to have sufficient liquidity, including cash on hand, payments from customers, access to debt financing, and access to public capital markets, to support ongoing operations and meet our working capital needs for at least the next 12 months and all of our known requirements and plans for cash. However, we may be unable to raise additional funds or enter into such arrangements when needed on favorable terms, or at all, which would have a negative impact on our
financial condition and could force us to delay, limit, reduce or terminate our ongoing operations and development plans. We have based our estimates as to how long we expect we will be able to fund our operations on assumptions that may prove to be wrong, and we could use our available capital resources sooner than we currently expect, in which case, we would be required to obtain additional financing sooner than currently projected, which may not be available to us on acceptable terms, or at all. Our failure to raise capital as and when needed would have a negative impact on our financial condition and our ability to pursue our business strategy.
We expect that our general and administrative expenses and our operating expenditures will continue to increase as we continue to expand our operations.
Sources of Liquidity
Our primary capital requirements are to fund our ongoing operations and working capital requirements. As of May 31, 2026, we had cash of $9.7 million and a working capital deficit of $42.6 million. Historically, we have incurred losses and have relied on Applied Parent to provide financing for our operations. We have primarily generated cash in the last 12 months from issuances of common stock, warrants, preferred stock, convertible promissory notes and the receipt of contractual deposits and revenue payments from our customer. In connection with the Business Combination, we raised $15.8 million in equity funding (gross, before deducting Business Combination and other related expenses). Additionally, we have the ability to modify the timing of our capital spending and extend our payment terms with vendors, if necessary.
Subsequent to the fiscal year ended May 31, 2026, we entered into the Grid Note, with Applied Parent, for the aggregate principal amount up to $100.0 million, reduced by the value of any of our liabilities guaranteed by the lender and a reserve amount determined by the lender. On July 1, 2026, we drew $7.0 million under the Grid Note, leaving $93.0 million of undrawn capacity available to us. Applied Parent has agreed not to exercise its demand right under the Grid Note prior to August 20, 2027.
Management prepared a cash flow forecast covering the period through August 31, 2027, which includes cash flows from operations and known and reasonably knowable contractual obligations, including debt principal and interest payments and operating and finance lease payments. Based on this forecast, our available liquidity, consisting of cash on hand and available capacity under the Grid Note, is expected to exceed forecasted cash commitments by approximately $61.0 million through this look-forward period.
Based on this analysis, we believe that we have substantial liquidity to meet our obligations as they become due for at least one year after the issuance of these consolidated financial statements. Accordingly, Management has concluded that substantial doubt about our ability to continue as a going concern is not raised.
Recent Financing Activities
See "Note 8 - Debt" in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for more information on our convertible promissory notes and other debt instruments.
On May 5, 2026, immediately prior to the Closing, we closed the Applied Parent PIPE Investment, for gross proceeds of approximately $15.8 million.
On May 11, 2026, we issued a total of 700,000 shares of common stock upon the exercise of 700,000 common stock warrants held by Armistice Capital, LLC, with an exercise price of $6.36 per common stock warrant, resulting in net proceeds of approximately $4.5 million.
Subsequent to the fiscal year ended May 31, 2026, we also entered into the Grid Note, as described above, of which we drew $7.0 million on July 1, 2026. Applied Parent has agreed not to exercise its demand right under the Grid Note prior to August 20, 2027.
On July 21, 2026, we issued a total of 66,666 shares of our common stock upon the exercise of 66,666 common stock warrants held by an investor, with an exercise price of $15.00 per common stock warrant, resulting in net proceeds of approximately $1.0 million.
Material Contractual Obligations
In the ordinary course of business, we enter into contractual arrangements that require future cash payments. The following table sets forth information regarding our anticipated future cash payments under our contractual obligations as of May 31, 2026 (in thousands):
| Payments Due by Period | |||||||||||||||||||||||
| Total | FY 2027 | FY 2028 | FY 2029 | FY 2030 | FY 2031 | Thereafter | |||||||||||||||||
|
Debt obligations(1)
|
$ | 4,275 | 3,650 | 625 | - | - | - | - | |||||||||||||||
|
Operating lease obligations(2)
|
$ | 65,109 | 21,798 | 22,623 | 17,152 | 3,536 | - | - | |||||||||||||||
|
Financing lease obligations(3)
|
$ | 62,022 | 51,055 | 10,967 | - | - | - | - | |||||||||||||||
(1)Debt obligations presented in the table reflect the B. Riley Promissory Note and Parker Hannifin Promissory Note agreements assumed in the Business Combination, which are described in Note 8 to the consolidated financial statements for further discussion.
(2)Operating lease obligations include future minimum payments for our operating leases.
(3)Financing lease obligations include future minimum payments for our finance leases.
Summary of Cash Flows
The following table provides information about our net cash flow for the fiscal years ended May 31, 2026 and May 31, 2025, respectively.
| Fiscal Year Ended | |||||||||||
| $ in thousands | May 31, 2026 | May 31, 2025 | |||||||||
| Net cash provided by (used in) operating activities | $ | 39,067 | $ | (7,222) | |||||||
| Net cash used in investing activities | (25,169) | (1,376) | |||||||||
| Net cash (used in) provided by financing activities | (6,632) | 10,996 | |||||||||
| Net increase in cash | 7,266 | 2,398 | |||||||||
|
Cash at beginning of period
|
2,398 | - | |||||||||
| Cash at end of period | $ | 9,664 | $ | 2,398 | |||||||
Commentary on the cash flows during the fiscal years ended May 31, 2026 and May 31, 2025
Operating Activities
The net cash provided by (used in) operating activities changed by $46.3 million, from $7.2 million used in operating activities for the fiscal year ended May 31, 2025 to $39.1 million provided by operating activities for the fiscal year ended May 31, 2026. Activities that positively impacted operating cash flows during the fiscal year ended May 31, 2026 included changes in operating assets and liabilities as well as a decrease in net loss between comparative periods. These positive impacts were partially offset by a decrease in depreciation and amortization and lease expense due to renegotiations of certain agreements during the fiscal year ended May 31, 2026.
Investing Activities
The net cash used in investing activities increased by $23.8 million, from $1.4 million for the fiscal year ended May 31, 2025 to $25.2 million for the fiscal year ended May 31, 2026. This change was primarily due to an increase in investments in property and equipment during the fiscal year ended May 31, 2026 compared to May 31, 2025.
Financing Activities
The net cash (used in) provided by financing activities changed by $17.6 million, from $11.0 million provided by financing activities for the fiscal year ended May 31, 2025 to $6.6 million used in financing activities for the fiscal year ended May 31, 2026. This change was primarily driven by an approximately $38.3 million decrease in net transactions with Applied Parent as well as the absence of $12.0 million of proceeds from the issuance of SAFE agreements that occurred during the fiscal year ended May 31, 2025. These decreases were partially offset by $15.0 million of net proceeds from the
APLD Parent PIPE Investment, $4.5 million of proceeds from the exercise of warrants, the principal transfer of $12.0 million of the SAFE agreements to Applied Parent, and a decrease of $25.2 million in finance lease repayments during the fiscal year ended May 31, 2026 compared to the fiscal year ended May 31, 2025.
Recent Accounting Pronouncements
For a discussion of recently issued financial accounting standards, refer to "Note 2 - Significant Accounting Policies".
Critical Accounting Estimates and Significant Judgments
Our consolidated financial statements are prepared in accordance with generally accepted accounting principles in the U.S. ("U.S. GAAP"). In connection with the preparation of our consolidated financial statements, we are required to make assumptions and estimates about future events and apply judgments that affect the reported amounts of assets, liabilities, revenue, expenses and the related disclosures. We base our assumptions, estimates and judgments on historical experience, current trends and other factors that management believes to be relevant at the time our consolidated financial statements are prepared. On a regular basis, management reviews the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with U.S. GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.
While our significant accounting policies are described in more detail in Note 2 to our consolidated financial statements, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
•the fair value of the intangible and tangible assets acquired and liabilities assumed in our business combination;
•the unobservable inputs and assumptions used by management in estimating the fair value of our convertible preferred stock, warrants, and employee and non-employee director equity awards, which impacts our financial condition;
•accounting for leases; and
•useful lives assigned to long-lived assets.
Assets Acquired and Liabilities Assumed in Business Combinations
We allocate the fair value of the purchase price of an acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, the amount and timing of projected future cash flows based on expected future growth rates and margins, discount rate used to determine the present value of these cash flows, future changes in technology and royalty for similar brand licenses, and asset lives. Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable, and as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities would ordinarily affect our amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite-lived intangible assets, including goodwill, are not amortized. When applicable, during the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are included in the consolidated statement of operations. Refer to Note 3. Business Combinations in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion regarding the valuation of the Business Combination.
Convertible Preferred Stock and Warrant Liabilities
We use the Black-Scholes option-pricing model to value our warrant liabilities at each reporting period, which requires the input of highly subjective assumptions, most notably the estimated volatility of our common stock over the expected term. We use our historical common stock volatility to estimate expected volatility over the warrant terms. Management also made uncertain estimates regarding the likelihood and timing of certain future events for application of the Binomial Lattice model for the valuation of its convertible Series B Preferred Stock and certain warrants. Changes in these assumptions could have potential material impacts on the estimated fair value of warrant liabilities. Refer to Note 11.
Warrants and Note 13. Temporary Equity in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion regarding the valuation of warrants and Series B Preferred Stock, respectively.
Accounting for Leases
In accordance with ASC 842, Leases, at the inception of an arrangement, we determine whether the arrangement is or contains a lease based on the unique facts and circumstances present, generally based on whether we have the right to obtain substantially all of the economic benefits from the use of an identified asset and whether we have the right to direct the use of an identified asset in exchange for consideration, which relates to an asset which we do not own. Operating lease liabilities and their corresponding right-of-use assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable. As such, we utilize our incremental borrowing rate to determine the present value of the future lease payments, which is a hypothetical rate based on our understanding of what our credit rating would be to borrow and resulting interest we would pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Certain adjustments to the right-of-use asset may be required for items, such as initial direct costs paid or incentives received. Lease payments may be fixed or variable; however, only fixed payments are included in our lease liability. Variable lease payments may include costs such as common area maintenance, utilities, or other costs. Variable lease payments are recognized in operating expenses in the period in which the obligation for those payments is incurred. Refer to Note 15. Leases in the notes to the consolidated financial statements included in this Annual Report on Form 10-K for further discussion.
Useful Lives Assigned to Long-Lived Assets
The useful life of an asset represents the period during which the asset is expected to contribute directly or indirectly to future cash flows. We estimate the useful lives of the Company's long-lived assets based on various factors, including the expected period of economic benefit of the asset in use, our intended use of the asset, economic factors such asset obsolescence and technological advances, any limitations imposed by legal, regulatory, or contractual requirements, and industry norms. These assumptions affect the timing and amount of depreciation expense, which could have a material adverse effect on the results of our operations.
Allocations From Applied Parent
The consolidated financial statements include expense allocations prior to the Business Combination for certain expenses provided by Applied Parent on a centralized basis, including, but not limited to, payroll, stock-based compensation and income taxes, and other expenses that are either specifically identifiable or clearly applicable to the Cloud Business. These expenses have been allocated to us 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 that are considered to be a reasonable reflection of the utilization of services provided or the benefit received by the Cloud Business 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 we operated as an independent, stand-alone public entity.
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