Quarterly report [Sections 13 or 15(d)]

Business Combinations

v3.26.3
Business Combinations
 3 Months Ended
Aug. 31, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
Ekso Bionics Holdings, Inc.
On May 5, 2026, the Company completed the Business Combination contemplated by the Contribution and Exchange Agreement. At the Closing, APLD ChronoScale HoldCo LLC, a wholly-owned subsidiary of APLD Intermediate HoldCo LLC (the “Contributor”), transferred to the Company all of its right, title and interest in 1200 shares of common stock of Cloud, representing 100% of the issued and outstanding equity interests of Applied Digital Cloud Corporation, in exchange for 138,216,820 newly issued shares of common stock of the Company. As a result of the Business Combination, Cloud became a direct, wholly-owned subsidiary of the Company. Following the consummation of the Applied Parent PIPE Investment (as defined below) and the closing of the Business Combination, Applied Parent and Contributor collectively beneficially owned approximately 97% of the outstanding common stock of the Company and the legacy Ekso shareholders owned approximately 3% of the Company’s outstanding common stock. Based on the relative voting rights and ownership interests following the Business Combination, Cloud was determined to be the accounting acquirer and the transaction was accounted for as a reverse acquisition.
May 2026 Applied Parent PIPE Investment
On May 1, 2026, in connection with, and as a condition to the Business Combination Closing, the Company entered into a securities purchase agreement (the “Securities Purchase Agreement”) with Applied Parent (the “Applied Parent PIPE Investment”), pursuant to which the Company agreed to sell and issue to Applied Parent 1,311,407 shares of Common Stock (the “Private Placement Shares”). The Private Placement Shares were sold in the Applied Parent PIPE Investment at an offering price of $12.01 per share, the closing price of the Common Stock on April 30, 2026, the date immediately preceding the date of execution of the Securities Purchase Agreement, for gross proceeds of approximately $15.8 million.
The closing of the Applied Parent PIPE Investment took place on May 5, 2026, immediately prior to the Business Combination Closing.
Lake Street Capital Markets, LLC (the “Placement Agent”) served as the Company’s exclusive placement agent in connection with the Applied Parent PIPE Investment. As compensation for the services provided by the Placement Agent in the Applied Parent PIPE Investment, the Company paid the Placement Agent a cash fee equal to 5.0% of the aggregate gross proceeds raised in the Applied Parent PIPE Investment, or approximately $0.8 million. The Company received net proceeds of approximately $15.0 million, after deducting placement agent fees and offering expenses paid by the Company. The Company used the net proceeds from the Applied Parent PIPE Investment for working capital and general corporate purposes.
Holding Company Transaction
On July 1, 2026, the Company completed the Holding Company Transaction pursuant to which ChronoScale Holdings Corporation became the successor issuer to ChronoScale and the publicly traded parent company, and Applied Digital Cloud Corporation became a direct wholly-owned subsidiary of ChronoScale Holdings Corporation and was renamed “ChronoScale Corporation.” All references to “Cloud” following the Holding Company Transaction refer to ChronoScale Corporation.
The aggregate purchase consideration in the Business Combination was $57.6 million, which was comprised of the following (in thousands except share amounts):
Purchase Consideration
Common and preferred shares issued (4,277,076 shares)
 $ 56,543 
Assumed restricted stock units (81,723 RSUs)
 1,080 
Total purchase consideration $ 57,623 
The fair value of the common stock, preferred stock, and assumed restricted stock units included in the purchase consideration was estimated based on the Company's $13.22 closing stock price on the Business Combination acquisition date.
In connection with the Business Combination, the Company assumed certain equity awards. The portion of these awards attributable to pre-combination service, valued at $1.1 million, was included in the total purchase price. The remaining compensation expense for awards requiring post-combination service have been, and will be, recognized over the respective awards' remaining requisite service period.
The following table sets forth the calculation and allocation of the purchase price to the identifiable assets acquired and liabilities assumed on the Business Combination acquisition date, after considering any measurement period adjustments (as discussed below) (in thousands):
Preliminary Purchase Purchase Price
Price Allocation Adjustments Allocation
Purchase consideration to be allocated $ 57,623  $ 57,623 
Cash $ 13,492  $ —  $ 13,492 
Goodwill 54,513  (126) 54,387 
Current assets held for sale 20,192  —  20,192 
Total assets acquired $ 88,197  $ (126) $ 88,071 
Current portion of debt (3,346) —  (3,346)
Accrued liabilities (3,397) —  (3,397)
Long-term debt (464) —  (464)
Warrant liabilities (3,242) —  (3,242)
Current liabilities held for sale (5,125) 126  (4,999)
Total liabilities assumed $ (15,574) $ 126  $ (15,448)
Total net assets acquired attributable to ChronoScale Corporation 72,623  —  72,623 
Less: Net cash acquired through Applied Parent PIPE Investment (as defined above) (15,000) —  (15,000)
Total net assets acquired attributable to ChronoScale Corporation, net of Applied Parent PIPE Investment $ 57,623  $ —  $ 57,623 
The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill, none of which is expected to be deductible for tax purposes. Goodwill is entirely attributable to the expected synergies and economic benefits associated with the access to public markets resulting from the Business Combination transaction, rather than the Legacy Ekso Business which is classified as held for sale and discontinued operations as of August 31, 2026 and May 31, 2026. The purchase price allocation was updated during the first fiscal quarter of 2027 for certain adjustments based on revised estimates of fair value as shown above. As a result, during the three months ended August 31, 2026, the Company recorded a measurement period adjustment to the purchase price allocation, which resulted in a decrease to goodwill and current liabilities held for sale of approximately $0.1 million. As of the date of this Quarterly Report on Form 10-Q, the Company does not expect any additional material adjustments to the above purchase price allocations.
The acquired assets and assumed liabilities were recorded at their estimated fair values, which are subject to change during the measurement period, which is up to one year from the date of acquisition. Since the Business Combination acquisition date, and except for the measurement period adjustment as described above, there were no other measurement period adjustments made to the Company's assets and liabilities held-for-sale (refer to Note 6. Discontinued Operations for additional information regarding the held-for-sale classification). The measurement period adjustment pertaining to the current liabilities held-for-sale is included as a component of accrued liabilities as presented in the table below. Assets and
liabilities held-for-sale were recorded at their estimated fair values less costs to sell, as presented in the following table (in thousands):
Acquisition Date
ASSETS
Current assets:
Accounts receivable, net $ 4,125 
Inventories 4,562 
Prepaid expenses and other current assets 1,150 
Property and equipment, net 1,086 
Intangible assets, net 10,950 
Operating lease right-of-use assets, net 315 
Other assets 369 
Estimated costs to sell (2,365)
Total current assets held for sale $ 20,192 
LIABILITIES
Current liabilities:
Accounts payable $ 281 
Accrued liabilities 1,531 
Operating lease liabilities, current 321 
Deferred revenues, current 1,401 
Deferred revenues, non-current 1,288 
Operating lease liabilities, non-current 114 
Other non-current liabilities 62 
Total current liabilities held for sale $ 4,998 
The fair value of the assumed debt was determined based on a valuation performed by an independent third-party valuation specialist in connection with the acquisition.
The fair value of acquired intangible assets consists of Legacy Ekso's developed technology and trade name. The valuations of the developed technology and trade name were performed by a third-party valuation specialist using the relief-from-royalty method. As of the Business Combination acquisition date, the following table presents the amounts allocated to the intangible assets identified as of the date of acquisition and their estimated useful lives (in thousands):
Fair Value Useful Lives (in years)
Trade names $ 4,650  7
Developed technology 6,300  7
Total intangible assets acquired $ 10,950 
Refer to Note 6. Discontinued Operations — Loss on Impairment of Net Assets Held for Sale for information regarding the Company's impairment loss of its net assets held for sale for the three months ended August 31, 2026.
The following unaudited pro forma combined financial information presents the combined results of Cloud and Ekso Bionics Holdings, Inc. as if the Business Combination had occurred on June 1, 2025, the beginning of the comparable prior annual reporting period:
Three Months Ended August 31, 2025
Pro forma revenue $ 18,775 
Pro forma net loss $ (14,260)
The unaudited pro forma combined financial information has been derived from the historical financial information of Cloud and Ekso Bionics Holdings, Inc. and reflects pro forma adjustments for the reversal of historical amortization expense related to intangible assets and the recognition of amortization expense related to the acquired intangible assets in connection with the Business Combination.
The unaudited pro forma combined financial information does not necessarily reflect what the combined company’s financial condition or results of operations would have been had the Business Combination and related financing transactions been completed as of June 1, 2025. The unaudited pro forma combined financial information is presented for informational purposes only and may not be indicative of the Company’s future financial condition or results of operations.