ChronoScale Holdings Corporation Quarterly report [Sections 13 or 15(d)]

Quarterly report [Sections 13 or 15(d)]

Discontinued Operations

Discontinued Operations

3 Months Ended

Aug. 31, 2026

Discontinued Operations and Disposal Groups [Abstract]

Following the Business Combination and in connection therewith, the Company classified the Legacy Ekso Business as held for sale. Because the Legacy Ekso Business met the criteria to be classified as "held for sale," the business qualifies for discontinued operations presentation in accordance with ASC 205-20, Discontinued Operations. As such, the Company reported the Legacy Ekso Business as discontinued operations for the three months ended August 31, 2026. The sale of the Legacy Ekso Business was completed on September 30, 2026. Refer to Note 19. Subsequent Events for additional information regarding the sale of the Legacy Ekso Business.

The financial results of the Legacy Ekso Business are presented as net loss from discontinued operations on the condensed consolidated statements of operations. The results of operations included within discontinued operations represent the three months ended August 31, 2026 and include directly attributable revenues and expenses. Corporate overhead costs and other general administrative expenses that are not directly attributable to the operations of the discontinued component have not been allocated to discontinued operations. The following table presents the major components of the financial results of the Legacy Ekso Business for the period presented (in thousands):


	Three Months Ended
	August 31, 2026
Revenue	$	2,597
Costs and expenses:
Cost of revenues	1,289
Selling, general and administrative	17,327
Total costs and expenses	18,616
Operating loss from discontinued operations	(16,019)
Interest income	4
Other expense, net	(39)
Net loss from discontinued operations before income tax expense	(16,054)
Income tax expense	—
Net loss from discontinued operations	$	(16,054)

As of August 31, 2026, the assets and liabilities of the Legacy Ekso Business are classified as current in the Company's condensed consolidated balance sheets, as it is probable that the sale will occur within one year. The following table represents the aggregated carrying amounts of classes of assets and liabilities that are classified as held for sale on the condensed consolidated balance sheets for the periods presented (in thousands):


	August 31, 2026		May 31, 2026
ASSETS
Current assets:
Cash	$	2	$	2
Accounts receivable	3,090		3,914
Prepaid expenses and other current assets	5,659		5,604
Property and equipment, net	1,069		1,084
Intangible assets, net	10,950		10,950
Operating lease right of use asset, net	284		284
Other assets	425		368
Total current assets held for sale	21,479		$	22,206
Less: Write-down loss and valuation allowance	(16,491)		(2,365)
Assets held for sale, net	4,988		19,841

LIABILITIES
Current liabilities:
Accounts payable	360		263
Accrued liabilities	1,858		1,807
Current portion of operating lease liability	191		290
Deferred revenue	2,493		2,563
Long-term portion of operating lease liability	86		105
Total current liabilities held for sale	$	4,988	$	5,028
Net assets held for sale	$	—	$	14,813

Loss on Impairment of Net Assets Held for Sale

In connection with the classification of the Legacy Ekso Business as held for sale and discontinued operations, the Company evaluated the Legacy Ekso disposal group for impairment as of August 31, 2026, in accordance with ASC 360-10, Impairment and Disposal of Long-Lived Assets. The disposal group was measured at the lower of its carrying amount and fair value less cost to sell.

During the first quarter of fiscal year 2027, the Company continued to market the Legacy Ekso Business and advance negotiations with prospective buyers. The sale of the Legacy Ekso Business was structured as two related transactions, consisting of a stock purchase agreement and an asset purchase agreement. The disposal of the Legacy Ekso Business was completed on September 30, 2026. The Company determined that the two transactions should be evaluated as a single disposal group because they are economically linked and represent a coordinated disposal of the Legacy Ekso Business.

As of August 31, 2026, the disposal group consisted of approximately $21.5 million of assets and $5.0 million of liabilities, resulting in net assets of $16.5 million. Based on the combined economics of the two transactions, the Company estimated the fair value of the disposal group to be $1.5 million. After deducting $2.6 million of estimated incremental costs to sell the Legacy Ekso Business, the Company determined that the fair value less costs to sell resulted in a negative value of $1.1 million. The fair value less costs to sell used for measuring the disposal group under ASC 360-10 is floored at $0, and as a

result, the remaining $1.1 million of estimated costs to sell Legacy Ekso is not included in this initial impairment calculation and will be recognized as period expenses when incurred. As the disposal group's carrying amount of $16.5 million exceeded its estimated fair value less costs to sell, the Company recognized an impairment loss of $14.1 million as of August 31, 2026. The impairment loss was recognized through a single disposal-group valuation allowance and was not allocated to the individual classes of assets held for sale. The impairment loss is included in net loss from discontinued operations in the condensed consolidated statement of operations for the three months ended August 31, 2026. The related valuation allowance is presented as valuation allowance for impairment loss on the condensed consolidated balance sheets as of August 31, 2026.

The Company determined that no impairment of goodwill existed for the three months ended August 31, 2026. 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.

The following table summarizes the net cash flows from discontinued operations of the Legacy Ekso Business for the three months ended August 31, 2026, and 2025 (in thousands):


	Three Months Ended
	August 31, 2026
Net cash used in operating activities - discontinued operations	$	(1,257)
Net cash used in investing activities - discontinued operations	$	15