The cloud computing and AI infrastructure markets have experienced significant growth and development in recent years, driven by rapid advancements in machine learning, natural language processing and computer vision, as well as increased adoption of artificial intelligence-enabled applications across a broad range of industries. Organizations are increasingly investing in AI technologies to enhance productivity, automate workflows, improve decision-making, and develop new products and services. As AI adoption expands, the demand for highly scalable computing infrastructure capable of supporting AI training, inference, and other compute-intensive workloads has increased substantially. Energy availability, cost, and sustainability have become critical considerations in the deployment and operation of digital infrastructure. Third-party industry sources project substantial continued growth in AI infrastructure spending, with UBS estimating global AI capital expenditures of approximately $423 billion in 2025, rising to approximately $571 billion in 2026, and approximately $1.3 trillion by 2030, representing a compound annual growth rate of approximately 25% ¹. According to International Data Corporation (IDC), worldwide AI infrastructure spending is projected to reach approximately $487 billion in 2026, representing approximately 53% year-over-year growth, and to exceed $1 trillion by 2029, reflecting a five-year compound annual growth rate of approximately 31% ². Within this market, demand is increasingly driven by AI inference workloads, and according to Gartner, end-user spending on AI-optimized Infrastructure-as-a-Service is projected to total approximately $37.5 billion in 2026, of which approximately 55% is expected to support inference workloads, increasing to more than 65% by 2029 ³.

The AI cloud market is highly competitive and continues to evolve rapidly. Primary competitors are cloud service providers, such as CoreWeave, Crusoe Energy, Lambda Labs, and Nebius Group. Many competitors offer more locations in more markets worldwide and have well-established international operations, and many may have significant advantages including greater name recognition, longer operating histories, higher operating margins, pre-existing relationships with current or potential customers, the capacity to provide the same or additional products and services at a lower cost, more significant marketing budgets and other financial and operational resources, more robust internal controls and systems, and better established, more extensive scale and lower cost suppliers and supplier relationships. The Cloud Business was among the first platforms to deploy NVIDIA's H100 GPUs, demonstrating an ability to source, integrate, and operate next-generation GPU infrastructure ahead of broader market adoption.

The Cloud Business provides graphics processing unit computing solutions that enable customers to execute critical workloads related to artificial intelligence, machine learning, rendering, and other High Performance Computing tasks at scale in a capacity-constrained market. Customers pay a fixed rate in exchange for an energized space supported by Cloud-provided equipment. As of May 31, 2026, the Cloud Business had one customer, Together AI, which utilizes GPU capacity across all three colocation centers pursuant to a master terms of service agreement originally entered into in December 2023. The Together AI Agreement was most recently renewed effective March 1, 2026 for an initial term of twelve months, after which it automatically renews for successive sixty-day periods unless either party provides prior written notice of termination. Services are priced at a fixed, per-GPU per-hour rate which is billed and paid monthly. For the year ended May 31, 2026, revenue from the Cloud Business accounted for approximately 99.5% of total revenue ⁴. The Cloud Business currently operates in three states: Colorado, Minnesota, and Utah, by renting space at third-party colocation centers and providing company-owned equipment to generate revenue.

The Cloud Business provides graphics processing unit computing solutions that enable customers to execute critical workloads related to artificial intelligence, machine learning, rendering, and other High Performance Computing tasks at scale. As of May 31, 2026, the Cloud Business had deployed a total of 6,144 GPUs ⁵. The growth strategy for the Cloud Business is centered on a four-layer platform that integrates infrastructure, compute, AI platform capabilities, and implementation services. The infrastructure layer, referred to as the NeoCloud Platform, is expected to consist of leased data centers, secured power capacity, and network connectivity. On top of this infrastructure base, the company expects to provide GPU-based computing resources through a GPU-as-a-Service model. The platform layer, referred to as the Token Factory, is expected to provide an inference and workload management system that allows customers to access and manage AI workloads through a centralized gateway, designed to enable customers to consume AI services through a usage-based model. The enterprise AI foundry, referred to as ChronoScale Foundry, is a managed platform that enables organizations to build, run, and govern agentic AI workflows within their own environment, supporting sovereignty, security, and compliance requirements. The services layer is expected to consist of personnel referred to as Outcome Engineers, which will include both technical engineers and domain-specific specialists. The team has experience in deploying and managing large-scale AI infrastructure and enterprise platforms, covering over 250,000 GPUs ⁶, including rapid parallel deployments, bring up of AI compute, AI network fabric, multi-exabyte-level storage platforms, and operating them over several years with greater uptime.

The Legacy Ekso Business designs, develops, and markets exoskeleton and complementary products that augment human strength, endurance, and mobility. The primary end market for the exoskeleton technology has been the healthcare sector, where the technology primarily serves people with physical disabilities or impairments in both physical rehabilitation and mobility. The Legacy Ekso Business has generated the majority of its sales from enterprise health products, which focus on neurological rehabilitation solutions in clinical settings. The Legacy Ekso Business includes a portfolio of robotic exoskeleton products and related services focused on rehabilitation, personal mobility, and industrial applications. On May 29, 2026, the Board determined that the Legacy Ekso Business met the criteria to be classified as held for sale on the consolidated balance sheets as the Board committed to a plan to divest Legacy Ekso and the Legacy Ekso Business to focus operations solely on the Cloud Business. The company expects to complete the divestiture of the Legacy Ekso Business during fiscal year 2027. The company recognized $0.4 million in revenue from the Legacy Ekso Business during the fiscal year ended May 31, 2026 within discontinued operations ⁷.

On May 5, 2026, the company consummated the previously announced business combination transaction contemplated by the Contribution and Exchange Agreement, dated February 15, 2026, by and among Ekso Bionics Holdings, Inc., APLD Intermediate HoldCo LLC, APLD ChronoScale HoldCo LLC, each a wholly-owned direct or indirect subsidiary of Applied Digital Corporation, and Cloud. Upon the Closing, Ekso changed its name to ChronoScale Corporation and Cloud became a wholly-owned subsidiary of Ekso. In connection with the Business Combination and immediately prior to the Closing, Applied Parent consummated the Applied Parent PIPE Investment, pursuant to which the company issued to Applied Parent 1,311,407 shares of common stock at an offering price of $12.01 per share for gross proceeds of approximately $15.75 million ⁸. Following the consummation of the Applied Parent PIPE Investment and the Closing, Applied Parent and Contributor beneficially owned approximately 97% of the outstanding common stock ⁹ and legacy Ekso shareholders owned approximately 3% of the outstanding common stock ¹⁰. On July 1, 2026, ChronoScale Corporation completed a holding company formation transaction pursuant to an Agreement and Plan of Merger, resulting in ChronoScale Holdings becoming the public company parent. On August 6, 2026, the company entered into a two-year strategic partnership with Microsoft to support the planned deployment of approximately 50 megawatts of AI compute capacity ¹¹, expected to utilize NVIDIA GB300 systems and advanced liquid-cooling infrastructure, with projected completion in the first calendar quarter of 2027. On May 11, 2026, the company 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 ¹². On May 13, 2026, the company issued a total of 355,961 shares of common stock upon the conversion of 2,926 shares of Series B Preferred Stock ¹³. On June 26, 2026, the company entered into a Demand Grid Promissory Note with Applied Parent for an aggregate principal amount available of up to $100.0 million ¹⁴, and on July 1, 2026, the company drew $7.0 million under the Grid Note ¹⁵.

Consolidated net losses were $50.3 million and $72.7 million for the fiscal years ended May 31, 2026 and May 31, 2025, respectively ¹⁶. 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 ¹⁷. 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 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 ¹⁸. 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 ¹⁹. 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 ²⁰. As of May 31, 2026, the company had cash of $9.7 million and a working capital deficit of $42.6 million ²¹.

The growth strategy for the Cloud Business is centered on a four-layer platform that integrates infrastructure, compute, AI platform capabilities, and implementation services. The infrastructure layer, referred to as the NeoCloud Platform, is expected to consist of leased data centers, secured power capacity, and network connectivity. The company expects to provide GPU-based computing resources through a GPU-as-a-Service model, with customers anticipated to access compute capacity either through cloud-based deployments or through dedicated, on-premises installations delivered as turnkey systems. The platform layer, referred to as the Token Factory, is expected to provide an inference and workload management system designed to enable customers to consume AI services through a usage-based model. The enterprise AI foundry, referred to as ChronoScale Foundry, is a managed platform that enables organizations to build, run, and govern agentic AI workflows within their own environment, and can be deployed on-premises, including through partner platforms. The services layer is expected to consist of personnel referred to as Outcome Engineers, which will include both technical engineers and domain-specific specialists. The company intends to offer available capacity both to its existing customer and to prospective customers with similar high-performance computing requirements, including AI and machine learning developers, model training providers, and enterprises deploying inference workloads, through two consumption models: GPU-as-a-Service and the Token Factory offering. The company believes offering both dedicated infrastructure and managed inference consumption models broadens its addressable customer base, improves utilization of deployed capacity, and may reduce customer concentration over time.

On August 6, 2026, the company entered into a two-year strategic partnership with Microsoft to support the planned deployment of approximately 50 megawatts of AI compute capacity ²². 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 available compute capacity and further strengthen the company's position as a provider of high-performance digital infrastructure supporting AI and cloud computing applications. The deployment is subject to the company's 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 the counterparty if the company does not meet or perform. In August 2026, the company also announced a strategic partnership with Nutanix, Inc. to jointly deliver enterprise-ready AI infrastructure, expected to enable enterprises to extend Nutanix on-premises environments into the company's GPU-as-a-Service capacity, access pre-paid inference through ChronoScale Token Factory, and deploy ChronoScale Foundry for agentic AI workflows within their own environments. The company intends to pursue similar strategic partnerships globally over time to extend the reach of its platform and accelerate enterprise AI adoption worldwide.The company currently rents colocation centers with approximately 14 megawatts in total capacity spread across three colocations, all of which currently serve the existing customer ²³. The company aims to expand the existing colocations with additional GPU deployments as part of its growth strategy, and has plans to add colocation centers with significant additional capacity in late calendar Q4 2026 and Q1 2027. The company is also working with colocation providers to add small compute footprints, offering edge inferencing services to anticipated customers by leveraging in-house software for optimized routing. As of May 31, 2026, the Cloud Business employed approximately 31 full-time employees across various departments, including operations, engineering, sales, administration, finance, and marketing, and Legacy Ekso employed approximately 53 full-time employees and four part-time employees ²⁴. During fiscal year 2026, the company invested significantly in its workforce to retain and attract top-tier employees, expanded its employee base, and promoted individuals internally to critical positions.

The company expects to need to raise substantial additional capital to expand its operations, pursue its growth strategies and respond to competitive pressures or unanticipated working capital requirements. The company expects to raise capital through a combination of equity offerings, debt financings and potentially joint venture agreements. Subsequent to the fiscal year ended May 31, 2026, the company entered into the Grid Note with Applied Parent for the aggregate principal amount up to $100.0 million, reduced by the value of any liabilities guaranteed by the lender and a reserve amount determined by the lender ²⁵. On July 1, 2026, the company drew $7.0 million under the Grid Note, leaving $93.0 million of undrawn capacity available ²⁶. Applied Parent has agreed not to exercise its demand right under the Grid Note prior to August 20, 2027. On July 21, 2026, the company issued a total of 66,666 shares of 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 ²⁷. On July 21, 2026, the company also issued a total of 355,961 shares of common stock upon the conversion of 2,926 shares of Series B Preferred Stock held by one of the holders ²⁸. An aggregate of 22,500,000 shares of common stock is authorized for issuance under the 2026 Omnibus Equity Incentive Plan ²⁹. The company does not expect to declare or pay dividends in the foreseeable future.

The company faces significant customer concentration risk, as during the fiscal year ended May 31, 2026, one customer accounted for all of the Cloud Business' revenue, and revenue from the Cloud Business comprised approximately 99.5% of total revenue ³⁰. The company expects that one or a limited number of customers will continue to account for a high percentage of revenue for the foreseeable future. The company is currently dependent on a limited number of suppliers, relying on Nvidia and planning to rely on AMD for the GPU chips offered to customers. The concentration of suppliers exposes the company to risks including potentially limited availability of and access to the latest components including sophisticated GPU chips, which can be affected by suppliers' capacity and commitments to other customers, lack of control over production costs, delivery, availability, terms, and pricing of components, and the potential for binding price or purchase commitments with suppliers at higher than market rates. The company's suppliers themselves rely on complex networks of third-party suppliers for semiconductor manufacturing, hardware components, and other critical inputs, introducing further risks throughout the supply chain.

The company faces pricing pressures as the industry evolves, and any significant or sustained reductions in pricing may reduce margins and adversely affect the business. The pricing for key offerings continues to mature as the industry develops and competition increases, and the company anticipates that increasing competition may lead to further pressures on pricing and differentiation. Technological developments in generative AI and inference, such as the development of AI models that require less computation power than earlier models, may result in decreased or differing demand for offerings. The company is unable to predict whether additional computing power will continue to be required to develop larger, more powerful AI models or to support inference or other use cases. The company's estimates of market opportunity and forecasts of market growth may prove to be inaccurate, which could result in the business failing to meet its growth targets. The company may be unable to deploy GPU infrastructure on the timelines committed to Microsoft, or at all, and any such delays in deployment or failure to deploy could result in significant financial penalties against the company, contract termination, or loss of some or substantially all of anticipated revenue. Under the terms of the Microsoft Deployment, if the company fails to deliver a tranche of GPU capacity by the applicable required delivery date, it is obligated to credit Microsoft with daily delay penalties, and under certain circumstances, Microsoft could terminate a tranche entirely or the entire agreement, requiring the company to refund the full amount of any upfront payments received.

Management's message emphasizes the strategic transformation following the Business Combination and the decision to divest the Legacy Ekso Business to focus operations solely on the Cloud Business. The holding company structure is described as better reflecting the individual operating businesses, allowing for and accommodating future growth from internal operations and generally providing for greater administrative and operational flexibility. The growth strategy is centered on a four-layer platform integrating infrastructure, compute, AI platform capabilities, and implementation services, with the team's experience in deploying and managing large-scale AI infrastructure covering over 250,000 GPUs cited as a key competitive advantage ³³. The strategic partnership with Microsoft for the planned deployment of approximately 50 megawatts of AI compute capacity utilizing NVIDIA GB300 systems is highlighted as a significant milestone expected to expand available compute capacity and strengthen the company's position ³⁴. Management's forward-looking statements include expectations to complete the divestiture of the Legacy Ekso Business during fiscal year 2027, to add colocation centers with significant additional capacity in late calendar Q4 2026 and Q1 2027, and to pursue strategic partnerships globally over time to extend the reach of the platform and accelerate enterprise AI adoption worldwide.

For the fiscal year ended May 31, 2026, total revenue was $71.6 million ³⁵, compared to $84.4 million for the fiscal year ended May 31, 2025 ³⁶. Net loss from continuing operations was $49.3 million for fiscal 2026 ³⁷, compared to $72.7 million for fiscal 2025 ³⁸. Net loss including discontinued operations was $50.3 million for fiscal 2026 ³⁹, compared to $72.7 million for fiscal 2025 ⁴⁰. The company did not report diluted EPS as it was in a net loss position. Cost of revenues was $88.7 million for fiscal 2026 ⁴¹, compared to $115.3 million for fiscal 2025 ⁴². Selling, general and administrative expense was $19.8 million for fiscal 2026 ⁴³, compared to $24.8 million for fiscal 2025 ⁴⁴. Operating loss was $37.5 million for fiscal 2026 ⁴⁵, compared to $55.3 million for fiscal 2025 ⁴⁶. Interest expense, net was $9.6 million for fiscal 2026 ⁴⁷, compared to $17.4 million for fiscal 2025 ⁴⁸. Loss on change in fair value of warrants was $2.2 million for fiscal 2026 ⁴⁹, with no comparable amount for fiscal 2025. Net cash provided by operating activities was $39.1 million for fiscal 2026 ⁵⁰, compared to net cash used in operating activities of $7.2 million for fiscal 2025 ⁵¹. Net cash used in investing activities was $25.2 million for fiscal 2026 ⁵², compared to $1.4 million for fiscal 2025 ⁵³. Net cash used in financing activities was $6.6 million for fiscal 2026 ⁵⁴, compared to net cash provided by financing activities of $11.0 million for fiscal 2025 ⁵⁵. As of May 31, 2026, cash was $9.7 million ⁵⁶, compared to $2.4 million as of May 31, 2025 ⁵⁷. As of May 31, 2026, the company had a working capital deficit of $42.6 million ⁵⁸. Net loss from discontinued operations was $1.0 million for fiscal 2026 ⁵⁹, representing the statement of operations activity related to the Legacy Ekso Business from May 5, 2026 to May 31, 2026.

The company faces material customer concentration risk, as one customer accounted for all Cloud Business revenue and approximately 99.5% of total revenue for the fiscal year ended May 31, 2026 ³¹, and the company expects one or a limited number of customers to continue to account for a high percentage of revenue. The company is dependent on a limited number of suppliers, currently relying on Nvidia and planning to rely on AMD for GPU chips, exposing the company to supply chain disruptions, delays in delivery, and increased costs. The company expects to need to raise substantial additional capital to expand operations, and such capital raises are expected to cause dilution to stockholders. The company's ability to deploy GPU infrastructure on the timelines committed to Microsoft is subject to its ability to obtain financing on favorable terms, and failure to deliver could result in significant financial penalties, contract termination, or loss of anticipated revenue. The company has a history of net losses, with consolidated net losses of $50.3 million and $72.7 million for the fiscal years ended May 31, 2026 and May 31, 2025, respectively ³², and expects to continue to experience net losses for the foreseeable future.