v3.26.1
Income Taxes
 12 Months Ended
May 31, 2026
Income Tax Disclosure [Abstract]  
Income Taxes Income Taxes
The components of consolidated income before taxes from continuing operations were as follows (in thousands):
May 31, 2026May 31, 2025May 31, 2024
United States$(181,532)$(230,963)$(149,575)
Foreign— — — 
Consolidated income before taxes from continuing operations$(181,532)$(230,963)$(149,575)

Income tax expense from continuing operations for the fiscal years ended May 31, 2026, 2025, and 2024 consisted of the following (in thousands):
May 31, 2026May 31, 2025May 31, 2024
Current expense
Federal $1,419 $— $— 
Foreign
— — — 
State
368 102 96 
Total current expense
1,787 102 96 
Deferred expense (benefit)
Federal
— — — 
Foreign
— — — 
State
— — — 
Total deferred expense— — — 
Total income tax expense$1,787 $102 $96 
Beginning in the fiscal year ending May 31, 2026, the Company adopted ASU 2023-09 prospectively as described in Note 2 - Significant Accounting Policies. A reconciliation of the statutory income tax rate from continuing operations to the Company's effective tax rate pursuant to the disclosure requirements of ASU 2023-09 for the fiscal year ended May 31, 2026 is as follows:
Amount%
U.S. federal statutory income tax rate$(38,122)21.0 %
Tax credits— — %
Non-taxable or non-deductible items
Stock-based compensation(6,593)3.6 %
Excess officer's compensation37,952 (20.8)%
Other2,173 (1.1)%
Cross-border tax laws— — %
Other reconciling items— — %
Changes in tax laws— — %
Changes in valuation allowances6,086 (3.5)%
State and local income taxes, net of federal income tax (1)
291 (0.2)%
Foreign tax effects— — %
Changes in unrecognized tax benefits— — %
Totals$1,787 (1.0)%
(1)The state that contributes to majority of the tax effects in this category is North Dakota.
The following table reconciles the statutory rate to the Company's effective tax rate for the fiscal years ended May 31, 2025 and 2024:
May 31, 2025May 31, 2024
Expected income tax rate at the U.S. statutory rate21.0 %21.0 %
Stock-based compensation(0.9)%2.0 %
State income taxes, net of federal tax benefit— %(0.1)%
Convertible debt instruments(12.1)%(2.1)%
Change in valuation allowance (7.5)%(19.8)%
Other, net(0.5)%(1.1)%
Income tax expense (benefit)— %(0.1)%
Cash paid for income taxes, net of refunds received, by jurisdiction pursuant to disclosure requirements of ASU 2023-09 for the year ending May 31, 2026 is as follows:
May 31, 2026
U.S. Federal $— 
U.S. States
Texas$148 
Massachusetts64 
Tennessee25 
Other4 
Foreign— 
Cash paid for income taxes, net of refunds received$241 
Cash paid for income taxes, net of amounts refunded, for years ending May 31, 2025 and May 31, 2024 were immaterial.
Deferred income taxes reflect the temporary differences between the amounts at which assets and liabilities are recorded for financial reporting purposes and the amounts utilized for tax purposes. The primary components of the temporary
differences that gave rise to the Company's deferred tax assets and liabilities for the fiscal years ended May 31, 2026 and 2025 are as follows (in thousands):
May 31, 2026May 31, 2025
Deferred tax assets
Net operating loss$159,266 $59,963 
Stock-based compensation3,831 2,006 
Capitalized research and development4,728 13,088 
Interest expense19,008 12,759 
Lease liability15,762 17,587 
Investment in partnership23,517 — 
Other202 824 
Deferred tax assets, gross226,314 106,227 
Less: valuation allowance(176,210)(65,856)
Total deferred tax assets, net50,104 40,371 
Deferred tax liabilities
Investments(23,212)— 
Property and equipment(8,436)(18,887)
Right of use assets(18,456)(21,484)
Other— — 
Total deferred tax liability, net(50,104)(40,371)
Net deferred tax asset$— $— 
As of May 31, 2026, the deferred tax assets, deferred tax liabilities and valuation allowance depicted in the table above, include $63.1 million of deferred tax assets, $1.5 million of deferred tax liabilities and $61.6 million of related valuation allowances associated with discontinued operations balance sheet.
The Company had $1.0 billion and $399.6 million of federal and state tax net operating losses at May 31, 2026 and 2025, respectively. At May 31, 2026, $440.7 million is available indefinitely to offset future income. The remaining carryforward amounts expire at varying dates beginning in 2028.
A valuation allowance is provided when it is more likely than not that some portion or the entire net deferred tax asset will not be realized. The Company has recorded an increase in the valuation allowance of $110.4 million as of May 31, 2026. Of the valuation allowance increase, $8.6 million was through current year activity and $101.8 million is equity related from Purchase Accounting. The Company has provided a valuation allowance for the portion of the deferred tax assets that it has determined are not more likely than not to be recognized.
The valuation allowance is primarily attributable to deferred tax assets for net operating losses that management believes are more likely than not to expire prior to being realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income of the appropriate character (i.e., capital or ordinary) during the period in which the temporary differences become deductible. Management considers, among other things, the scheduled reversals of deferred tax liabilities and the history of positive taxable income in evaluating the realizability of the deferred tax assets. Management believes that it is not likely that the results of future operations will generate sufficient taxable income to realize its deferred tax assets. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership, including a sale of the Company or significant changes in ownership due to sales of equity, may have limited, or may limit in the future, the amount of net operating loss carryforwards that could be used annually to offset future taxable income. Any potential limitations would not have a material impact on the financial statements due to the full valuation allowance maintained against the deferred taxes for net operating loss carryforwards.
The following table presents the beginning and ending balance of the Company's unrecognized tax benefits for the year ended May 31, 2026 (in thousands):
Balance, June 1, 2026$— 
Additions based on tax positions in the current year— 
Additions based on tax positions related to prior years (1)
$1,800 
Reductions for tax positions of prior years— 
Settlements with taxing authorities— 
Expiration of statue of limitations— 
Balance, May 31, 2026$1,800 
(1)The Company recognized $1.8 million of unrecognized tax benefits for the year ended May 31, 2026, all of which relate to discontinued operations from the Ekso business at ChronoScale. The Company did not have any unrecognized tax benefits for the year ended May 31, 2025.
The Company recognizes interest expense related to unrecognized tax benefits in income tax expense. The Company did not have any interest expense or expense for penalties related to unrecognized tax benefits for the reported periods.
The Company is subject to U.S. federal and state income tax examinations. Tax years ending May 31, 2023 through May 31, 2026 are open to examination by the major taxing jurisdictions to which the Company is subject, as carryforward attributes generated in these years may still be adjusted upon examination by the Internal Revenue Service (IRS) or other authorities if they have or will be used in a future period. The Company is not currently under examination by the IRS or any other taxing jurisdictions for any tax years.