Exascale Labs Holdings Inc 8-K/A, filed Sep 28, 2026
Exascale Labs Holdings Inc. (XLAB)
About this 8-K/A
Exascale Labs Holdings Inc filed this 8-K/A on September 28, 2026, reporting on events of August 27, 2026.
Items reported
- Item 2.01: Completed an acquisition or sale of assets
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
(
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
INTRODUCTORY NOTE
On September 2, 2026, Exascale Labs Holdings Inc., a Delaware corporation (formerly known as D. Boral ARC Merger Corporation) (“PubCo”), filed a Current Report on Form 8-K (the “Original Form 8-K”) in connection with the completion of its previously announced business combination contemplated by that certain Agreement and Plan of Merger, dated as of January 11, 2026 (the “Business Combination Agreement”), by and among D. Boral ARC Acquisition I Corp., a British Virgin Islands business company (“BCAR”), D. Boral ARC Merger Corporation, a Delaware corporation and a then wholly owned subsidiary of BCAR, D. Boral Arc Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of BCAR, and Exascale Labs Inc., a Delaware corporation (“Exascale”). The transactions contemplated by the Business Combination Agreement are referred to herein as the “Business Combination.”
The Business Combination was consummated on August 27, 2026 (the “Closing Date”), and upon the Domestication Merger (as defined in the Original Form 8-K), PubCo changed its name from “D. Boral ARC Merger Corporation” to “Exascale Labs Holdings Inc.”
This Amendment No. 1 to the Current Report on Form 8-K/A (this “Amendment”) is being filed to:
| (i) | amend Item 2.01 of the Original Form 8-K to include (a) the audited consolidated financial statements of Exascale as of and for the years ended June 30, 2026 and 2025, (b) Management’s Discussion and Analysis of Financial Condition and Results of Operations of Exascale for the years ended June 30, 2026 and 2025, (c) the unaudited interim consolidated financial statements of BCAR as of and for the three and six months ended June 30, 2026, and as of and for the period from March 20, 2025 (inception) through June 30, 2025, (d) Management’s Discussion and Analysis of Financial Condition and Results of Operations of BCAR for the three and six months ended June 30, 2026 and for the period from March 20, 2025 (inception) through June 30, 2025, and (e) the unaudited pro forma condensed combined financial information of BCAR and Exascale as of June 30, 2026, and for the year ended June 30, 2026; and |
| (ii) | amend Item 9.01 of the Original Form 8-K to include (a) the audited consolidated financial statements of Exascale as of and for the years ended June 30, 2026 and 2025, (b) the unaudited interim consolidated financial statements of BCAR as of and for the three and six months ended June 30, 2026, and as of and for the period from March 20, 2025 (inception) through June 30, 2025, and (c) the unaudited pro forma condensed combined financial information of BCAR and Exascale as of June 30, 2026, and for the year ended June 30, 2026. |
Except as set forth herein, this Amendment does not amend, modify, update or restate any other information set forth in the Original Form 8-K, and all other information in the Original Form 8-K filed on September 2, 2026 remains unchanged. This Amendment should be read in conjunction with the Original Form 8-K, which remains in effect except to the extent expressly amended hereby, and with PubCo’s other filings with the Securities and Exchange Commission (the “SEC”). Capitalized terms used but not defined herein have the meanings ascribed to them in the Original Form 8-K.
Item 2.01 Completion of Acquisition or Disposition of Assets.
The disclosures set forth in (i) the “Introductory Note” above and (ii) the “Introductory Note” and Item 1.01 of the Original Form 8-K are incorporated into this Item 2.01 by reference.
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FORM 10 INFORMATION
Item 2.01(f) of Form 8-K states that if the predecessor registrant was a shell company, as BCAR was immediately before the consummation of the Business Combination, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, PubCo is providing below the information that would be included in the Form 10 if it were to file a Form 10. Please note that the information provided below relates to PubCo following the consummation of the Business Combination, unless otherwise specifically indicated or the context otherwise requires.
Through the Business Combination, PubCo succeeded to the business of Exascale. Certain historical information relating to PubCo contained or incorporated by reference in this section of this Amendment reflects or are incorporated by reference to the historical business, operations and financial information of Exascale for periods prior to the Closing, as indicated by the context and the applicable disclosure.
Cautionary Note Regarding Forward-Looking Statements
This document and the information incorporated by reference herein include “forward-looking statements” within the meaning of the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. All statements, other than statements of present or historical fact included in or incorporated by reference in this Amendment, regarding PubCo’s future financial performance, as well as its strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects, plans and objectives of PubCo’s management are forward-looking statements. When used in this Amendment, the words “anticipate”, “believe”, “can”, “continue”, “could”, “estimate”, “expect”, “forecast”, “intend”, “may”, “might”, “plan”, “possible”, “potential”, “predict”, “project”, “seek”, “should”, “strive”, “target”, “will”, “would,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on PubCo’s management’s expectations and assumptions about future events and are based on available information as to the outcome and timing of future events. PubCo cautions you that these forward-looking statements are subject to all of the risks and uncertainties incident to its business, most of which are difficult to predict and many of which are beyond the control of PubCo.
These forward-looking statements are based on information available as of the date of the Original Form 8-K, and expectations, forecasts and assumptions as of such date, and involve a number of risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing PubCo’s views as of any subsequent date, and PubCo does not undertake any obligation to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
As a result of a number of known and unknown risks and uncertainties, PubCo’s actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include:
| ● | PubCo’s limited operating history and history of losses; |
| ● | PubCo’s ability to recognize the anticipated benefits of the Business Combination, which may be affected by, among other things, competition, and the ability of PubCo to grow and manage growth profitably; |
| ● | PubCo’s future capital needs and PubCo’s ability to obtain sufficient additional financing on acceptable terms or at all; |
| ● | risks relating to the uncertainty of the projected financial information with respect to PubCo; |
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| ● | the ability to maintain the listing of the PubCo Class A Ordinary Common Stock on Nasdaq; |
| ● | changes in the market in which PubCo competes, including with respect to its competitive landscape, technology evolution or changes in applicable laws or regulations; |
| ● | demand uncertainty for artificial intelligence (“AI”) compute services, including slower-than-anticipated adoption of large language models, changes in customer workload requirements, budget constraints, or shifts toward alternative architectures or in-house compute solutions; |
| ● | fluctuations in utilization rates of PubCo’s graphics processing unit (“GPU”) capacity, which could negatively affect revenues, margins, and operating leverage; |
| ● | technological risks, including the performance, scalability, reliability, and security of PubCo’s platform, as well as the pace of innovation in AI hardware and software that could render PubCo’s offerings less competitive; |
| ● | competitive pressures from hyperscalers, cloud service providers, vertically integrated AI infrastructure companies, and other GPU-as-a-Service providers with greater scale, resources, or pricing flexibility; |
| ● | the impact of macroeconomic events, such as inflation, recessions or depressions, and war or fears of war; |
| ● | changes in the vertical markets that PubCo targets; |
| ● | the impact of current or future government regulation and oversight, including the U.S. federal, state and local authorities; |
| ● | the ability to launch new services and products or to profitably expand into new markets; |
| ● | the ability to develop and maintain effective internal controls and procedures, correct or remediate the previously identified material weaknesses, or correct or remediate any future identified material weaknesses; |
| ● | increased costs associated with being a public company; |
| ● | the exposure to any liability, protracted and costly litigation or reputational damage relating to PubCo’s data security; |
| ● | PubCo’s controlled company status under Nasdaq rules; and |
| ● | other risks and uncertainties set forth in the Proxy Statement/Prospectus in the section titled “Risk Factors.” |
Business and Facilities
The information set forth in the section of the Proxy Statement/Prospectus entitled “Information About Exascale” beginning on page 216 is incorporated herein by reference.
Risk Factors
The risks associated with PubCo’s business and operations following the Closing Date are described in the Proxy Statement/Prospectus in the section entitled “Risk Factors” beginning on page 54, which is incorporated herein by reference.
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Financial Information
Audited Financial Statements
The audited consolidated financial statements of BCAR as of December 31, 2025 and for the period from March 20, 2025 (inception) through December 31, 2025, audited by Guangdong Prouden CPAs GP, are included in the Proxy Statement/Prospectus beginning on page F-20 of the Proxy Statement/Prospectus and are incorporated by reference herein.
The audited financial statements of Exascale as of and for the years ended June 30, 2026 and 2025, audited by HTL International, LLC, are set forth in Exhibit 99.1 hereto and incorporated by reference herein.
Unaudited Interim Financial Statements
The unaudited interim consolidated financial statements of BCAR as of and for the three and six months ended June 30, 2026, and as of and for the period from March 20, 2025 (inception) through June 30, 2025, are included on pages 1 to 19 of BCAR’s Form 10-Q filed with the SEC on August 14, 2026 (the “BCAR Form 10-Q”) and are incorporated herein by reference.
Unaudited Pro Forma Condensed Combined Financial Information
The unaudited pro forma condensed combined financial information of BCAR and Exascale as of June 30, 2026, and for the year ended June 30, 2026 is set forth in Exhibit 99.3 hereto and incorporated by reference herein.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Management’s Discussion and Analysis of Financial Condition and Results of Operations of Exascale for the years ended June 30, 2026 and 2025 is set forth in Exhibit 99.2 hereto and incorporated by reference herein.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of BCAR for the period from March 20, 2025 (inception) through December 31, 2025 is included in the Proxy Statement/Prospectus in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations of BCAR” beginning on page 212 of the Proxy Statement/Prospectus and is incorporated herein by reference.
Management’s Discussion and Analysis of Financial Condition and Results of Operations of BCAR for the three and six months ended June 30, 2026 and the period from March 20, 2025 (inception) through June 30, 2025 is included on pages 20 to 22 of the BCAR Form 10-Q and is incorporated herein by reference.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of PubCo Common Stock as of the Closing Date by:
| ● | each person who is known to be the beneficial owner of more than 5% of the PubCo Common Stock; |
| ● | each executive officer and director of PubCo; and |
| ● | all executive officers and directors of PubCo as a group. |
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Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security, including options, rights and convertible securities that are exercisable as of the Closing Date or exercisable within 60 days after the Closing Date.
The information set forth in the table below is based on 64,334,789 shares of PubCo Common Stock outstanding immediately following the Closing Date, consisting of 33,689,050 shares of PubCo Class A Ordinary Common Stock having one (1) vote per share and 30,645,739 shares of PubCo Class B Super Common Stock having twenty (20) votes per share.
| Name(1) | PubCo Class A Ordinary Common Stock Beneficially Owned |
Percent of PubCo Class A Ordinary Common Stock |
PubCo Class B Super Common Stock Beneficially Owned |
Percent of PubCo Class B Super Common Stock |
Percent of Voting Control(2) |
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| Directors, and Other Named Executive Officers | ||||||||||||||||||||
| Hoansoo Lee(3) | - | - | 5,000,000 | 16.3 | 15.5 | |||||||||||||||
| Wenying Jia(4) | - | - | 25,645,739 | 83.7 | 79.3 | |||||||||||||||
| David Card | - | - | - | - | - | |||||||||||||||
| Shachar Kariv | - | - | - | - | - | |||||||||||||||
| Jaeyoung Shin | - | - | - | - | - | |||||||||||||||
| All directors and executive officers as a group (5 persons) | - | - | 30,645,739 | 100.0 | 94.8 | |||||||||||||||
| 5% Stockholders other than Directors and Officers | ||||||||||||||||||||
| MFH 1, LLC(5) | 11,833,369 | 35.1 | - | - | 1.8 | |||||||||||||||
| (1) | Unless otherwise noted, the business address of each of the following is c/o Exascale Labs Holdings Inc., 820 Gessner Road, Suite 332, Houston, Texas 77024. |
| (2) | Based on an aggregate of 64,334,789 Common Stock (consisting of 33,689,050 Class A Ordinary Common Stock having one (1) vote per share and 30,645,739 Class B Super Common Stock having twenty (20) votes per share). The voting percentage is calculated based on such voting rights. |
| (3) | Consists of (i) 2,000,000 shares of Class B Super Common Stock directly held by HSL Capital Management LLC, (ii) 1,000,000 shares of Class B Super Common Stock directly held by the Jisu Paul Lee Non-Grantor Directed Trust, (iii) 1,000,000 shares of Class B Super Common Stock directly held by the Sophia Jisun Lee Non-Grantor Directed Trust and (iv) 1,000,000 shares of Class B Super Common Stock directly held by the Gabriel Jihwan Lee Non-Grantor Directed Trust. Hoansoo Lee is the sole member and manager of HSL Capital Management LLC and has sole voting and dispositive power with respect to the Class B Super Common Stock directly held by HSL Capital Management LLC. Hoansoo Lee is the settlor of, and serves as investment advisor to, each of the Jisu Paul Lee Non-Grantor Directed Trust, the Sophia Jisun Lee Non-Grantor Directed Trust, and the Gabriel Jihwan Lee Non-Grantor Directed Trust, and the beneficiaries of each of those trusts are the children of Hoansoo Lee. As such, Mr. Lee may be deemed to beneficially own the shares directly held by such trusts. Mr. Lee disclaims beneficial ownership of such shares directly held by such trusts except to the extent of his pecuniary interest therein, if any, and the inclusion of such shares in this table shall not be deemed an admission of beneficial ownership for any purpose. |
| (4) | Consists of shares of Class B Super Common Stock directly held by Zerowave Ltd. Ms. Jia is the sole member and manager of Zerowave Ltd and has sole voting and dispositive power with respect to the shares directly held by Zerowave Ltd. |
| (5) | John Darwin is the manager of MFH 1, LLC and, accordingly, Mr. Darwin has sole voting and investment discretion with respect to the shares held of record by MFH 1, LLC. Mr. Darwin disclaims any economic interest in the shares held by MFH 1, LLC, except to the extent of his pecuniary interest therein. The business address of MFH 1, LLC is 10 E. 53rd Street, Suite 3001, New York, NY 10022. |
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Information about Directors and Executive Officers
| Name | Age | Position(s) Held | ||
| Hoansoo Lee | 42 | Chief Executive Officer and Class III Director | ||
| Jake Carney | 38 | Chief Financial Officer | ||
| Wenying Jia | 57 | Chairperson and Class II Director | ||
| David Card | 70 | Class II Director and Lead Independent Director | ||
| Shachar Kariv | 55 | Class I Director | ||
| Jaeyoung Shin | 48 | Class I Director |
Resignations and Appointments
In connection with the closing of the Business Combination, the pre-existing officers and directors of BCAR resigned from their respective positions as officers and/or directors of BCAR, in each case effective as of the effective time of the Domestication Merger.
In connection with the closing of the Business Combination, the pre-existing officers and directors of PubCo resigned from their respective positions as officers and/or directors of PubCo, in each case effective as of the Closing Date.
Effective as of the Closing Date, Hoansoo Lee was appointed as Chief Executive Officer, Interim Chief Financial Officer and a member of the PubCo Board, Wenying Jia was appointed as the Chairperson, and a member of the PubCo Board, and each of David Card, Shachar Kariv and Jaeyoung Shin was appointed as a member of the PubCo Board.
Effective September 4, 2026, Gildas Bonnier was appointed as Interim Chief Financial Officer of PubCo, and Hoansoo Lee ceased to serve as Interim Chief Financial Officer. Effective September 25, 2026, the PubCo Board appointed Jake Carney as Chief Financial Officer of PubCo, and Mr. Bonnier ceased to serve as Interim Chief Financial Officer.
Information, including biographical information, with respect to PubCo’s directors and executive officers after the Closing is included in the Proxy Statement/Prospectus in the section titled “Executive Officers and Directors of Exascale and Executive Officers And Directors of PubCo” beginning on page 257 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Board Composition
PubCo’s business and affairs are managed under the direction of the board of directors of PubCo (the “PubCo Board”). The PubCo Board consists of five directors and is divided into three classes, designated Class I, Class II and Class III, with each class serving staggered three-year terms and one class standing for election at each annual meeting of stockholders. Shachar Kariv and Jaeyoung Shin are the current Class I directors, David Card and Wenying Jia are the current Class II directors, and Hoansoo Lee is the current Class III director. The current terms of Class I, II and III directors will expire at the annual meeting of stockholders to be held in 2027, 2028 and 2029, respectively. Wenying Jia is the current Chairperson of the PubCo Board, and the PubCo Board has designated David Card as Lead Independent Director.
Role of the Board in Risk Oversight
The PubCo Board has extensive involvement in the oversight of risk management related to PubCo and its business and accomplished this oversight through the regular reporting to the PubCo Board by the audit committee. The audit committee represents the PubCo Board by periodically reviewing PubCo’s accounting, reporting and financial practices, including the integrity of its financial statements, the surveillance of administrative and financial controls and its compliance with legal and regulatory requirements.
Director Independence
David Card, Shachar Kariv and Jaeyoung Shin are PubCo’s independent directors, as defined under the rules promulgated by Nasdaq. PubCo’s independent directors have regularly scheduled meetings at which only independent directors are present. Any affiliated transactions are required to be on terms that the PubCo Board believes are no less favorable to PubCo than could be obtained from independent parties. None of the independent directors has any relationship with PubCo besides their service on the PubCo Board.
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Board Committees
The standing committees of the PubCo Board consist of an audit committee, a compensation committee and a nominating and corporate governance committee.
Audit Committee
The audit committee of the PubCo Board consists of David Card, Shachar Kariv and Jaeyoung Shin, each of whom meets the definition of “independent director” for purposes of serving on the audit committee under the Nasdaq rules and the independence standards under Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Jaeyoung Shin is the chairperson of the audit committee. The audit committee’s duties, which are specified in PubCo’s Audit Committee Charter, include, but are not limited to:
| ● | assisting board oversight of (i) the integrity of PubCo’s financial statements, (ii) PubCo’s compliance with legal and regulatory requirements, (iii) PubCo’s independent registered public accounting firm’s qualifications and independence, and (iv) the performance of PubCo’s internal audit function and independent registered public accounting firm; |
| ● | the appointment, compensation, retention, replacement and oversight of the work of the independent auditors and any other independent registered public accounting firm engaged by PubCo; |
| ● | pre-approving all audit and non-audit services to be provided by the independent auditors or any other registered public accounting firm engaged by PubCo, and establishing pre-approval policies and procedures; reviewing and discussing with the independent registered public accounting firm all relationships the auditors have with PubCo in order to evaluate their continued independence; |
| ● | setting clear policies for audit partner rotation in compliance with applicable laws and regulations; |
| ● | obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures and (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues; |
| ● | meeting to review and discuss PubCo’s annual audited financial statements and quarterly financial statements with PubCo’s management and the independent auditor, including reviewing PubCo’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results of Operations”; |
| ● | reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to PubCo entering into such transaction; and |
| ● | reviewing with management, the registered public accounting firm and PubCo’s legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding PubCo’s financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. |
The PubCo Board has determined that Jaeyoung Shin qualifies as an “audit committee financial expert,” as defined under the rules and regulations of Nasdaq and the SEC.
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Corporate Governance and Nominating Committee
The corporate governance and nominating committee of the PubCo Board consists of David Card, Shachar Kariv and Jaeyoung Shin. David Card is the chairperson of the corporate governance and nominating committee. The corporate governance and nominating committee is responsible for overseeing the selection of persons to be nominated to serve on the PubCo Board. The corporate governance and nominating committee considers persons identified by its members, management, stockholders, investment bankers and others. The guidelines for selecting nominees, which are specified in PubCo’s Corporate Governance and Nominating Committee Charter, generally provide that persons to be nominated (i) should have demonstrated notable or significant achievements in business, education or public service, (ii) should possess the requisite intelligence, education and experience to make a significant contribution to the PubCo Board and bring a range of skills, diverse perspectives and backgrounds to its deliberations and (iii) should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders of PubCo. The corporate governance and nominating committee will consider a number of qualifications relating to management and leadership experience, background and integrity and professionalism in evaluating a person’s candidacy for membership on the PubCo Board. The corporate governance and nominating committee may require certain skills or attributes, such as financial or accounting experience, to meet specific board needs that arise from time to time and will also consider the overall experience and makeup of its members to obtain a broad and diverse mix of board members. The corporate governance and nominating committee does not distinguish among nominees recommended by stockholders and other persons.
Compensation Committee
The compensation committee of the PubCo Board consists of David Card, Shachar Kariv and Jaeyoung Shin, each of whom meets the definition of “independent director” under the Nasdaq rules. Shachar Kariv is the chairperson of the compensation committee. The compensation committee’s duties, which are specified in PubCo’s Compensation Committee Charter, include, but are not limited to:
| ● | reviewing and approving on an annual basis the corporate goals and objectives relevant to PubCo’s Chief Executive Officer’s compensation and evaluating PubCo’s Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration of PubCo’s Chief Executive Officer based on such evaluation; |
| ● | reviewing and making recommendations to the PubCo Board with respect to compensation and any incentive compensation and equity-based plans that are subject to board approval of all of PubCo’s other officers; |
| ● | reviewing PubCo’s executive compensation policies and plans; |
| ● | implementing and administering PubCo’s incentive compensation and equity-based remuneration plans; |
| ● | assisting PubCo’s management in complying with PubCo’s proxy statement and annual report disclosure requirements; |
| ● | reviewing and approving all special perquisites, special cash payments and other special compensation and benefit arrangements for PubCo’s officers and employees; |
| ● | producing a report on executive compensation to be included in PubCo’s annual proxy statement; and |
| ● | reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. |
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The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, independent legal counsel or other adviser and the compensation committee is directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee is required to consider the independence of each such adviser, including the factors required by Nasdaq and the SEC.
Code of Ethics
PubCo has adopted a written code of ethics that applies to its directors, officers and employees, including its principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. A copy of the code is posted on PubCo’s website at https://www.exascalelabs.ai. In addition, PubCo intends to post on its website all disclosures that are required by law or the Nasdaq rules concerning any amendments to, or waivers from, any provision of the code. The information on PubCo’s website is not incorporated by reference in this Current Report on Form 8-K, and is provided as an inactive textual reference only.
Executive Compensation
Information with respect to the historical compensation of PubCo’s executive officers is included in the Proxy Statement/Prospectus in the section titled “Compensation of Named Executive Officers and Directors of Exascale” beginning on page 263 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Going forward, decisions with respect to the compensation of PubCo’s executive officers, including its named executive officers, will be made by the compensation committee of the PubCo Board. PubCo anticipates that compensation for its executive officers will have the following components: base salary, cash bonus opportunities, equity compensation, employee benefits and severance protections.
Certain Relationships and Related Transactions
Certain relationships and related party transactions are described in the Proxy Statement/Prospectus in the section titled “Certain Relationships and Related Party Transactions” beginning on page 268 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Legal Proceedings
From time to time, PubCo and its subsidiaries may become involved in legal proceedings arising in the ordinary course of its business. PubCo is not a party to or aware of any proceedings that PubCo believes will have, individually or in the aggregate, a material adverse effect on PubCo’s business, financial condition or results of operations. Regardless of outcome, litigation can have an adverse impact on PubCo because of defense and settlement costs, diversion of management resources and other factors.
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters
Market Information and Holders
Immediately prior to the closing of the Business Combination, the BCAR Units, the BCAR Class A Ordinary Shares and the BCAR Warrants were listed on Nasdaq under the symbols “BCARU,” “BCAR” and “BCARW,” respectively.
In connection with the Business Combination, as of the Closing Date, all of the BCAR Units separated into their component parts and ceased trading on Nasdaq.
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On August 28, 2026, the PubCo Class A Ordinary Common Stock and PubCo Warrants began trading on Nasdaq under the symbols “XLAB” and XLABW,” respectively. The PubCo Class B Super Common Stock are not listed on Nasdaq or any other securities exchange and are not publicly traded.
As of the Closing Date and following the completion of the Business Combination, PubCo had approximately 33,689,050 shares of PubCo Class A Ordinary Common Stock issued and outstanding held of record by 37 holders and 30,645,739 shares of PubCo Class B Super Common Stock issued and outstanding held of record by five holders.
Dividends
PubCo has not paid any cash dividends on the PubCo Common Stock to date, and does not anticipate declaring any cash dividends on the PubCo Common Stock in the foreseeable future. Any decision to declare and pay cash dividends on the PubCo Common Stock in the future will be made at the discretion of the PubCo Board and will depend on, among other things, PubCo’s revenues and earnings, if any, capital requirements, contractual restrictions, general financial condition and other factors the PubCo Board may deem relevant.
Recent Sales of Unregistered Securities
Information about recent sales of unregistered securities is set forth in the Proxy Statement/Prospectus in the section titled “Information about Exascale—Recent Sales of Unregistered Securities” on page 230 of the Proxy Statement/Prospectus, which is incorporated herein by reference.
Description of Registrant’s Securities
The description of PubCo’s securities is set forth in the section of the Proxy Statement/Prospectus entitled “Description of PubCo’s Securities” beginning on page 304 of the Proxy Statement/Prospectus, which information is incorporated herein by reference.
Indemnification of Directors and Officers
In connection with the Business Combination, following the Closing Date, PubCo entered into the Indemnification Agreements with each of its directors and executive officers. Subject to certain exceptions, the Indemnification Agreements provide that PubCo will indemnify each of its directors and executive officers for certain expenses, which may include attorneys’ fees, judgments, fines and settlement amounts, incurred by a director or officer in any action or proceeding arising out of that person’s services as a director or officer of PubCo or of any other company or enterprise to which the person provides services at PubCo’s request.
The foregoing description of the Indemnification Agreements is qualified in its entirety by reference to the form of Indemnification Agreement, a copy of which is attached as Exhibit 10.3 to this Amendment and is incorporated herein by reference.
Financial Statements and Supplementary Data
The information set forth under Item 9.01 of this Amendment is incorporated herein by reference.
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
The information set forth in Item 4.01 of the Original Form 8-K is incorporated herein by reference.
Financial Statements and Exhibits
The information set forth in Item 9.01 of this Amendment is incorporated herein by reference.
10
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired.
The audited consolidated financial statements of BCAR as of December 31, 2025 and for the period from March 20, 2025 (inception) through December 31, 2025, audited by Guangdong Prouden CPAs GP, are included in the Proxy Statement/Prospectus beginning on page F-20 of the Proxy Statement/Prospectus and are incorporated by reference herein.
The audited financial statements of Exascale as of and for the years ended June 30, 2026 and 2025, audited by HTL International, LLC, are set forth in Exhibit 99.1 hereto and incorporated by reference herein.
The unaudited interim consolidated financial statements of BCAR as of and for the three and six months ended June 30, 2026, and as of and for the period from March 20, 2025 (inception) through June 30, 2025, are included on pages 1 to 19 of the BCAR Form 10-Q and incorporated by reference herein.
(b) Pro Forma Financial Information.
The unaudited pro forma condensed combined financial information of BCAR and Exascale as of June 30, 2026, for the year ended June 30, 2026 is set forth in Exhibit 99.3 hereto and incorporated by reference herein
(d) Exhibits.
Exhibit Index
| * | Filed previously. |
| + | Schedule and exhibits to this Exhibit omitted pursuant to Regulation S-K Item 601(b)(2). PubCo agrees to furnish supplementally a copy of any omitted schedule or exhibit to the SEC upon request. |
11
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EXASCALE LABS HOLDINGS INC. | ||
| Date: September 28, 2026 | By: | /s/ Hoansoo Lee |
| Name: | Hoansoo Lee | |
| Title: | Chief Executive Officer | |
12
Exhibit 99.1
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
F-1
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders of Exascale Labs Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Exascale Labs Inc. (the “Company”) and its subsidiary as of June 30, 2025 and 2026, and the related consolidated statements of operations and comprehensive loss, changes in shareholders’ deficit, and cash flows for each of the years in the two-year period ended June 30, 2026, and the related notes (collectively referred to as the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2026, and the results of its operations and its cash flows for each of the years in the two-year period ended June 30, 2026, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.
| /s/ HTL International, LLC | |
| We have served as the Company’s auditor since 2025. | |
Houston, Texas |
|
| September 28, 2026 |
F-2
CONSOLIDATED BALANCE SHEETS
AS OF JUNE 30, 2025 AND 2026
(All amounts in US$, except for number of shares)
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| ASSETS | ||||||||
| Current Assets | ||||||||
| Cash and cash equivalents | $ | 4,231,689 | $ | 2,693,586 | ||||
| U.S. Dollar Coin | - | 2,160,746 | ||||||
| Accounts receivable, net | 152,536 | 1,107,210 | ||||||
| Advance to suppliers | 1,030,761 | 112,343 | ||||||
| Refundable deposits receivable | 681,125 | 450,000 | ||||||
| Other receivables | 1,207,626 | - | ||||||
| Total Current Assets | 7,303,737 | 6,523,885 | ||||||
| Non-Current Assets | ||||||||
| Deferred offering costs | - | 190,000 | ||||||
| Equipment, net | 19,600 | 12,840 | ||||||
| Total Non-Current Assets | 19,600 | 202,840 | ||||||
| Total Assets | $ | 7,323,337 | $ | 6,726,725 | ||||
| LIABILITIES AND SHAREHOLDERS’ DEFICIT | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 90,015 | $ | 916,422 | ||||
| Simple agreements for future equity | 18,243,885 | 29,121,268 | ||||||
| Contract liabilities | 432,760 | 1,070,378 | ||||||
| Refundable deposits payable | 1,445,580 | 359,481 | ||||||
| Other current liabilities | 107,481 | 417,951 | ||||||
| Total Current Liabilities | 20,319,721 | 31,885,500 | ||||||
| Total Liabilities | $ | 20,319,721 | $ | 31,885,500 | ||||
| Commitments and contingencies (Note 14) | ||||||||
| Shareholders’ Deficit | ||||||||
| Common stock (US$0.01 par value per share; 1,500 shares authorized; 1,500 shares issued and outstanding as of June 30, 2025) | $ | 15 | $ | - | ||||
| Class A common stock (US$0.01 par value per share; 303 shares authorized; 303 shares issued and outstanding as of June 30, 2026) | - | 3 | ||||||
| Class B common stock (US$0.01 par value per share; 1,197 shares authorized; 1,197 shares issued and outstanding as of June 30, 2026) | - | 12 | ||||||
| Additional paid-in capital | 220,636 | 220,636 | ||||||
| Accumulated deficit | (13,217,035 | ) | (25,379,426 | ) | ||||
| Total Shareholders’ Deficit | $ | (12,996,384 | ) | $ | (25,158,775 | ) | ||
| Total Liabilities and Shareholders’ Deficit | $ | 7,323,337 | $ | 6,726,725 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-3
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS FOR THE YEARS ENDED JUNE 30, 2025 AND 2026
(All amounts in US$, except for number of shares, and per share data)
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Revenues | $ | 7,015,512 | $ | 14,822,799 | ||||
| Cost of revenues | (5,910,315 | ) | (12,404,546 | ) | ||||
| Gross profit | 1,105,197 | 2,418,253 | ||||||
| Operating expenses | ||||||||
| Selling and marketing expenses | (989,155 | ) | (499,392 | ) | ||||
| General and administrative expenses | (362,982 | ) | (1,229,516 | ) | ||||
| Research and development expenses | (2,797,906 | ) | (5,490,185 | ) | ||||
| Total operating expenses | (4,150,043 | ) | (7,219,093 | ) | ||||
| Loss from operations | (3,044,846 | ) | (4,800,840 | ) | ||||
| Change in fair value of simple agreements for future equity | (4,614,821 | ) | (7,377,383 | ) | ||||
| Other income | - | 15,832 | ||||||
| Loss before income tax expenses | (7,659,667 | ) | (12,162,391 | ) | ||||
| Income tax expenses | - | - | ||||||
| Net loss and total comprehensive loss | $ | (7,659,667 | ) | $ | (12,162,391 | ) | ||
| Loss per share | ||||||||
| Basic and diluted | $ | (5,106.44 | ) | $ | (8,108.26 | ) | ||
| Weighted average number of shares used to compute loss per share | ||||||||
| Basic and diluted | 1,500 | 1,500 | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-4
CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ DEFICIT FOR THE YEARS ENDED JUNE 30, 2025 AND 2026
(All amounts in US$, except for number of shares)
| Common stock | Class A common stock |
Class B common stock |
Additional paid-in |
Accumulated |
Total shareholders’ |
|||||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Shares | Amount | capital | deficit | deficit | ||||||||||||||||||||||||||||
| Balance as of June 30, 2024 | 1,500 | $ | 15 | - | $ | - | - | $ | - | $ | 67,370 | $ | (5,557,368 | ) | $ | (5,489,983 | ) | |||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (7,659,667 | ) | (7,659,667 | ) | |||||||||||||||||||||||||
| Share-based compensation | - | - | - | - | - | - | 153,266 | - | 153,266 | |||||||||||||||||||||||||||
| Balance as of June 30, 2025 | 1,500 | $ | 15 | - | $ | - | - | $ | - | $ | 220,636 | $ | (13,217,035 | ) | $ | (12,996,384 | ) | |||||||||||||||||||
| Re-designation of authorized common stock | (1,500 | ) | (15 | ) | 303 | 3 | 1,197 | 12 | - | - | - | |||||||||||||||||||||||||
| Net loss | - | - | - | - | - | - | - | (12,162,391 | ) | (12,162,391 | ) | |||||||||||||||||||||||||
| Balance as of June 30, 2026 | - | $ | - | 303 | $ | 3 | 1,197 | $ | 12 | $ | 220,636 | $ | (25,379,426 | ) | $ | (25,158,775 | ) | |||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F-5
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED JUNE 30, 2025 AND 2026
(All amounts in US$)
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Cash flows from operating activities: | ||||||||
| Net loss | $ | (7,659,667 | ) | $ | (12,162,391 | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation of equipment | 6,234 | 6,760 | ||||||
| Share-based compensation | 153,266 | - | ||||||
| Change in fair value of simple agreements for future equity | 4,614,821 | 7,377,383 | ||||||
| Allowance for credit losses | - | 38,022 | ||||||
| Other operating activities settled in digital assets and U.S. Dollar Coin | - | (567,267 | ) | |||||
| Changes in operating assets and liabilities: | ||||||||
| Accounts receivable | (29,204 | ) | (992,696 | ) | ||||
| Advance to suppliers and prepaid expense | (750,264 | ) | 918,418 | |||||
| Refundable deposits receivable | (571,125 | ) | 231,125 | |||||
| Other receivables | 1,709,568 | 1,707,626 | ||||||
| Accounts payable | (38,025 | ) | 826,407 | |||||
| Contract liabilities | 337,434 | 637,618 | ||||||
| Refundable deposits payable | 1,222,375 | (1,086,099 | ) | |||||
| Other current liabilities | (6,212 | ) | 310,470 | |||||
| Net cash used in operating activities | $ | (1,010,799 | ) | $ | (2,754,624 | ) | ||
| Cash flows from investing activities: | ||||||||
| Purchase of equipment | (2,138 | ) | - | |||||
| Proceeds from sale of digital assets and U.S. Dollar Coin | - | 1,406,521 | ||||||
| Net cash (used in) provided by investing activities | $ | (2,138 | ) | $ | 1,406,521 | |||
| Cash flows from financing activities: | ||||||||
| Payment for deferred offering costs | - | (190,000 | ) | |||||
| Proceeds from simple agreements for future equity | 4,275,000 | - | ||||||
| Net cash provided by (used in) financing activities | $ | 4,275,000 | $ | (190,000 | ) | |||
| Net change in cash and cash equivalents | 3,262,063 | (1,538,103 | ) | |||||
| Cash and cash equivalents at the beginning of year | 969,626 | 4,231,689 | ||||||
| Cash and cash equivalents at the end of year | $ | 4,231,689 | $ | 2,693,586 | ||||
| Supplementary Information: | ||||||||
| Income tax paid | $ | - | $ | 800 | ||||
| Interest expense paid | $ | - | $ | - | ||||
| Supplemental schedule of non-cash financing activities: | ||||||||
| Investment proceeds received by an employee on behalf of the Company from SAFEs investors | $ | 32,500 | $ | 500,000 | ||||
| Investment proceeds received through U.S. Dollar Coin from SAFEs investors | $ | - | $ | 3,000,000 | ||||
The accompanying notes are an integral part of these consolidated financial statements.
F-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in US$, except for number of shares and per share data)
1. Organization and principal activities
On June 1, 2022, Exascale Labs Inc. (the “Company”) was formally incorporated in the State of Delaware. In accordance with the Company’s Certificate of Incorporation, the total authorized share capital of the Company consists of 1,500 shares of common stock, with a par value of $0.01 per share, all of which are of one class. The governance structure of the Company stipulates that the business and affairs of the Company shall be managed by or under the direction of its board of directors.
On December 16, 2025, the Company incorporated its wholly-owned subsidiary, Evana Alpha Pte. Ltd., in Singapore. The Company subscribed for all 1,000 ordinary shares of the subsidiary, with a total issued share capital of Singapore Dollars 1,000. The subsidiary’s principal business activity is information technology consultancy (excluding cybersecurity).
The Company is a next-generation artificial intelligence (“AI”) infrastructure provider operating an asset-light, software-defined graphics processing unit (“GPU”) compute platform and related AI infrastructure solutions. The Company’s core business includes GPU as a Service (“GaaS”), through which it provides reserved and on-demand access to high-performance GPU compute capacity sourced from third-party data centers globally, as well as GPU cluster management and optimization services for artificial intelligence data center (“AIDC”) operators. In addition, the Company has developed certain modular data center, high-density liquid cooling, high-voltage direct current (“HVDC”) power, data center interconnectivity and energy storage solutions that are designed to address deployment bottlenecks in AI infrastructure and that the Company believes are ready for commercial engagement in future. The platform is purpose-built for large-scale AI workloads, including large language model (“LLM”) training, fine-tuning, and high-concurrency inference.
In January 2026, the Company adopted an Amended and Restated Certificate of Incorporation, which established a dual-class common stock structure. Under this new structure, the Company’s equity is divided into 303 shares of Class A common stock and 1,197 shares of Class B common stock, which are entitled to one (1) vote and twenty (20) votes per share, respectively. Despite the differential in voting power, Class A common stock and Class B common stock rank pari passu in all other respects, sharing ratably in dividends and any distributions upon liquidation. Furthermore, all outstanding Simple Agreements for Future Equity (“SAFEs”) are designated to convert or settle exclusively into Class A common stock.
On January 11, 2026, D. Boral ARC Acquisition I Corp., a British Virgin Islands business company (“BCAR”) entered into an Agreement and Plan of Merger (the “Business Combination Agreement”), with D. Boral ARC Merger Corporation, a Delaware corporation and a wholly owned subsidiary of BCAR (“PubCo”), D. Boral Arc Merger Sub Inc., a Delaware corporation and a wholly owned subsidiary of BCAR (“Merger Sub”), and the Company.
On August 27, 2026 (the “Closing Date”), PubCo consummated the transactions contemplated by the Business Combination Agreement (the “Business Combination”). PubCo changed its name from “D. Boral ARC Merger Corporation” to “Exascale Labs Holdings Inc”. Upon the closing of the Business Combination, Merger Sub merged with and into the Company, with the Company surviving as a wholly owned subsidiary of PubCo. The Company’s former securityholders received an aggregate of 19,354,261 PubCo Class A common stock and 30,645,739 PubCo Class B common stock, representing aggregate merger consideration of $500.0 million based on a deemed value of $10.00 per share. The Class B common stock have 20 votes per share, while the Class A common stock have one vote per share.
The Business Combination was accounted for as a reverse recapitalization, with the Company identified as the accounting acquirer and BCAR identified as the accounting acquiree for financial reporting purposes (De-SPAC transaction).
As of the Closing Date and following the completion of the Business Combination, PubCo had approximately 64,334,789 shares of PubCo Common Stock issued and outstanding, consisting of approximately 33,689,050 PubCo Class A common stock and 30,645,739 PubCo Class B common stock. In addition, as of the Closing Date, PubCo had 14,099,992 warrants issued and outstanding, each whole warrant entitling the holder thereof to purchase one share of PubCo Class A common stock at an exercise price of $11.50 per share.
F-7
2. Summary of significant accounting policies
a. Going concern
As of June 30, 2026, the Company had cash and U.S. Dollar Coin (“USDC”) of $4.9 million and current liabilities of $31.9 million. For the years ended June 30, 2025 and 2026, the Company used $1.0 million and $2.8 million in operating activities. The Company incurred net losses of $7.7 million and $12.2 million for these respective periods. Since inception, the Company has incurred recurring net losses from operations and negative cash flows from operating activities. As of June 30, 2026, the Company had an accumulated deficit of $25.4 million. These factors raised substantial doubt regarding the Company’s ability to continue as a going concern within one year of the date these consolidated financial statements were issued.
On August 27, 2026, the Company consummated the Business Combination. Upon the closing of the Business Combination, all outstanding SAFEs of the Company were converted into PubCo Class A common stock in accordance with their terms, eliminating SAFE liabilities that totaled approximately $29.1 million as of June 30, 2026. In connection with the closing of the Business Combination, the Company obtained access to cash proceeds of approximately $11.8 million retained from the Business Combination. In addition, between July 1, 2026 and August 27, 2026, an investor provided the Company with $1.0 million in the form of a SAFE, which was also converted into PubCo Class A common stock upon the closing of the Business Combination.
Management has prepared a cash flow forecast covering the twelve-month period following the date that these consolidated financial statements are issued. The forecast considers the liquidity provided by the De-SPAC transaction, conversion of SAFE instruments on the closing of the Business Combination, as well as management’s operating plans and expectations, including the Company’s continued focus on expanding its market presence and developing client relationships to drive revenue growth and managing operating expenses, with the objective of improving cash flows from operations over time.
Based on this forecast, management believes that the Company will have sufficient liquidity to fund its ongoing operations and anticipated working capital requirements for a period of at least twelve months after the date that these consolidated financial statements are issued. Accordingly, management has concluded that the substantial doubt about the Company’s ability to continue as a going concern has been alleviated.
These consolidated financial statements have been prepared on a going concern basis, and no adjustments are required to the carrying amounts or classification of assets and liabilities in the financial statements.
b. Basis of presentation
The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the applicable rules and regulations of the Securities and Exchange Commission (“SEC”).
F-8
2. Summary of significant accounting policies (Continued)
c. Use of estimates and assumptions
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in preparing the consolidated financial statements are reasonable and prudent; however, actual results could differ from these estimates under different assumptions or conditions. Significant accounting estimates include recognition and measurement of SAFEs notes, recognition and measurement of the allowance for expected credit losses, deferred tax assets and valuation allowance.
d. Fair value measurements
In accordance with FASB ASC 820 Fair Value Measurements and Disclosures, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Company uses a three-level hierarchy for fair value measurements of certain assets and liabilities for financial reporting purposes that distinguishes between market participant assumptions developed from market data obtained from outside sources (observable inputs) and the Company’s own assumptions about market participant assumptions developed from the best information available to us in the circumstances (unobservable inputs).
The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
Level 1: Quoted prices in active markets for identical assets or liabilities.
Level 2: Inputs other than Level 1 prices for similar assets or liabilities that are directly or indirectly observable in the marketplace.
Level 3: Unobservable inputs which are supported by little or no market activity and values determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
The fair value measurements discussed herein are based upon certain market assumptions and pertinent information available to management during the years ended June 30, 2025 and 2026. The carrying amount of cash and cash equivalents, accounts receivable, refundable deposits receivable, other receivables, accounts payable, refundable deposits payable and other current liabilities approximated their fair values as of June 30, 2025 and 2026. For the years ended June 30, 2025 and 2026, the Company carried SAFEs and digital assets at their fair value (see Note 4-Fair Value Measurements for fair value information).
e. Functional currency
The accompanying consolidated financial statements are presented in the United States dollar (“US$”). The functional currency of the Company and its subsidiary is the US$.
All transactions are measured and recorded in the Company’s functional currency.
f. Cash and cash equivalents
The Company considers all highly liquid investments instruments purchased with a maturity period of three months or less to be cash or cash equivalents. The carrying amounts reported in the accompanying balance sheets for cash and cash equivalents approximate their fair value. As of June 30, 2025 and 2026, the Company does not have any cash equivalents.
F-9
2. Summary of significant accounting policies (Continued)
g. Crypto assets
The Company’s crypto assets classified in current assets are held primarily for use in the ordinary course of business which is expected to be actively utilized or converted within the normal operating cycle and such crypto assets can be sold in a highly liquid marketplace. During the year ended June 30, 2026, the Company only held crypto assets of Tether USD (“USDT”) and USDC, which are principally funded by SAFE investors and as a form of collection from revenue transactions. The Company’s crypto assets are held with a qualified third-party custodian who provide secure storage and safeguarding of the Company’s crypto assets.
USDC
USDC is a stablecoin redeemable on a one-to-one basis for U.S. dollars and is accounted for as a financial instrument in the consolidated balance sheets.
Crypto assets other than USDC
On December 13, 2023, the FASB issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain cryptocurrencies. The new guidance requires entities to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. The Company applied the ASU since its holding of crypto assets in December 2025.
Digital assets that are received as noncash consideration in the Company’s revenue arrangements and paid in purchases of professional service and others are presented as cash flows from operating activities in other operating activities settled in digital assets and USDC. Digital assets that are received in the Company’s revenue arrangements and sold for cash within seven days are presented as cash flows from operating activities, while other digital asset activity held longer than seven days is reflected as cash flows from investing activities under disposal of digital assets and USDC held in the consolidated statements of cash flows. The Company presents crypto assets other than USDC separately from other intangible assets and USDC, recorded as digital assets on the consolidated balance sheets.
For the year ended June 30, 2026, the Company recorded receipt and disbursement of digital assets amounted to $991,601 and $991,601, respectively, which resulted in an ending balance of nil. The Company’s balances related to digital assets and stablecoins during the period included USDT and USDC, both of which are USD-pegged stablecoins. No fair value gain or loss on digital assets was recognized for the year ended June 30, 2026 considering the low volatility in the fair value of digital assets during the year ended June 30, 2026.
h. Expected credit loss and accounts receivable
The Company adopted Financial Standards Accounting Board (“FASB”) Accounting Standards Codification (“ASC”) 326 “Financial Instruments — Credit Losses” (“ASC 326”) on July 1, 2023.
The Company’s accounts receivable are within the scope of ASC 326. ASC 326 introduces an approach based on expected credit losses on financial assets at amortized cost. Upon adoption of ASC 326, the Company estimates the expected credit losses for accounts receivable using the roll-rate method on a collective basis when similar risk characteristics exist. Expected credit losses are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. After all attempts to collect a receivable have failed, the receivable is written off against the allowance.
F-10
2. Summary of significant accounting policies (Continued)
h. Expected credit loss and accounts receivable (Continued)
Accounts receivable represents those receivables derived in the ordinary course of business, net of an allowance for any potentially uncollectible amounts. The Company makes estimates of expected credit and collectability trends for the allowance for credit losses based upon its assessment of various factors, including historical experience, the age of the accounts receivable balances, credit quality of its customers, current economic conditions, reasonable and supportable forecasts of future economic conditions that may vary by geography, customer-type, or industry sub-vertical, and other factors that may affect its ability to collect from customers.
Although the Company has historically not experienced significant credit losses, they may experience increasing credit loss risks from accounts receivable in future periods if its customers are adversely affected by economic pressures or uncertainty associated with local or global economic recessions, or other customer-specific factors, and actual experience in the future may differ from their past experiences or current assessment.
i. Deferred offering costs
The Company follows the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “Expenses of Offering”. Deferred offering costs consist of underwriting, legal, and other professional expenses incurred through the balance sheet date that are directly related to the intended De-SPAC Transaction. These costs will be charged to shareholders’ equity, netted against the proceeds, upon the completion of the Business Combination. Should the transaction prove to be unsuccessful, these deferred costs, as well as additional expenses to be incurred, will be charged to the statements of operations and comprehensive loss. As of June 30, 2025 and 2026, the Company deferred nil and $190,000 of transaction costs, respectively.
j. Advance to suppliers
Advance to suppliers represent prepayments made to vendors in connection with the purchase of services. Advance is recorded at the amount paid and are classified as current assets when the related services are expected to be received within one year or the normal operating cycle.
k. Refundable deposits receivable
Refundable deposits receivable mainly represents security deposits and refundable cooperation deposits paid to suppliers and business partners that are contractually recoverable upon the completion of services. These amounts are recorded as assets when paid, generally at the amount paid. Deposits expected to be recovered within one year are classified as current; otherwise, they are classified as non-current. Allowance should be assessed under CECL, and write off when not recoverable. The Company evaluates the credit risk of refundable deposits receivable and recognizes an allowance for credit losses based on the current expected credit losses (“CECL”) model. Specific balances are written off when they are deemed uncollectible and all collection efforts have been exhausted. As of June 30, 2025 and 2026, no allowance for credit losses was recorded.
l. Other receivables
Other receivables represent funds temporarily held in trust by an employee acting as the Company’s behalf. As of June 30, 2025 and 2026, the balance were $1,207,626 and nil, respectively, primarily comprising proceeds from SAFEs agreements received via the employee and net of payments made to designated suppliers at the Company’s direction.
m. Equipment, net
Equipment, net is stated at cost less accumulated depreciation and impairment, if any. Depreciation is computed using the straight-line method over the estimated useful lives of three or five years, depending on the asset category.
F-11
2. Summary of significant accounting policies (Continued)
n. Refundable deposits payable
Refundable deposits payable represent security payments received from a third party and customers, which are required for certain intelligent computing power service arrangements. As of June 30, 2025 and 2026, the balances were $1,445,580 and $359,481, respectively.
o. Impairment of long-lived assets
The Company reviews its long-lived assets, equipment, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated from the use of the asset and its eventual disposition. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount exceeds the fair value of the impaired assets. Assets to be disposed of are reported at the lower of their carrying amount or fair value less cost to sell. There was no impairment of long-lived assets for the years ended June 30, 2025 and 2026.
p. Simple agreements for future equity
SAFEs issued by the Company are freestanding financial instruments. As they contain certain redemption or liquidation features that may require the Company to settle the obligation in cash upon the occurrence of defined events (e.g., a change of control or dissolution), the instruments create an obligation that meets the definition of a liability. Accordingly, the SAFEs are classified in their entirety as liabilities on the consolidated balance sheets.
These liabilities are measured at fair value upon initial recognition and are subsequently remeasured at fair value at each reporting date. All changes in their fair value are recognized in the consolidated statement of operations and comprehensive loss in the period in which they occur.
q. Revenue recognition
The Company applied ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) for all periods presented.
The five-step model defined by ASC 606 requires the Company to (i) identify its contracts with clients, (ii) identify its performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to its performance obligations in those contracts, and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the client in an amount that reflects the consideration expected in exchange for those goods or services.
The Company reports all of its revenues on a gross basis. This determination is based on the Company’s assessment that it is the principal in its revenue arrangements. The Company controls the service delivery platform and infrastructure before the service is provided to the customer. It is primarily responsible for fulfilling the service promise, has discretion in setting prices, and assumes the credit risk associated with the customer receivable.
As a practical expedient, the Company elected to expense the incremental costs of obtaining a contract when incurred if the amortization period of the asset that the Company otherwise would have recognized is one year or less.
Pursuant to ASC 606, the Company recognizes revenue based on the transaction price, which is the amount of consideration it expects to be entitled to exchange for transferring services to customers. For Intelligent Computing Power Services, contract consideration is generally fixed and is typically stated as a fixed monthly fee determined by (i) the contractually specified number of GPUs (capacity) and (ii) the service period. Accordingly, the transaction price is generally the fixed contractual amount. The Company recognizes revenue over time as the services are provided throughout the contract term. The Company offers payment terms ranging from 0 to 6 months, depending on customers’ credit profiles and service requirements.
F-12
2. Summary of significant accounting policies (Continued)
q. Revenue recognition (Continued)
The Company does not provide warranties for its services and does not offer service-type warranty arrangements.
The following is a description of the principal activities of the Company from which the Company generates its revenue under ASC 606.
| (i) | Revenue for intelligent computing power service |
The Company leverages its expertise in high-performance computing and cloud-native architectures to build and operate stable, efficient, and scalable GPU computing platforms through modular data center design and liquid cooling technology. The Company uses these platforms to provide computing resources for large-scale AI training, model inference, and high-performance scientific computing to commercial enterprise clients with substantial GPU computing requirements. Supporting services include GPU server environment deployment, cluster scheduling and performance optimization, high-speed network interconnection, real-time monitoring and intelligent alerting systems, as well as industry-compliant security and regulatory assurance.
The Company accounts for the above promises as a single performance obligation because they are highly integrated and not separately identifiable in the context of the contract. The Company provides an integrated, managed GPU computing platform in which computing capacity, deployment/configuration, scheduling, networking, monitoring, and security/compliance are interdependent and together deliver a single combined service—continuous access to a functioning and secured platform over the contractual term.
The Company provides intelligent computing power services under two pricing models: (i) reserved capacity arrangements and (ii) on-demand (pay-as-you-go) arrangements. The following table presents revenue recognized during the period by arrangement type:
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Reserved capacity arrangements | $ | 6,501,569 | $ | 14,652,429 | ||||
| On-demand arrangements | 44,680 | 12,508 | ||||||
| Total | $ | 6,546,249 | $ | 14,664,937 | ||||
Reserved capacity arrangements
The Company enters into reserved capacity arrangements, which generally provide committed intelligent computing power services for a defined service term ranging from 3 months to 3 years, with the majority of such arrangements having a one-year term. These contracts typically are non-cancelable, or may be canceled only under limited conditions with early notifications required. Payment terms generally range from 0-6 months upon the completion of services, and certain arrangements require prepayments. Any prepayments are recorded as contract liabilities and recognized over the service term.
The performance obligation is satisfied over time because the customer simultaneously receives and consumes the benefits. Revenue is recognized using a time-elapsed output method over the contractual service period.
F-13
2. Summary of significant accounting policies (Continued)
q. Revenue recognition (Continued)
On-demand (pay-as-you-go) arrangements
The Company provides customers with on-demand access to intelligent computing power and GPU resources under pay-as-you-go model which requires advance payment. Customer advances are recorded as contract liabilities and recognized as revenue over the time during the provision of related services underlying the contract term. The revenue is recognized over time because the customer can simultaneously receive and consume the benefits during the service period. These arrangements generally do not include a fixed contractual term or minimum usage commitments.
| (ii) | Revenue from comprehensive data center service |
The Company leverages its project experience in infrastructure management, cluster optimization, and system monitoring to provide full-cycle operational support to data center asset owners. Services encompass facility environment deployment, network architecture implementation, security and compliance system development, daily operational monitoring, and emergency fault response. Revenue is recognized over time because the Company’s services are performed throughout the contract term and the customer benefits as the services are provided.
For the years ended June 30, 2025 and 2026, $7,015,512 and $14,822,799 of the revenue of the Company was recognized over time, respectively.
Revenue disaggregated by service lines for the years ended June 30, 2025 and 2026 was disclosed in the table below:
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Revenue from intelligent computing power service | $ | 6,546,249 | $ | 14,664,937 | ||||
| Revenue from comprehensive data center service | 469,263 | 157,862 | ||||||
| Total | $ | 7,015,512 | $ | 14,822,799 | ||||
r. Contract liabilities
The Company receives advance payments from its customers for services to be provided in the future. These payments are recorded as contract liabilities on the balance sheet within “Contract liabilities”.
Contract liabilities are recognized when consideration is received from a customer prior to the Company satisfying its related performance obligations. For these service contracts, the Company recognizes revenue, and reduces the contract liabilities, over time as the services are rendered and the performance obligations are satisfied. Revenue recognized during the years ended June 30, 2025 and 2026 that was included in the contract liability balance at the beginning of the year was $95,326 and $392,152, respectively.
s. Cost of revenues
The Company’s cost of revenues primarily includes computing power service, professional service fees and staff costs and employee benefits. All the cost of revenues are recognized in the period in which the related services occur or the benefits are received.
F-14
2. Summary of significant accounting policies (Continued)
t. Selling and marketing expenses
The Company’s selling and marketing expenses primarily include: (i) advertising and promotion expenses, (ii) staff costs, employee benefits and share-based compensation, and (iii) travel and other routine office expenses. All expenses are recognized in the period in which the related services occur or the benefits are received. The Company expenses advertising costs as incurred, and for the years ended June 30, 2025 and 2026, the Company incurred advertising and promotion expenses of $157,388 and $80,910, respectively.
u. Research and development expenses
The Company’s research and development expenses mainly consist of software development outsourcing service fees, server cost, staff costs and employee benefits, and testing expenses.
v. General and administrative expenses
The Company’s general and administrative expenses mainly consist of staff costs and employee benefits, professional service fees, depreciation expenses and other operating expenses.
w. Other income
The Company safeguards its USDC through a third-party custodian. The Company’s other income represents the yield of USDC the Company earned through participation in a third-party custodian service.
x. Income tax
Income taxes are determined in accordance with the provisions of ASC Topic 740, “Income Taxes” (“ASC Topic 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their consolidated financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the consolidated financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.
y. Capital structure
The Company is authorized to issue 1,500 shares of common stock of $0.01 par value each. As of June 30, 2025, there were 1,500 shares issued and outstanding.
Pursuant to the resolution of the board of directors on January 8, 2026, the authorized share capital of 1,500 shares of common stock was re-designated to 303 shares of Class A common stock and 1,197 shares of Class B common stock. Holders of Class A common stock and Class B common stock have the same rights, except for voting and conversion rights. Each share of Class A common stock is entitled to one vote; and each share of Class B common stock is entitled to twenty votes and is convertible into one share of Class A common stock at any time by the holder thereof and upon transfer by the holder thereof other than certain permitted transfers. Class A common stock are not convertible into Class B common stock under any circumstances. Furthermore, all outstanding warrants, options, SAFEs and other convertible securities are designated to convert or settle exclusively into Class A common stock.
As of June 30, 2026, there were 303 shares of Class A common stock and 1,197 shares of Class B common stock outstanding.
F-15
2. Summary of significant accounting policies (Continued)
z. Share-based compensation
The Company grants share options of the Company to eligible employees and non-employees. The Company accounts for share-based awards issued to employees and non-employees in accordance with ASC Topic 718 Compensation – Stock Compensation. The Company recognizes forfeitures as they occur. The share-based compensation expenses have been categorized as either general and administrative expenses or selling and marketing expenses, depending on the job functions of the grantees.
The Company’s share-based compensation awards are expected to be settled through transfers of existing shares of common stock held by the controlling shareholder, rather than through the issuance of new shares by the Company. The underlying shares of common stock are included in issued and outstanding shares as of the balance sheet date; accordingly, such settlement is not expected to increase the Company’s total issued and outstanding shares.
Employees’ share-based awards and non-employees’ share-based awards are measured at the grant date fair value of the awards and recognized as expenses a) immediately at grant date if no vesting conditions are required; or b) using graded vesting method, net of estimated forfeitures, over the requisite service period, which is the vesting period.
The Company employs discounted cash flow method to determine the fair value of the Company’s share-based compensation arrangements, where the key valuation variables include risk free rate, discount rate, and perpetual rate.
aa. Segment reporting
ASC 280, “Segment Reporting”, establishes standards for reporting information about operating segments on a basis consistent with the Company’s internal organizational structure as well as information about geographical areas, business segments and major customers in consolidated financial statements for details on the Company’s business segments.
The Company uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Company’s chief operating decision maker (“CODM”) for making operating decisions and assessing performance as the source for determining the Company’s reportable segments. The Company’s CODM is the chief executive officer. The CODM regularly reviews consolidated operating results and reviews consolidated revenues and net loss when making decisions about allocating resources and assessing performance of the segment, and hence, the Company has only one reportable segment. Therefore, as the Company has determined it operates as a single reportable segment, the CODM assesses the Company’s performance and results of operations on a consolidated basis.
bb. Related parties
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control or significant influence, such as a family member or relative, shareholder, or a related corporation.
cc. Comprehensive loss
Comprehensive loss is defined as a change in equity during a period from transactions and other events and circumstances from non-owner sources. The Company’s comprehensive loss was the same as its reported net loss for all periods presented.
F-16
2. Summary of significant accounting policies (Continued)
dd. Loss per share
Basic net loss per share of common stock attributable to common shareholders is calculated by dividing net loss attributable to common shareholders by the weighted-average shares of common stock outstanding for the period. Potentially dilutive shares, which are based on the weighted-average shares of common stock underlying outstanding share-based awards or options using the treasury stock method or the if-converted method, as applicable, are included when calculating diluted net income per share of common stock attributable to common shareholders when their effect is dilutive.
Diluted net loss per share attributable to common shareholders is computed by adjusting the weighted-average number of shares of common stock outstanding for the dilutive effect of all potential common stock equivalents. These potential shares are included in the diluted earnings per share calculation only when their effect is dilutive.
In periods where the Company reports a net loss, diluted net loss per share is calculated in the same manner as basic net loss per share because the inclusion of any potential common stock would have an anti-dilutive effect. The Company had no potential common stock equivalents outstanding during the periods presented. Consequently, no potential common stock equivalents were included in the calculation for the years in which a net loss was incurred.
ee. Dividends
Dividends are recognized when declared. No dividends were declared for the year ended June 30, 2025 and 2026, respectively. The Company does not have any present plan to pay any dividends on its common stock in the foreseeable future. The Company currently intends to retain the available funds and any future earnings to operate and expand its business.
ff. Emerging growth company
The Company intends to operate as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). The JOBS Act permits companies with emerging growth company status to take advantage of an extended transition period to comply with new or revised accounting standards, delaying the adoption of these accounting standards until such time as those standards would apply to private companies. The Company elected to use this extended transition period to enable it to comply with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company’s consolidated financial statements may not be comparable to companies that comply with the new or revised accounting standards as of public company effective dates.
gg. Recently accounting pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires entities to make incremental income tax disclosures on an annual basis. The amendments require that public business entities disclose specific categories in the rate reconciliation and provide additional information for reconciling items meeting a quantitative threshold. The amendments also require disclosure of income taxes paid to be disaggregated by jurisdiction, and the disclosure of income tax expense disaggregated by federal, state, and foreign. Amendments are effective for annual periods beginning after December 15, 2025 and thereafter, with early adoption permitted. The Company is currently evaluating the impact of the new accounting pronouncements or guidance on the consolidated financial statements. The Company will adopt this ASU for the fiscal year beginning July 1, 2026.
F-17
2. Summary of significant accounting policies (Continued)
gg. Recently accounting pronouncements (Continued)
In July 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-05, Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. The amendment provides (1) all entities with a practical expedient to assume that current conditions as of the balance sheet date do not change for the remaining life of the assets and (2) entities other than public business entities with an accounting policy election to consider collection activity after the balance sheet date when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under Topic 606. This guidance is effective for annual reporting periods beginning after December 15, 2025 and interim reporting periods within those annual reporting periods. Early adoption is permitted. The Company is currently evaluating the impact of the new accounting pronouncements or guidance on the consolidated financial statements. The Company will adopt this ASU for the fiscal year beginning July 1, 2026.
In November 2024, the FASB issued ASU 2024-03 “Income Statement—Reporting comprehensive (loss) income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). The amendments in this update intend to improve the disclosures about a public business entity’s expenses and address requests from investors for more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation, amortization, and depletion) in commonly presented expense captions (such as cost of sales, selling, general and administrative expenses, and research and development). ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and interim periods beginning after December 15, 2027. The Company is currently evaluating the impact from the adoption of this ASU on its consolidated financial statements. The Company will adopt this ASU for its annual report for the fiscal year beginning July 1, 2027 and for interim reports for periods beginning July 1, 2028.
In January 2025, the FASB issued Accounting Standards Update (ASU) No. 2025-01, Income Statement — Reporting comprehensive (loss) income — Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date. The amendment clarifies the effective date of ASU No. 2024-03 that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. Early adoption of Update 2024-03 is permitted. The Company is currently evaluating the impact of the above new accounting pronouncements or guidance on the consolidated financial statements. The Company will adopt this ASU for its annual report for the fiscal year beginning July 1, 2027 and for interim reports for periods beginning July 1, 2028.
In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Accounting for and Disclosure of Software Costs (“ASU 2025-06”), which amends certain aspects of the accounting for and disclosure of internal-use software costs. ASU 2025-06 is effective for annual reporting periods beginning with the year ending December 31, 2028, with early adoption permitted. The Company is currently evaluating the impact of the above new accounting pronouncements or guidance on the consolidated financial statements. The Company will adopt this ASU for the fiscal year beginning July 1, 2028.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the balance sheets, statements of income and comprehensive loss and cash flows.
3. Concentration and risk
Custodian Risk
The Company’s crypto assets are held exclusively with a single third-party custodian. Custodian risk refers to the potential loss, theft, or misappropriation of the Company’s assets held with its sole third-party custodian, due to the custodian’s operational failures, cybersecurity breaches, or financial difficulties experienced by the third-party custodian. The Company periodically monitor the financial health, insurance coverage, and security measures of the Company’s custodians, reliance on such third parties inherently exposes the Company to risks that the Company cannot fully mitigate.
F-18
3. Concentration and risk (Continued)
Concentration of credit risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, accounts receivable and refundable deposits receivable. The Company performs ongoing credit evaluations of the customers’ financial condition and maintains an allowance for potential credit losses. This allowance consists of an amount identified for specific customers and an amount based on overall estimated exposure. The Company’s overall estimated exposure excludes amounts covered by credit insurance.
Concentration of customers
The Company’s revenue was concentrated among a limited number of customers during the periods presented. The following table summarized customers with greater than 10% of the total revenue:
| For the | ||||||||
| years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Customer A | 14.0 | % | ** | |||||
| Customer B | 12.5 | % | ** | |||||
| Customer C | 10.2 | % | 20.1 | % | ||||
| Customer D | ** | 19.2 | % | |||||
| **: | less than 10% |
The Company’s account receivable was concentrated among a limited number of customers during the periods presented. The following table summarized customers with greater than 10% of the total account receivable:
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| Customer D | ** | 10.2 | % | |||||
| Customer E | 42.7 | % | ** | |||||
| Customer F | 38.3 | % | ** | |||||
| Customer G | 19.0 | % | ** | |||||
| Customer H | * | 43.7 | % | |||||
| Customer I | ** | 12.8 | % | |||||
| *: | nil, new customer for the year ended June 30, 2026 |
| **: | less than 10% |
F-19
3. Concentration and risk (Continued)
Concentration of suppliers
The Company’s purchases was concentrated among a limited number of suppliers during the periods presented. The following table summarized suppliers with greater than 10% of the total purchase:
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Supplier A | 41.4 | % | ** | |||||
| Supplier B | 31.7 | % | 31.0 | % | ||||
| Supplier C | 18.4 | % | 28.0 | % | ||||
| Supplier D | * | 18.4 | % | |||||
| Supplier E | * | 11.4 | % | |||||
| *: | nil, new supplier for the year ended June 30, 2026 |
| **: | less than 10% |
The Company’s account payable was concentrated among a limited number of suppliers during the periods presented. The following table summarized suppliers with greater than 10% of the total account payable:
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| Supplier F | 54.9 | % | ** | |||||
| Supplier G | 32.3 | % | ** | |||||
| Supplier C | 12.1 | % | 77.3 | % | ||||
| Supplier B | ** | 12.4 | % | |||||
| Supplier E | ** | 10.3 | % | |||||
| **: | less than 10% |
F-20
4. Fair value measurements
As of June 30, 2025 and 2026, information about inputs into the fair value measurement of the Company’s assets and liabilities that are measured at fair value on a recurring basis in periods subsequent to their initial recognition is as follows:
| Fair value measurement at reporting date using | ||||||||||||||||
| Description | Fair value as of June 30, 2025 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
| Liabilities: | ||||||||||||||||
| Simple agreements for future equity(1) | $ | 18,243,885 | $ | - | $ | - | $ | 18,243,885 | ||||||||
| Other payable related to the equity option(2) | 53,333 | - | - | 53,333 | ||||||||||||
| Fair value measurement at reporting date using | ||||||||||||||||
| Description | Fair value as of June 30, 2026 |
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
||||||||||||
| Liabilities: | ||||||||||||||||
| Simple agreements for future equity(1) | $ | 29,121,268 | $ | - | $ | - | $ | 29,121,268 | ||||||||
| Other payable related to the equity option(2) | 53,333 | - | - | 53,333 | ||||||||||||
| (1) |
The Company classifies its SAFEs as financial liabilities measured at fair value. The value of these agreements depends significantly on future financing activities, liquidity events, or other material milestones, and their valuation relies on significant inputs that are not observable in the public market. Accordingly, they are classified within Level 3 of the fair value hierarchy.
The fair value measurement is based on an integrated framework combining scenario analysis and financial instrument decomposition (i.e. Bond Plus Call Method). As of June 30, 2026, the proceeds of the SAFEs on the date of issuance were $14,092,500. The details of significant unobservable inputs can refer to Note 8-Simple Agreements for Future Equity for further details. |
| (2) | Equity options. On May 9, 2023, the Company entered into an agreement with a third-party service provider (the “Service Provider”). The Service Provider received a freestanding equity-linked right exercisable, at the Service Provider’s option, upon the closing of the Company’s next qualified equity financing. The right provides the ability to subscribe for up to the value of $200,000 at a 25% discount price per share on the grant date. The equity option is remeasured at fair value at each reporting date, with changes in fair value recognized in earnings. As of June 30, 2025 and 2026, the fair value of the equity option was $53,333, and no gain or loss from changes in fair value was recognized for the periods presented. The fair value measurement of the equity option is categorized within Level 3 of the fair value hierarchy and was determined using a scenario-based analysis, which incorporates significant unobservable inputs and management judgment regarding the probability and timing of potential future financing outcomes. |
F-21
5. Crypto assets
The Company uses crypto assets like USDT and USDC as medium of exchange for collecting and settling business-related payments and for receiving investment proceeds. As of June 30, 2025 and 2026, the Company held nil and $2,160,746 of USDT and USDC, respectively.
The Company commenced the use of crypto assets in December 2025. The movements in digital assets and USDC for the year ended June 30, 2026 are set out below:
| USDT | USDC | |||||||
| Balance as of June 30, 2025 | $ | - | $ | - | ||||
| Additions(i) | 991,601 | 6,275,251 | ||||||
| Disposals - sold for US dollars | (596,852 | ) | (809,669 | ) | ||||
| Disposals(ii) | (394,749 | ) | (3,304,836 | ) | ||||
| Balance as of June 30, 2026 | $ | - | $ | 2,160,746 | ||||
| (i) | The Company acquired a total of 991,601 USDT at a cost of $991,601 from revenues and other current assets. The Company acquired a total of 6,275,251 USDC at a cost of $ 6,275,251 from revenues, USDC rewards, other current assets and investment proceeds from SAFEs. | |
| (ii) | The Company uses digital assets and USDC to settle professional services fees and other expenditures, and any digital assets held may be converted into USDC, as needed. |
The Company’s balances related to digital assets are USD-pegged stablecoins. No fair value gain or loss on digital assets was recognized for the year ended June 30, 2026 considering the low volatility in the fair value of USDT during the year ended June 30, 2026.
The following table summarizes other operating activities settled in digital assets and USDC:
|
For the June 30, 2026 |
||||
| Revenue | $ | (2,798,918 | ) | |
| Other receivables | (1,452,102 | ) | ||
| Cost and expenses | 3,699,585 | |||
| USDC rewards | (15,832 | ) | ||
| Total operating activities settled in digital assets and USDC | $ | (567,267 | ) | |
F-22
6. Accounts receivable
Accounts receivable consisted of the following:
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| Accounts receivable | $ | 152,536 | $ | 1,145,232 | ||||
| Less: allowance for credit losses | - | (38,022 | ) | |||||
| Accounts receivable, net | $ | 152,536 | $ | 1,107,210 | ||||
Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company maintains an allowance for credit losses for expected losses over the life of the accounts receivable using the current expected credit loss methodology. The Company determines the allowance based on historical loss experience, current conditions, and reasonable and supportable forecasts.
For the years ended June 30, 2025 and 2026, the movement of allowance for expected credit losses were as below:
|
For the June 30, |
||||||||
| 2025 | 2026 | |||||||
| Balance at beginning of the year | $ | - | $ | - | ||||
| Addition | - | 38,022 | ||||||
| Balance at end of the year | $ | - | $ | 38,022 | ||||
7. Equipment, net
Equipment, net consisted of the following:
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| Equipment | $ | 29,944 | $ | 29,198 | ||||
| Total | 29,944 | 29,198 | ||||||
| Less: accumulated depreciation | (10,344 | ) | (16,358 | ) | ||||
| Net carrying amount | $ | 19,600 | $ | 12,840 | ||||
Depreciation expenses for the years ended June 30, 2025 and 2026 were $6,234 and $6,760, respectively.
F-23
8. Simple agreements for future equity
The Company has entered into SAFEs with various investors that were classified as liabilities on the Company’s balance sheets and accounted for at fair value, subject to remeasurement each reporting period. SAFEs have no maturity date, does not bear any interest and provides the investor with the right to convert into a variable number of shares of future equity in the Company at the stated conversion amount, if certain events or conditions are triggered.
During the period from October 2022 through June 30, 2026, the Company entered into Simple Agreements for Future Equity with third-party investors, receiving aggregate gross proceeds of $14,092,500. For the years ended June 30, 2025 and 2026, the Company received SAFEs proceeds of $4,307,500 and $3,500,000, respectively. No issuance costs were incurred in connection with these arrangements.
On August 27, 2026, the Company consummated the Business Combination contemplated by the Agreement and Plan of Merger dated January 11, 2026. Upon the De-SPAC closing, all outstanding SAFEs of the Company were cancelled and converted into the right to receive shares of PubCo Class A common stock based on the applicable SAFE holders’ implied ownership percentages. The shares of PubCo Class A common stock received in connection with the SAFE conversion constituted full satisfaction of their rights under the applicable SAFEs and were subject to a six-month lock-up period following the Closing Date. No additional cash consideration was payable upon such conversion.
The SAFEs agreements grant investors the right to participate in the Company’s future equity financing events. The agreements contain various conversion and redemption provisions, including conversion upon an equity financing event, as well as settlement in the event of a liquidity event or dissolution of the Company. Key terms of the SAFEs are as follows:
Equity Financing – Upon the occurrence of an equity financing event, the SAFE instruments convert into shares of the Company’s Standard Preferred shares as follows:
| (i) | Price-based SAFEs: each SAFEs automatically converts into a greater of (a) the number of shares of preferred shares equal to SAFEs purchase amount divided by the lowest price per share paid for the standard preferred shares or (b) the number of shares of preferred shares equal to the SAFEs purchase amount divided by the SAFEs price. |
| ● | “SAFEs price” is calculated by dividing a fixed post-money valuation cap by the Company capitalization, a defined term that includes all outstanding equity and convertible instruments. | |
| ● | “Equity Financing” means a bona fide transaction or series of transactions with the principal purpose of raising capital, pursuant to which the Company issues and sells preferred share at a fixed valuation, including but not limited to, a pre-money or post-money valuation. |
| (ii) | Fixed-percentage SAFEs: on the initial closing of such Equity Financing, the SAFE automatically converts into that number of shares of the Standard Preferred Share representing a fixed percentage of total issued and outstanding shares of the Company immediately after the Closing. |
Not all SAFEs agreements contain the equity financing conversion provision described above. Certain SAFEs are structured without an Equity Financing conversion feature and are generally settled only upon a Liquidity Event or a Dissolution Event (as defined in the respective SAFEs agreements). The Company considered the contractual terms of the SAFEs, including whether an Equity Financing conversion feature is present and the settlement provisions upon a Liquidity Event or a Dissolution Event, in the valuation and measurement of these instruments. As of June 30, 2026, SAFEs with an aggregate purchase amount of $13,632,500 include an Equity Financing conversion feature, while SAFEs with an aggregate purchase amount of $460,000 do not include this feature and are generally settled only upon a Liquidity Event or a Dissolution Event, in accordance with their terms.
The Company does not have any preferred shares outstanding as of the date these consolidated financial statements are issued; therefore, an equity financing event has not been triggered.
F-24
8. Simple agreements for future equity (Continued)
Liquidity Event – If there is a liquidity event before the conversion of each SAFE, the holder of each SAFEs will automatically be entitled to the greater of (i) SAFEs purchase amount, or (ii) the amount payable on the number of shares of common stock equal to the purchase amount divided by the Liquidity Price.
| ● | “Liquidity Price” is calculated by dividing the post-money valuation cap by the separately defined capital base, referred to as “liquidity capitalization” in the SAFEs agreements. | |
| ● | “Liquidity Event” means a change of control, a direct Listing or an initial public offering. |
Dissolution Event – If there is a dissolution event before the conversion of each SAFE, the holder of each SAFEs will automatically be entitled to receive a portion of proceeds equal to SAFEs purchase amount.
The Company classifies its SAFEs as financial liabilities measured at fair value. Since the value of these instruments depends on significant unobservable inputs, including future financing activities and liquidity events, they are classified as Level 3 within the fair value hierarchy.
The fair value measurement utilizes a combined scenario analysis and financial instrument decomposition approach. Based on management’s assessment of the Company’s prospects, probability distributions are assigned to potential settlement-triggering events. Valuation is performed using a “debt plus option” model: the debt component is valued using a discounted cash flow method with key assumptions including expected settlement timing, risk-free interest rate, and credit spread; the embedded conversion right is treated as a call option and valued using the Black-Scholes model, with key inputs including the fair value of common stock, expected term, and volatility. The overall fair value represents the probability-weighted sum across all scenarios, supported by an independent third-party valuation specialist.
As of June 30, 2025 and 2026, the SAFE liabilities were measured at fair value using the above Level 3 methodology. Significant unobservable inputs—including timing of events, volatility, and credit spreads—are based on management’s reasonable estimates as of each valuation date.
Major valuation inputs adopted in the valuation of the SAFE Instruments are as follows:
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| Volatility(1) | 78.6 | % | 88.7 | % | ||||
| Risk-free rate(2) | 4.0 | % | 3.9 | % | ||||
| Credit spread(3) | 8.9 | % | 9.7 | % | ||||
| Discount rate(4) | 12.8 | % | 13.6 | % | ||||
| Dividend yield(5) | 0.0 | % | 0.0 | % | ||||
| (1) | Volatility: Derived with reference to historical price volatility of comparable companies | |
| (2) | Risk-free rate: Derived with reference to U.S. sovereign bond yield | |
| (3) | Credit spread: Risk premium over the risk-free rate, derived with reference to the spread of CCC rated bonds | |
| (4) | Discount rate: Sum of risk-free rate and credit spread | |
| (5) | Dividend yield: Derived with reference to historical dividend record of the Company |
F-25
8. Simple agreements for future equity (Continued)
The following tables set forth a summary of the activity of the SAFE liabilities, respectively, which represents a recurring fair value measurement at the end of each reporting period:
| Amount | ||||
| Balance at June 30, 2024 | $ | 9,321,564 | ||
| Issuance of simple agreements for future equity | 4,307,500 | |||
| Change in fair value | 4,614,821 | |||
| Balance at June 30, 2025 | $ | 18,243,885 | ||
| Issuance of simple agreements for future equity | 3,500,000 | |||
| Change in fair value | 7,377,383 | |||
| Balance at June 30, 2026 | $ | 29,121,268 | ||
9. Income taxes
Exascale Labs Inc. is incorporated in the State of Delaware and is subject to U.S. federal income tax and Delaware corporate income tax, as well as income taxes in other jurisdictions where it conducts business. The statutory corporate income tax rate is 21% for U.S. federal purposes. Delaware imposes a corporate income tax at a rate of 8.7% on corporate taxable income. In addition, the Company is subject to state and local income taxes in other states in which it operates, calculated under applicable state law using apportionment methods (or similar rules) that allocate income among jurisdictions based on factors such as sales.
In addition, the Company files income or franchise tax returns in various other U.S. states and is subject to the applicable statutory tax rates in each jurisdiction based on income apportioned to those states.
Evana Alpha Pte. Ltd. is incorporated in Singapore and is subject to the statutory corporate income tax rate of 17%.
The current and deferred components of income tax expense reflected in the statements of operations and comprehensive loss were nil for the year ended June 30, 2025 and 2026.
The following table reconciles the statutory rate to the Company’s effective tax rate. The effective tax rate reconciliation is based on the U.S. federal statutory rate of 21%.
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| US Statutory income tax rate | 21.0 | % | 21.0 | % | ||||
| State income tax | 8.7 | % | 2.3 | % | ||||
| Tax differences from other jurisdictions | - | (0.4 | )% | |||||
| R&D expense super deduction | (2.7 | )% | ||||||
| Change in fair value of simple agreements for future equity | (17.9 | )% | (9.0 | )% | ||||
| Change in valuation allowance | (11.8 | )% | (11.2 | )% | ||||
| Effective income tax rate | - | - | ||||||
The Company’s effective income tax rate was 0% for both years ended June 30, 2025 and 2026. This is primarily attributable to the recognition of a full valuation allowance against the net deferred tax assets, as the Company has concluded that it is not more likely than not that these assets will be realized in the foreseeable future. Accordingly, no tax benefit has been recognized for the losses incurred during these periods.
F-26
9. Income taxes (Continued)
The principal components of deferred tax assets and deferred tax liabilities were as follows:
| As of June 30, |
||||||||
| 2025 | 2026 | |||||||
| Deferred tax assets | ||||||||
| Net operating loss carry forward | $ | 1,652,998 | $ | 2,679,040 | ||||
| R&D expense super deduction | - | 322,388 | ||||||
| Bad provision | - | 7,985 | ||||||
| Total deferred tax assets | 1,652,998 | 3,009,413 | ||||||
| Less: valuation allowance | (1,652,998 | ) | (3,009,413 | ) | ||||
| Total deferred tax assets, net | $ | - | $ | - | ||||
The changes in valuation allowance for the years ended June 30, 2025 and 2026 were as follows:
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Balance at the beginning of the year | $ | (748,679 | ) | $ | (1,652,998 | ) | ||
| Additions | (904,319 | ) | (1,356,415 | ) | ||||
| Balance at the end of the year | $ | (1,652,998 | ) | $ | (3,009,413 | ) | ||
As of June 30, 2025 and 2026, Exascale Labs Inc. had net operating loss carryforwards (“NOLs”) of $5.6 million and $9.9 million for U.S. federal income tax purposes and $5.6 million and $6.1 million for state income tax purposes. The federal NOLs do not expire but are subject to an annual deduction limit of 80% of taxable income. The Company’s NOLs can be carried forward to offset current year profit for Delaware and California corporate income tax purposes, subject to certain limitations.
Evana Alpha Pte. Ltd. had NOLs of $0.4 million for the year ended June 30, 2026. Under Singapore tax rules, the company’s unutilized tax losses and capital allowances may be carried forward indefinitely, subject to the shareholding and same business tests (generally requiring at least 50% shareholder continuity). Current-year losses may also be carried back up to SGD 100,000.
The Company recognizes deferred tax assets if it is more likely than not that those deferred tax assets will be realized. Management reviews deferred tax assets periodically for recoverability and makes estimates and judgments regarding the expected geographic sources of taxable income in assessing the need for a valuation allowance to reduce deferred tax assets to their estimated realizable value. Realization of the Company’s deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain.
The Company had no unrecognized tax benefits as of June 30, 2025 and 2026. The Company currently files income tax returns in the U.S., as well as Delaware. All tax years are open for examination. The Company currently has no federal or state tax examinations in progress.
F-27
10. Share-based compensation
For the years ended June 30, 2025 and 2026, total share-based compensation expenses recognized were $153,266 and nil, respectively.
| (1) | Employee |
On January 6, 2025, with the approval from the Board of the Company, an employee was granted equity award from inception of the employment agreement, which represented 0.1% of the Company’s total shares outstanding at issuance date (the “0.1% Award”, i.e., 1.5 shares). The equity award had a vesting period of 24 months after grant, but with no requisite service period. Alongside the employee’s separation in September 2025, the equity award remained its vesting pace under the 24-month vesting schedule. As of June 30, 2026, 1.125 shares of the Company were vested, with remaining 0.375 shares unvested.
| (2) | Non-employee |
On December 2, 2024, with the approval from the Board of the Company, a contractor was granted equity award from inception of the contractor agreement representing 0.053333% of the Company’s total shares outstanding at issuance date (“0.05% Award”, i.e., 0.8 shares). The equity award had a vesting period of 24 months after grant, with half vested as of April 1, 2025 and remaining as of November 1, 2026, but with no requisite service period. As of June 30, 2026, the first half of the equity award had been vested, the remaining half had been outstanding.
The Company’s share-based compensation awards are expected to be settled through transfers of existing shares of common stock held by the controlling shareholder, rather than through the issuance of new shares by the Company. The underlying shares of common stock are included in the issued and outstanding shares as of the balance sheet date; accordingly, such settlement is not expected to increase the Company’s total issued and outstanding shares. The vested shares are not recorded in the individual names of the holders on the Company’s shares ledger, but held by the controlling shareholder on their behalf, mainly due to the plan to a direct register of shares under the listed company during De-SPAC transaction. The Company, as well as the controlling shareholder deemed the grant as the time when the employee and non-employees are entitled to economic benefits and risks of the subsequent changes in fair value of the granted shares accordingly to the agreed vesting period.
11. Related party transactions
Hoansoo Lee serves as the Company’s Chief Executive Officer and Chief Financial Officer. The Company has entered into a consulting services agreement with Hoansoo Lee, pursuant to which Hoansoo Lee provides strategic consulting and advisory services to the Company.
For the years ended June 30, 2025 and 2026, the Company incurred consulting service fees of $100,150 and $27,000, respectively. As of June 30, 2025 and 2026, there were no outstanding balances payable to Hoansoo Lee as all amounts had been fully settled during the respective periods.
F-28
12. Basic and diluted net loss per share
Basic loss per share and diluted loss per share have been calculated in accordance with ASC 260, “Earnings Per Share” on computation of earnings per share for the years ended June 30, 2025 and 2026 as follows:
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Net loss attributable to common shareholders | $ | (7,659,667 | ) | (12,162,391 | ) | |||
| Denominator: | ||||||||
| Weighted-average shares of common stock outstanding(i) | 1,500 | 1,500 | ||||||
| Basic and diluted loss per share | $ | (5,106.44 | ) | (8,108.26 | ) | |||
| (i) | In January 2026, the Company adopted an Amended and Restated Certificate of Incorporation, which established a dual-class common stock structure. Under this new structure, the Company’s equity is divided into 303 shares of Class A common stock and 1,197 shares of Class B common stock, which are entitled to one (1) vote and twenty (20) votes per share, respectively. Despite the differential in voting power, Class A common stock and Class B common stock rank pari passu in all other respects, sharing ratably in dividends and any distributions upon liquidation. |
| (ii) | For the fiscal years ended June 30, 2026 and 2025, diluted net loss per share was calculated in the same manner as basic net loss per share because there were no potential common stock equivalents outstanding during the periods presented. |
13. Segment information
The Company manages its business in a centralized manner and operates as a single segment and accordingly has only one operating and reportable segment, the provision of GPU computing platform services. The Company’s Chief Executive Officer serves as the CODM. The CODM regularly reviews entity-wide operating results and reviews consolidated revenues and net loss as reported in the statement of operations and comprehensive loss when making decisions about allocating resources and assessing performance of the segment, and hence, the Company has only one reportable segment.
The primary measures of segment revenue and profitability for the Company’s operating segment are considered to be consolidated revenue and net loss. The CODM uses consolidated revenue to assess market performance and growth, and net loss to evaluate segment profitability and cost management. Both measures are used together to allocate resources, including employee or capital resources. Significant expense categories regularly provided to and reviewed by the CODM include those presented in the statements of operations and comprehensive loss as well as disaggregated expenses of staff costs and employee benefits, professional service expenses, share-based compensation, and other general and administrative expenses.
F-29
13. Segment information (Continued)
The following table presents the segment information of the Company for the measurement of segment profitability for the years ended June 30, 2025 and 2026:
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Revenues | $ | 7,015,512 | $ | 14,822,799 | ||||
| Cost of revenues | (5,910,315 | ) | (12,404,546 | ) | ||||
| Gross profit | $ | 1,105,197 | $ | 2,418,253 | ||||
| Research and development expenses | ||||||||
| – Outsourcing research and development expenses | (2,787,346 | ) | (4,079,430 | ) | ||||
| – Computing power costs and others | (10,560 | ) | (1,410,755 | ) | ||||
| Selling and marketing expenses | ||||||||
| – Staff costs, employee benefits and office expenses | (835,889 | ) | (499,392 | ) | ||||
| – Share-based compensation | (153,266 | ) | - | |||||
| General and administrative expenses | ||||||||
| – Staff costs, employee benefits and Others | (328,662 | ) | (444,259 | ) | ||||
| – Professional service expenses | (34,320 | ) | (785,257 | ) | ||||
| Loss from operations | $ | (3,044,846 | ) | $ | (4,800,840 | ) | ||
| Change in fair value of simple agreements for future equity | (4,614,821 | ) | (7,377,383 | ) | ||||
| Other income | - | 15,832 | ||||||
| Income tax expenses | - | - | ||||||
| Net loss | $ | (7,659,667 | ) | $ | (12,162,391 | ) | ||
Substantially all of the Company’s long-lived assets are located in the United States. The following table presents the Company’s revenue from major geographical areas for the periods indicated.
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Hong Kong | $ | 600,000 | $ | 4,539,901 | ||||
| United States of America | 2,085,579 | 3,913,744 | ||||||
| Canada | 1,443,306 | 3,679,780 | ||||||
| Singapore | 2,484,905 | 2,023,271 | ||||||
| United Kingdom | 391,722 | 666,103 | ||||||
| Others | 10,000 | - | ||||||
| Total | $ | 7,015,512 | $ | 14,822,799 | ||||
F-30
14. Commitments and contingencies
From inception to date, the Company has not been a party to any legal proceedings, claims, or disputes arising in the ordinary course of business. As of June 30, 2026, the Company had no outstanding litigation, and there were no commitments or contingencies that management believes would have a material effect on the consolidated financial statements.
15. Subsequent events
The Company evaluated all events and transactions that occurred after June 30, 2026, up through September 28, 2026, which is the date that these consolidated financial statements are issued, unless as disclosed elsewhere and below, no other material subsequent events occurred that would require recognition or disclosure in the Company’s consolidated financial statements.
SAFEs
From July 1, 2026 to September 28, 2026, an investor provided $1.0 million to the Company in the form of a SAFE.
Convertible Loan
On July 16, 2026, the Company, as lender, entered into a convertible loan agreement with a third party in the principal amount of approximately $1.5 million. The full loan amount was disbursed in July 2026.
Business combination and Conversion of SAFEs instruments
On August 27, 2026, Exascale Labs Holdings Inc. consummated the transactions contemplated by the Agreement and Plan of Merger dated January 11, 2026, by and among BCAR, PubCo, Merger Sub and the Company (the “Business Combination”).
Prior to the Acquisition Merger, BCAR completed its domestication from the British Virgin Islands to Delaware by merging with and into PubCo, with PubCo surviving as a Delaware corporation. In connection with the Domestication Merger, PubCo changed its name from “D. Boral ARC Merger Corporation” to “Exascale Labs Holdings Inc.” Following the Domestication Merger, Merger Sub merged with and into the Company, with the Company surviving as a wholly owned subsidiary of PubCo.
In connection with the Acquisition Merger, the outstanding equity interests of the Company were cancelled and converted into shares of PubCo common stock. The outstanding SAFEs of the Company were cancelled and converted into the right to receive shares of PubCo Class A common stock based on the applicable SAFE holders’ implied ownership percentages. The shares of PubCo Class A common stock received in connection with the SAFE conversion constituted full satisfaction of their rights under the applicable SAFEs and were subject to a six-month lock-up period following the Closing Date.
Upon the closing of the Business Combination, the Company’s former securityholders received an aggregate of 19,354,261 shares of PubCo Class A common stock and 30,645,739 shares of PubCo Class B Common stock, representing aggregate merger consideration of $500.0 million based on a deemed value of $10.00 per share. The Class B Common stock have 20 votes per share, while the Class A common stock have one vote per share.
The Business Combination was accounted for as a reverse recapitalization, with the Company identified as the accounting acquirer and BCAR identified as the accounting acquiree for financial reporting purposes.
The Class A common stock and warrants of PubCo commenced trading on Nasdaq on August 28, 2026 under the symbols “XLAB” and “XLABW,” respectively.
F-31
15. Subsequent events (Continued)
Non-Binding Memorandum of Understanding for Potential Data Center Collaboration
On July 21, 2026, the Company entered into a non-binding memorandum of understanding with a third party to explore the joint development and commercialization of multiple data centers in Japan with an aggregate targeted capacity of at least 20 MW, including the potential deployment of the Company’s GaaS and cluster management solutions on the third party’s infrastructure. The memorandum of understanding is not legally binding, other than with respect to customary confidentiality and termination provisions, and does not obligate either party to enter into a definitive agreement, and there can be no assurance that any transaction or definitive agreement will be consummated.
Compute Service Agreement for GPU Capacity
On July 15, 2026, the Company entered into a Compute Service Agreement with a third party to secure GPU compute capacity of approximately 4,000 PFLOPS (FP16) over a three-year term, for total contracted service fees of approximately $71 million. As of the date of this report, service delivery under the agreement has not commenced and no payment obligations have arisen.
F-32
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS OF EXASCALE LABS INC.
The following discussion and analysis of the financial condition and results of operations of Exascale Labs Inc. (“Legacy Exascale”) for the years ended June 30, 2026 and 2025 is included as Exhibit 99.2 to Amendment No. 1 (the “Amendment”) to the Current Report on Form 8-K filed by Exascale Labs Holdings Inc. (“PubCo”) with the SEC on September 2, 2026 (the “Original Form 8-K”). Unless the context otherwise requires, references in this Exhibit 99.2 to “we,” “us,” “our” and the “Company” refer to PubCo and its consolidated subsidiaries following the Closing and to Legacy Exascale and its subsidiary prior to the Closing; the historical financial information discussed below is that of Legacy Exascale. As used in this Exhibit 99.2, “GaaS” means GPU as a Service, “AIDC” means AI data center, “LLM” means large language model, “HVDC” means high-voltage direct current, “USDC” means U.S. Dollar Coin and “SAFEs” means simple agreements for future equity. Capitalized terms used but not defined in this Exhibit 99.2 have the meanings given to them in the Amendment or the Original Form 8-K.
You should read the following discussion and analysis of our financial condition and results of operations together with our audited consolidated financial statements and notes thereto included as Exhibit 99.1 to the Amendment. Certain of the information contained in this discussion and analysis or set forth elsewhere in the Amendment or the Original Form 8-K, including information with respect to plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the section entitled “Risk Factors” in the Proxy Statement/Prospectus, which is incorporated by reference in the Amendment, our actual results could differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. You should carefully read that section to gain an understanding of the important factors that could cause actual results to differ materially from our forward-looking statements. Please also see the section entitled “Form 10 Information—Cautionary Note Regarding Forward-Looking Statements” in the Amendment.
OVERVIEW
Legacy Exascale was incorporated in the State of Delaware in June 2022. Exascale Labs Holdings Inc. was incorporated in the State of Delaware in December 2025 in connection with the Business Combination. Through the Business Combination, Exascale Labs Holdings Inc. succeeded to the business of Legacy Exascale. We are a next-generation AI infrastructure provider operating an asset-light, software-defined GPU compute platform and related AI infrastructure solutions. Our core business includes GaaS, through which we provide reserved and on-demand access to high-performance GPU compute capacity sourced from third-party data centers globally, as well as GPU cluster management and optimization services for AIDC operators. In addition, we have developed certain modular data center, high-density liquid cooling, HVDC power, data center interconnectivity and energy storage solutions that are designed to address deployment bottlenecks in AI infrastructure and that we believe are ready for commercial engagement, although these capabilities have not yet generated revenue as of the date of the Amendment. The platform is purpose-built for large-scale AI workloads, including LLM training, fine-tuning, and high-concurrency inference.
Our business consists of two primary product and service categories. First, we provide GPU-based compute services through our GaaS offering, which delivers scalable access to high-performance GPU capacity via bare-metal and VM configurations. These services are offered through both on-demand and reserved usage models and are designed to support a range of AI workloads, including large-scale model training, fine-tuning, and high-concurrency inference. Second, we provide Infrastructure Solutions for AI deployments, which include (i) GPU cluster management and operational services provided to AIDC operators, including planning and configuration support, monitoring, performance tuning, and ongoing operational assistance for large-scale GPU deployments, which are revenue-generating and delivered pursuant to commercial service arrangements, and (ii) certain modular data center, advanced liquid cooling, HVDC power, data center interconnectivity and energy storage solutions that management believes are ready to support customer deployments as of the date of the Amendment, although such offerings have not generated revenue to date. We expect to pursue these offerings on an asset-light basis, primarily through partnerships, systems integration, contract manufacturing and other collaborative structures.
Key Financial Metrics
| For the Years Ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| $ | $ | |||||||
| Total revenues | 7,015,512 | 14,822,799 | ||||||
| Loss from operations | (3,044,846 | ) | (4,800,840 | ) | ||||
| Net loss | (7,659,667 | ) | (12,162,391 | ) | ||||
Key Performance and Operating Metrics
We use certain key performance and operating metrics to evaluate the performance of our business, monitor customer demand and utilization, assess capacity sourcing and deployment, evaluate supplier procurement and pricing, and support resource allocation decisions. Management reviews these metrics together with our financial results, including revenue, cost of revenue, gross margin, operating expenses and cash flows.
The following table presents our key performance and operating metrics for the fiscal years ended June 30, 2025 and 2026. We calculate GPU-hours using a standard 730-hour month for each month presented, rather than the actual number of calendar days in each month. We use 730 hours because it approximates the average number of hours in a month and is applied consistently across all periods presented to enhance period-to-period comparability and avoid fluctuations caused solely by differences in the number of calendar days in individual months. Accordingly, available GPU-hours are calculated as deployed GPU capacity multiplied by 730 hours for each month, and billable GPU-hours are calculated as customer-contracted GPU capacity multiplied by 730 hours for each month. Our current KPI framework does not separately track or present on-demand GPU-hours as a key operating metric. On-demand usage, to the extent generated during the periods presented, is discussed through revenue and MD&A rather than through this KPI.
For capacity-based metrics, we present monthly average amounts for the applicable period because management believes period-average capacity metrics are more directly comparable to period revenue, cost of revenue, available GPU-hours, billable GPU-hours and utilization. Monthly average amounts are calculated as the simple average of the monthly capacity amounts compiled by management for each month in the applicable period.
| For the years ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| Average contracted GPU supply | 935.3 GPUs | 1,294.7 GPUs | ||||||
| Average theoretical GPU compute power related to contracted GPU supply | 733,231 Tflops | 2,194,087 Tflops | ||||||
| Average deployed GPU capacity | 816.7 GPUs | 1,154.7 GPUs | ||||||
| Average theoretical GPU compute power related to deployed GPU capacity | 595,289 Tflops | 1,816,187 Tflops | ||||||
| Average customer-contracted GPU capacity | 754.7 GPUs | 1,050.8 GPUs | ||||||
| Average theoretical GPU compute power related to customer-contracted GPU capacity | 532,238 Tflops | 1,580,057 Tflops | ||||||
| Available GPU-hours | 7,154,000 | 10,114,880 | ||||||
| Billable GPU-hours | 6,610,880 | 9,205,008 | ||||||
| Utilization of deployed GPU capacity | 92.4 | % | 91.0 | % | ||||
| Weighted-average remaining customer contract term, as of period end | 4.2 months | 8.2 months | ||||||
2
Average contracted GPU supply.
The monthly average GPU capacity secured under binding supplier arrangements during the applicable period. This metric includes GPU capacity available to us under binding supplier arrangements during the period and excludes non-binding forecasts, options, allocation indications, memorandums of understanding (“MOUs”) and similar non-binding arrangements. Monthly average amounts are calculated as the simple average of the monthly capacity amounts compiled by management for each month in the applicable period. This metric provides visibility into our access to GPU supply and capacity sourcing over the applicable period. Management uses this metric for supplier procurement planning, deployment planning, capacity expansion decisions and alignment of supplier capacity with expected customer demand.
Average theoretical GPU compute power related to contracted GPU supply.
The monthly average theoretical compute power associated with average contracted GPU supply during the applicable period, calculated based on the GPU types and theoretical performance characteristics used by management. Theoretical GPU compute power does not represent actual realized throughput, which may vary based on workload type, configuration, utilization, software optimization, networking, memory, customer usage patterns and other factors. This metric helps investors understand the compute capacity associated with our contracted GPU supply. Management uses this metric to assess the scale and performance profile of contracted GPU resources.
Average deployed GPU capacity.
The monthly average GPU capacity that was installed, configured and made available for customer workloads on our platform during the applicable period. Monthly average amounts are calculated as the simple average of the monthly capacity amounts compiled by management for each month in the applicable period. This metric helps investors understand the average amount of capacity available for revenue-generating customer workloads during the period. Management uses this metric to assess deployment progress, available service capacity and operational readiness.
Average theoretical GPU compute power related to deployed GPU capacity.
The monthly average theoretical compute power associated with average deployed GPU capacity during the applicable period, calculated based on the GPU types and theoretical performance characteristics used by management. Theoretical GPU compute power does not represent actual realized throughput, which may vary based on workload type, configuration, utilization, software optimization, networking, memory, customer usage patterns and other factors. This metric helps investors understand the compute capacity associated with our deployed GPU capacity. Management uses this metric to assess deployed platform scale and capacity available to support customer workloads.
Average customer-contracted GPU capacity.
The monthly average customer demand committed under binding customer arrangements during the applicable period, measured by reference to GPUs committed to customers or equivalent committed GPU-hours, as applicable, and excluding non-binding MOUs, letters of intent, cancellable trial arrangements, pipeline opportunities and similar non-binding discussions. Monthly average amounts are calculated as the simple average of the monthly capacity amounts compiled by management for each month in the applicable period. This metric provides visibility into committed demand and forward utilization. Management uses this metric to assess demand visibility, customer commitments, capacity allocation and alignment between supplier capacity and customer demand.
3
Average theoretical GPU compute power related to customer-contracted GPU capacity.
The monthly average theoretical compute power associated with average customer-contracted GPU capacity during the applicable period, calculated based on the GPU types and theoretical performance characteristics used by management. Theoretical GPU compute power does not represent actual realized throughput, which may vary based on workload type, configuration, utilization, software optimization, networking, memory, customer usage patterns and other factors. This metric helps investors understand the compute power associated with customer-contracted demand. Management uses this metric to assess customer demand, capacity allocation and utilization planning.
Available GPU-hours.
The aggregate standardized GPU-hours during the applicable period attributable to deployed GPU capacity available to support customer workloads, calculated as the sum, for each month in the applicable period, of deployed GPU capacity multiplied by 730 hours. We use a standard 730-hour month for this calculation and does not adjust the calculation based on differences in the actual number of calendar days in each month. Available GPU-hours is a standardized capacity metric based on deployed GPU capacity made available for customer workloads and does not reflect actual customer usage. This metric serves as the denominator for utilization and helps investors understand the amount of deployed capacity available to generate revenue. Management uses this metric to monitor platform availability, operating capacity and potential idle capacity.
Billable GPU-hours.
The aggregate standardized GPU-hours during the applicable period attributable to customer-contracted GPU capacity under reserved or other binding customer arrangements, calculated as the sum, for each month in the applicable period, of customer-contracted GPU capacity multiplied by 730 hours. We use a standard 730-hour month for this calculation and do not adjust the calculation based on differences in the actual number of calendar days in each month. Our current KPI framework does not separately track or present on-demand GPU-hours as a key operating metric. On-demand usage, to the extent generated during the periods presented, is discussed through revenue and MD&A rather than through this KPI. This metric serves as the numerator for utilization and helps investors understand the portion of available deployed capacity covered by customer-contracted arrangements. Management uses this metric to evaluate customer commitments, revenue generation and capacity monetization.
Utilization of deployed GPU capacity.
Billable GPU-hours divided by available GPU-hours for the applicable period. This metric helps investors evaluate the efficiency with which we monetize deployed capacity. Management uses this metric to identify idle capacity, evaluate demand, plan procurement, assess pricing and support expansion decisions.
Weighted-average remaining customer contract term.
Weighted-average remaining term of binding fixed-term customer contracts as of the end of the applicable period, weighted by monthly committed revenue. This metric helps investors assess revenue visibility, renewal timing and customer contract duration. Management uses this metric to manage renewals, assess revenue visibility and align customer commitments with supplier arrangements.
We review supplier pricing and procurement cost information in connection with procurement planning, customer pricing, margin management and supplier negotiations. However, we do not use a single standardized average procurement cost per GPU-hour or per billable GPU-hour as a key operating metric. Our supplier arrangements are primarily usage-based and bundled with related infrastructure services, and pricing may vary based on GPU type, capacity configuration, usage volume, supplier terms, deposits, prepayments, service period, hosting, power, network connectivity and prevailing market conditions. We therefore discuss supplier cost trends through cost of revenue, gross margin and qualitative period-over-period MD&A discussion, rather than presenting a separate unit-cost KPI.
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SPECIFIC FACTORS AFFECTING OUR RESULTS OF OPERATIONS
As an AI infrastructure provider, our operational performance is shaped by key factors tied to the rapid evolution of the AI industry. While influenced by these broader industry trends, we believe our results of operations are more directly affected by company-specific factors, including the following major factors:
Our ability to secure a stable and competitive supply of advanced GPU chips
Our business depends on our ability to obtain a reliable and cost-competitive supply of advanced GPU chips. Given the current global environment, in which supply chains are concentrated and subject to periodic constraints, access to GPUs is an important input to our capacity planning, ability to meet customer requirements, and anticipated growth. GPUs represent a foundational component of our technology platform, and limitations in supply could adversely affect operating efficiency and service delivery. We believe that our current chip technology compares favorably with available alternatives and supports customer acquisition and retention.
Our ability to manage computing power supply under an asset-light model
We operate under an asset-light model and do not own core hardware. As a result, our service offerings depend on the availability of GPU servers and related computing capacity sourced and integrated from third-party providers. Supplier concentration, access to advanced GPU hardware, procurement terms, and delivery timelines may affect our available capacity, cost structure, and deployment flexibility. Disruptions in the supply chain, changes in technology, or modifications to relationships with key suppliers could adversely impact our business.
We seek to mitigate these risks through supplier relationship management, capacity planning, and the use of contractual arrangements designed to provide flexibility where feasible. We have expanded our available computing capacity over time, which supports anticipated business growth and may contribute to improved procurement efficiency.
Our ability to develop and scale our technical and operational platform
Our service offerings depend on the performance and reliability of our software platform and operational systems, which enable the delivery and management of computing services. While GPU hardware is sourced from third parties, our software and operational capabilities are required to allocate resources, manage performance, support automation, and provide customer support at scale. The effectiveness of this technical and operational layer influences service reliability, operating costs, and the customer experience.
We continue to develop and enhance our internal software platform and operational processes, including the addition of new functionality intended to address evolving customer requirements and support the scaling of our services.
Our ability to manage third-party data center dependencies
We rely on third-party providers for data center facilities, including space, power, cooling, and network connectivity. These infrastructure components are not directly controlled by us, and their availability, cost and performance may affect service delivery. Under our asset-light model, we seek to manage these dependencies through capacity planning, system architecture design, service-level management, and the use of multiple facilities where feasible.
Our approach is intended to support operational continuity and provide flexibility as service demand evolves; however, disruptions or changes in third-party data center relationships could adversely impact operations.
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Our ability to acquire, retain, and expand our customer base
Our results depend on continued customer demand for our services and our ability to attract and retain customers in a competitive market. Serving both AI developers and enterprise customers requires offerings that meet customer performance, reliability, and cost expectations, as well as the ability to respond to evolving use cases and requirements. Competition, changes in customer preferences, or the availability of alternative solutions could affect customer acquisition and retention.
We seek to support customer retention by maintaining service quality and reliability and by demonstrating the value of our services over time. For the fiscal year ended June 30, 2025 and 2026, our customer renewal rate was approximately 90% and 68%, respectively.
Our ability to achieve profitability through cost management
Under our asset-light model, we incur operating expenses in place of significant capital expenditures. Our primary cost components include GPU hardware resources, data center hosting, power, and network services. As a result, operating results are influenced by our ability to manage these ongoing costs in relation to revenue.
We seek to improve financial performance by managing resource utilization, negotiating procurement arrangements, and applying pricing practices intended to reflect cost structures and market conditions, while maintaining service quality. There can be no assurance that these efforts will result in sustained profitability.
KEY COMPONENTS OF RESULTS OF OPERATIONS
Revenues
Our business is primarily comprised of the following two revenue streams: (i) providing intelligent computing power service to commercial enterprise clients with substantial GPU computing requirements, and (ii) providing comprehensive data center service to data center asset owners.
(i) Revenue from intelligent computing power service
We leverage our expertise in high-performance computing and cloud-native architectures to build and operate stable, efficient, and scalable GPU computing platforms through modular data center design and liquid cooling technology. We use these platforms to provide computing resources for large-scale AI training, model inference, and high-performance scientific computing to commercial enterprise clients with substantial GPU computing requirements. Supporting services include GPU server environment deployment, cluster scheduling and performance optimization, high-speed network interconnection, real-time monitoring and intelligent alerting systems, as well as industry-compliant security and regulatory assurance. Under ASC 606, all related services are accounted for as a single performance obligation, and revenue is recognized on a straight-line basis over the contractual service period.
(ii) Revenue from comprehensive data center service
We leverage our project experience in infrastructure management, cluster optimization, and system monitoring to provide full-cycle operational support to data center asset owners. Services encompass facility environment deployment, network architecture implementation, security and compliance system development, daily operational monitoring, and emergency fault response. Under ASC 606, revenue from each distinct service, which constitutes a separate performance obligation, is recognized on a straight-line basis over the contractual service period.
Cost of Revenues
Our cost of revenues primarily include computing power service, professional service fees and staff costs and employee benefits. All the cost of revenues are recognized in the period in which the related services occur or the benefits are received.
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Operating expenses
Our selling and marketing expenses primarily include: (i) advertising and promotion expenses, (ii) staff costs, employee benefits and share-based compensation, and (iii) travel and other routine office expenses. All expenses are recognized in the period in which the related services occur or the benefits are received.
Our general and administrative expenses mainly consist of staff costs and employee benefits, professional service fees, depreciation expenses and other operating expenses.
Our research and development expenses mainly consist of software development outsourcing service fees, server costs, staff costs and employee benefits, and testing expenses.
RESULTS OF OPERATIONS
Fiscal year ended June 30, 2025 compared to fiscal year ended June 30, 2026
The following table summarizes the results of our operations for the years ended June 30, 2025 and 2026 and provides information regarding the dollar and percentage increase (or decrease) during such periods.
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Fluctuation | ||||||||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Revenue from intelligent computing power service | 6,546,249 | 93.3 | % | 14,664,937 | 98.9 | % | 8,118,688 | 124.0 | % | |||||||||||||||
| Revenue from comprehensive data center service | 469,263 | 6.7 | % | 157,862 | 1.1 | % | (311,401 | ) | -66.4 | % | ||||||||||||||
| Total revenues | 7,015,512 | 100.0 | % | 14,822,799 | 100.0 | % | 7,807,287 | 111.3 | % | |||||||||||||||
| Cost of revenues | (5,910,315 | ) | -84.2 | % | (12,404,546 | ) | -83.7 | % | (6,494,231 | ) | 109.9 | % | ||||||||||||
| Gross profit | 1,105,197 | 15.8 | % | 2,418,253 | 16.3 | % | 1,313,056 | 118.8 | % | |||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Selling and marketing expenses | (989,155 | ) | -14.1 | % | (499,392 | ) | -3.4 | % | 489,763 | -49.5 | % | |||||||||||||
| General and administrative expenses | (362,982 | ) | -5.2 | % | (1,229,516 | ) | -8.3 | % | (866,534 | ) | 238.7 | % | ||||||||||||
| Research and development expenses | (2,797,906 | ) | -39.9 | % | (5,490,185 | ) | -37.0 | % | (2,692,279 | ) | 96.2 | % | ||||||||||||
| Total operating expenses | (4,150,043 | ) | -59.2 | % | (7,219,093 | ) | -48.7 | % | (3,069,050 | ) | 74.0 | % | ||||||||||||
| Loss from operations | (3,044,846 | ) | -43.4 | % | (4,800,840 | ) | -32.4 | % | (1,755,994 | ) | 57.7 | % | ||||||||||||
| Change in fair value of simple agreements for future equity | (4,614,821 | ) | -65.8 | % | (7,377,383 | ) | -49.8 | % | (2,762,562 | ) | 59.9 | % | ||||||||||||
| Other income | - | - | % | 15,832 | 0.1 | % | 15,832 | NA | ||||||||||||||||
| Loss before income tax expenses | (7,659,667 | ) | -109.2 | % | (12,162,391 | ) | -82.1 | % | (4,502,724 | ) | 58.8 | % | ||||||||||||
| Income tax expenses | - | - | - | - | - | - | ||||||||||||||||||
| Net loss | (7,659,667 | ) | -109.2 | % | (12,162,391 | ) | -82.1 | % | (4,502,724 | ) | 58.8 | % | ||||||||||||
| Loss per share(1) | ||||||||||||||||||||||||
| Basic and diluted | $ | (5,106.44 | ) | $ | (8,108.26 | ) | ||||||||||||||||||
| Weighted average number of shares | ||||||||||||||||||||||||
| Basic and diluted | 1,500 | 1,500 | ||||||||||||||||||||||
| (1) | On January 8, 2026, we re-designated our authorized share capital of 1,500 common stock to 303 shares of Class A common stock and 1,197 shares of Class B common stock. |
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Revenues
Our revenues consist of the following:
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Fluctuation | ||||||||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||||||||
| Revenues | ||||||||||||||||||||||||
| Revenue from intelligent computing power service | 6,546,249 | 93.3 | % | 14,664,937 | 98.9 | % | 8,118,688 | 124.0 | % | |||||||||||||||
| Revenue from comprehensive data center service | 469,263 | 6.7 | % | 157,862 | 1.1 | % | (311,401 | ) | -66.4 | % | ||||||||||||||
| Total revenues | 7,015,512 | 100.0 | % | 14,822,799 | 100.0 | % | 7,807,287 | 111.3 | % | |||||||||||||||
Our total revenue increased by $7.8 million, or 111.3%, from $7.0 million for the year ended June 30, 2025 to $14.8 million for the year ended June 30, 2026. This growth was primarily driven by revenue from our intelligent computing power service, which increased by approximately $8.1 million, or 124.0%, from $6.5 million for the year ended June 30, 2025 to $14.7 million for the year ended June 30, 2026. This segment constituted 98.9% of our total revenue for fiscal year 2026, up from 93.3% in the prior fiscal year, solidifying its position as the core driver of our expansion. This increase was partially offset by a decrease of $0.3 million, or 66.4%, from comprehensive data center service.
We quantified the increase in revenue attributable to expansion within our existing customer base and new customer additions as follows:
| (i) | Expansion within existing customer base: $4.8 million (approximately 61.5% of total revenue growth), representing increased spending by customers that generated revenue for the year ended June 30, 2025. The increase in average revenue per existing customer was primarily associated with higher service utilization, as average service usage increased from 8.2 months for the year ended June 30, 2025 to 11.8 months for the year ended June 30, 2026, with a 17 % increase in average monthly service fees, which we believe reflects increased customer demand for compute services and higher workload and performance requirements. |
| (ii) | New customers: $3.0 million (approximately 38.5% of total revenue growth), representing revenue from customers that first generated revenue for the year ended June 30, 2026. |
The revenue growth analysis for our two revenue streams is presented below:
| (1) | Revenue from intelligent computing power service |
Our revenue from intelligent computing power service increased by approximately $8.1 million, or 124.0%, from $6.5 million for the year ended June 30, 2025 to $14.7 million for the year ended June 30, 2026. The increase was mainly due to:
Expansion and Efficiency Enhancement of Our Core Resource Pool
Our intelligent computing power resource pool has seen significant improvements in both scale and performance. Through strategic investments, we have not only expanded our total computing power supply but also optimized our resource scheduling efficiency and stability, particularly with the latest GPU computing cards. This enables us to meet the stringent demands of high-end customers for low-latency, highly reliable computing power while supporting more high-load clients, laying a solid physical foundation for revenue scaling.
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Deepening Product Value and Enhancing Solution Added Value
We continuously enhance the value delivered to customers through rapid iteration of product features and strengthening of our technical service systems. Specific manifestations include:
| (i) | Rapid evolution of product functionality: Keeping pace with cutting-edge demands, we have consistently enhanced core features such as model training optimization, inference acceleration, and dedicated resource scheduling, enabling customers to utilize computing power more efficiently. |
| (ii) | Professionalization of technical services: We provide in-depth support for technology-driven clients, including architecture consulting, performance tuning, and rapid troubleshooting, transforming from a “resource provider” to a “technology partner.” |
| (iii) | Enhancement of solution added value: By offering integrated solutions that include software tool chains, industry optimization practices, and ongoing technical support, we help customers reduce total cost of ownership and accelerate innovation, thereby achieving higher average revenue per customer and deeper customer engagement. |
High Customer Renewal Rate and Strengthening of Long-Term Partnerships
Our customer agreements generally fall into two categories, namely, (i) agreements for compute services and (ii) agreements for GPU cluster management services and related infrastructure support services. With respect to compute services, we offer both reserved arrangements and on-demand arrangements. Reserved arrangements generally provide committed intelligent computing power services for a defined service term. Historically, most reserved arrangements have had initial terms of approximately one year, although actual contract durations have generally ranged from approximately three months to three years. On-demand arrangements are generally provided under our platform terms and conditions and allow customers to obtain services on a pay-as-you-go basis without a fixed committed service term. With respect to GPU cluster management services and related infrastructure support services, we generally enter into customer agreements that provide for services to be delivered either over a defined service period on a fixed-term basis or on a project basis to complete specified scope, deliverables, or implementation work within an agreed timeframe.
During the fiscal year ended June 30, 2025, we had 28 customers across our current revenue-generating offerings, of which 19 continued to generate revenue during the fiscal year ended June 30, 2026. Accordingly, for the year ended June 30, 2026, our customer renewal rate was approximately 68% (19 out of 28). The average revenue per enterprise customer increased from $250,000 to $570,000, directly contributing to stable revenue growth. The high renewal rate stems from:
| (i) | Industry-leading hardware and software in our computing services: The reliability and performance of our products consistently meet standards. |
| (ii) | Establishment of long-term partnerships: Transitioning from transactional relationships to strategic collaborations, we have signed long-term framework agreements with several leading customers, ensuring sustainable and predictable revenue. |
Expanded our market presence.
During the initial operational phase of year ended June 30, 2024, our revenue primarily originated from early-established regional markets, such as Canada and Hong Kong. Entering year ended June 30, 2025, we successfully extended our reach to strategic markets including Singapore and the United States, resulting in a more balanced and diversified revenue structure. Specifically, the combined contribution from the Singapore and U.S. markets amounted to $4.6 million, accounting for 65.1% of total revenue for the year ended June 30, 2025. During the year ended June 30, 2026, the revenue from Hong Kong and U.S. markets was $8.5 million, accounting for 57.0% of total revenue for the period.
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Overall, our growth model has established a virtuous cycle encompassing “supply capacity, product value, customer relationships, and market presence”: resource expansion supports scale growth, product evolution enhances monetization capabilities, customer relationships provide a stable foundation, and market optimization strengthens development resilience. This growth system has laid a solid groundwork for our future sustainable development, while also validating the effectiveness of our strategic execution and the sustainability of our business model.
| (2) | Revenue from comprehensive data center service |
Our revenue from our comprehensive data center service decreased by $0.3 million, or 66.4%, from $0.5 million for the year ended June 30, 2025 to $0.2 million for the year ended June 30, 2026. The decrease was mainly due to a decline in the average service volume per customer, while the number of customers remained unchanged at two for both fiscal years.
Cost of revenues
Our cost of revenues increased by $6.5 million, from $5.9 million for the year ended June 30, 2025 to $12.4 million for the year ended June 30, 2026, representing a growth rate of 109.9%. This increase primarily reflects the scaling of our business operations in line with revenue expansion, while demonstrating improved cost efficiency as evidenced by the reduction in the cost-to-revenue ratio from 84.2% to 83.7%.
Gross profit and gross margin
The following table sets forth our gross profit and gross margin by revenue types for the years indicated:
| For the Years Ended June 30, |
||||||||||||||||
| 2025 | 2026 | Fluctuation | ||||||||||||||
| $ | $ | $ | % | |||||||||||||
| Revenues | 7,015,512 | 14,822,799 | 7,807,287 | 111.3 | % | |||||||||||
| Cost of revenues | (5,910,315 | ) | (12,404,546 | ) | (6,494,231 | ) | 109.9 | % | ||||||||
| Gross profit | 1,105,197 | 2,418,253 | 1,313,056 | 118.8 | % | |||||||||||
| Gross margin | 15.8 | % | 16.3 | % | ||||||||||||
Our gross profit increased by $1.3 million, from $1.1 million for the year ended June 30, 2025 to $2.4 million for the year ended June 30, 2026, representing a growth rate of 118.8%. This increase was driven by higher revenue and an expansion in gross margin, which improved from 15.8% to 16.3%.
The concurrent improvement in gross profit and gross margin reflects scalable operational efficiency amid rapid revenue growth. Margin expansion was achieved through ongoing optimization of technology infrastructure, energy efficiency initiatives, and dynamic resource scheduling, which helped contain the growth of cost of revenues to 109.9%, below the revenue growth of 111.3%.
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Operating expenses
The following table sets forth our operating expenses, both in absolute amount and as a percentage of the total revenues, for the years indicated:
| For the Years Ended June 30, | ||||||||||||||||||||||||
| 2025 | 2026 | Fluctuation | ||||||||||||||||||||||
| $ | % | $ | % | $ | % | |||||||||||||||||||
| Operating expenses | ||||||||||||||||||||||||
| Selling and marketing expenses | (989,155 | ) | -14.1 | % | (499,392 | ) | -3.4 | % | 489,763 | -49.5 | % | |||||||||||||
| General and administrative expenses | (362,982 | ) | -5.2 | % | (1,229,516 | ) | -8.3 | % | (866,534 | ) | 238.7 | % | ||||||||||||
| Research and development expenses | (2,797,906 | ) | -39.9 | % | (5,490,185 | ) | -37.0 | % | (2,692,279 | ) | 96.2 | % | ||||||||||||
| Total operating expenses | (4,150,043 | ) | -59.2 | % | (7,219,093 | ) | -48.7 | % | (3,069,050 | ) | 74.0 | % | ||||||||||||
Our operating expenses consist of selling and marketing expenses, general and administrative expenses, and research and development expenses. Operating expenses increased by $3.1 million, or 74.0%, from $4.2 million for the year ended June 30, 2025 to $7.2 million for the year ended June 30, 2026. The increase was primarily due to research and development expenses increasing by $2.7 million and general and administrative expenses increasing by $0.9 million, partially offset by a decrease in selling and marketing expenses of $0.5 million.
Our selling and marketing expenses decreased by $0.5 million, or 49.5%, to $0.5 million for the year ended June 30, 2026 from $1.0 million for the year ended June 30, 2025. The decrease was primarily driven by lower share-based compensation expense and reduced marketing and promotional spending. Revenue growth for the year ended June 30, 2026 came mainly from upsells to existing customers and new customer acquisitions, without a corresponding increase in selling and marketing expenses. We expect selling and marketing expenses to remain relatively stable as a percentage of total revenue in the foreseeable future.
General and administrative expenses increased by $0.9 million, or 238.7%, from $0.4 million for the year ended June 30, 2025 to $1.2 million for the year ended June 30, 2026. The increase was primarily attributable to salaries and compensations paid to operational support staff and professional fees related to consulting and audit. Despite the increase, we believe our general and administrative spending remained disciplined and aligned with our ongoing focus on administrative cost control and operating efficiency.
Research and development expenses increased by $2.7 million, or 96.2%, from $2.8 million for the year ended June 30, 2025 to $5.5 million for the year ended June 30, 2026. This increase reflects our continued commitment to technological innovation and product development to strengthen the core competitiveness of our intelligent computing power services and comprehensive for data center.
Loss from operations
Our loss from operations amounted to $4.8 million for the year ended June 30, 2026, compared to $3.0 million for the year ended June 30, 2025, representing an increase in operating loss of $1.8 million. This change was primarily attributable to the growth in operating expenses as we invested in research and development activities and higher professional service fees, which was partially offset by the revenue growth we achieved during the period.
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Change in fair value of simple agreements for future equity
The change in fair value of simple agreements for future equity resulted in a loss of $7.4 million for the year ended June 30, 2026, compared to a loss of $4.6 million for the year ended June 30, 2025. The increase in loss of $2.8 million reflects the relative stabilization in the valuation of these instruments during the period.
Net loss
Our net loss increased by $4.5 million, from $7.7 million for the year ended June 30, 2025 to $12.2 million for the year ended June 30, 2026. The increase in net loss was primarily driven by the growth in operating loss and the fair value adjustment on simple agreements for future equity, as we continued to invest in scaling our infrastructure, expanding our market presence, and advancing our technology platform.
LIQUIDITY AND CAPITAL RESOURCES
Going Concern Considerations
As of June 30, 2026, we had cash and USDC of $4.9 million and current liabilities of $31.9 million. For the years ended June 30, 2025 and 2026, we used $1.0 million and $2.8 million in operating activities. We incurred net losses of $7.7 million and $12.2 million for these respective periods. Since inception, we have incurred recurring net losses from operations and negative cash flows from operating activities. As of June 30, 2026, we had an accumulated deficit of $25.4 million. These factors raised substantial doubt regarding our ability to continue as a going concern within one year of the date our audited consolidated financial statements included as Exhibit 99.1 to the Amendment were issued.
On August 27, 2026, we consummated the Business Combination. Upon the closing of the Business Combination, all outstanding SAFEs of Legacy Exascale were converted into PubCo Class A Ordinary Common Stock in accordance with their terms, eliminating SAFE liabilities that totaled approximately $29.1 million as of June 30, 2026. In connection with the closing of the Business Combination, we obtained access to cash proceeds of approximately $11.8 million retained from the Business Combination. In addition, between July 1, 2026 and August 27, 2026, an investor provided us with $1.0 million in the form of a SAFE, which was also converted into PubCo Class A Ordinary Common Stock upon the closing of the Business Combination.
Management has prepared a cash flow forecast covering the twelve-month period following the date our audited consolidated financial statements included as Exhibit 99.1 to the Amendment are issued. The forecast considers the liquidity provided by the Business Combination, conversion of SAFE instruments on the closing of the Business Combination, as well as our operating plans and expectations, including our continued focus on expanding our market presence and developing client relationships to drive revenue growth and managing operating expenses, with the objective of improving cash flows from operations over time.
Based on this forecast, we believe that we will have sufficient liquidity to fund our ongoing operations and anticipated working capital requirements for a period of at least twelve months after the date our audited consolidated financial statements included as Exhibit 99.1 to the Amendment are issued. Accordingly, we have concluded that the substantial doubt about our ability to continue as a going concern has been alleviated.
Our audited consolidated financial statements included as Exhibit 99.1 to the Amendment have been prepared on a going concern basis, and no adjustments are required to the carrying amounts or classification of assets and liabilities in the financial statements.
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Cash Flows
Fiscal year ended June 30, 2025 compared to fiscal year ended June 30, 2026
The following table sets forth a summary of our cash flows for the years ended June 30, 2025 and 2026.
| For the Years Ended |
||||||||
| June 30, | ||||||||
| 2025 | 2026 | |||||||
| $ | $ | |||||||
| Net cash used in operating activities | (1,010,799 | ) | (2,754,624 | ) | ||||
| Net cash (used in) provided by investing activities | (2,138 | ) | 1,406,521 | |||||
| Net cash provided by (used in) financing activities | 4,275,000 | (190,000 | ) | |||||
| Net change in cash and cash equivalents | 3,262,063 | (1,538,103 | ) | |||||
| Cash and cash equivalents at the beginning of year | 969,626 | 4,231,689 | ||||||
| Cash and cash equivalents at the end of year | 4,231,689 | 2,693,586 | ||||||
Operating Activities
For the year ended June 30, 2025, net cash used in operating activities was $1.0 million. This outflow was primarily attributable to: (i) a net loss of $7.7 million; (ii) an increase in advance to suppliers of $0.8 million, mainly due to strategic advances to secure priority access to key resources; and (iii) an increase in refundable deposits receivable, mainly due to business expansion. This outflow was significantly offset by non-cash adjustments and favorable changes in working capital, including: (i) a change in the fair value of the simple agreements for future equity of $4.6 million; (ii) a decrease in other receivables of $1.7 million due to the offset of investment funds held by an employee against supplier payments made on our behalf; (iii) an increase in refundable deposits payable of $1.2 million, primarily due to higher customer deposits resulting from business expansion; and (iv) an increase in contract liabilities of $0.3 million, mainly driven by an increase in both the customer base and the average revenue per customer resulting from business expansion.
For the year ended June 30, 2026, net cash used in operating activities was $2.8 million. This outflow was primarily attributable to: (i) a net loss of $12.2 million; (ii) an increase in account receivable of $1.0 million, mainly due to the growth in revenue; and (iii) a decrease in refundable deposits payable of $1.1 million. This outflow was significantly offset by non-cash adjustments and favorable changes in working capital, including: (i) a change in the fair value of the simple agreements for future equity of $7.4 million; (ii) a decrease in other receivables of $1.7 million due to the offset of investment funds held by an employee against supplier payments made on our behalf; (iii) an decrease in advance to suppliers of $0.9 million and an increase in account payable of 0.8 million, primarily due to our having secured more favorable credit terms from our suppliers.
Investing Activities
Net cash used in investing activities for the fiscal year ended June 30, 2025 was $2.1 thousand, which was attributable to the purchases of equipment of $2.1 thousand.
Net cash provided by investing activities for the fiscal year ended June 30, 2026 was $1.4 million, which was proceeds from the sale of USDT and USDC.
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Financing Activities
Net cash provided by financing activities was $4.3 million for the fiscal year ended June 30, 2025, solely attributable to proceeds from the SAFEs. Net cash used in financing activities was $0.2 million for the fiscal year ended June 30, 2026, solely attributable to payment for deferred offering costs.
During the fiscal year ended June 30, 2026, we received $3.5 million of SAFEs proceeds through non-cash channels, consisting of $3.0 million received in USDC and $0.5 million received by an employee on our behalf. These amounts were disclosed as supplemental non-cash financing information and therefore were not included in net cash provided by financing activities.
CAPITAL EXPENDITURES
Our capital expenditures were minimal for the periods presented. We spent $2.1 thousand and nil on equipment purchases for the years ended June 30, 2025 and 2026. Going forward, we expect to make necessary capital expenditures to meet the expected growth of our business.
COMMITMENTS AND CONTRACTUAL OBLIGATIONS
We had no commitments and contractual obligations during any of the periods presented other than those disclosed in Note “COMMITMENTS and CONTINGENCIES” of our financial statements.
OFF BALANCE SHEET ARRANGEMENTS
We had no off-balance sheet arrangements during any of the periods presented.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our financial statements in accordance with generally accepted accounting principles in the United States of America, which requires our management to make estimates that affect the reported amounts of assets and liabilities at the dates of the balance sheets, as well as the reported amounts of revenues and expenses during the reporting periods. To the extent that there are material differences between these estimates and actual results, our financial condition or results of operations would be affected. We base our estimates on our own historical experience and other assumptions that we believe are reasonable after taking account of our circumstances and expectations for the future based on available information. We evaluate these estimates on an ongoing basis.
We consider an accounting estimate to be critical if: (i) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (ii) changes in the estimate that are reasonably likely to occur from period to period or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations. There are other items within our financial statements that require estimation but are not deemed critical, as defined above. Changes in estimates used in these and other items could have a material impact on our financial statements.
Revenue Recognition
We applied ASC Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) for all periods presented.
The five-step model defined by ASC606 requires us to (i) identify our contracts with clients, (ii) identify our performance obligations under those contracts, (iii) determine the transaction prices of those contracts, (iv) allocate the transaction prices to our performance obligations in those contracts, and (v) recognize revenue when each performance obligation under those contracts is satisfied. Revenue is recognized when promised goods or services are transferred to the client in an amount that reflects the consideration expected in exchange for those goods or services.
14
We report all of our revenues on a gross basis. This determination is based on our assessment that we are the principal in our revenue arrangements. We control the service delivery platform and infrastructure before the service is provided to the customer. We are primarily responsible for fulfilling the service promise, has discretion in setting prices, and assumes the credit risk associated with the customer receivable.
As a practical expedient, we elected to expense the incremental costs of obtaining a contract when incurred if the amortization period of the asset that we otherwise would have recognized is one year or less.
Pursuant to ASC 606, we recognize revenue based on the transaction price, which is the amount of consideration we expect to be entitled to in exchange for transferring services to customers. For intelligent computing power services, contract consideration is generally fixed and is typically stated as a fixed monthly fee determined by (i) the contractually specified number of GPUs (capacity) and (ii) the service period. Accordingly, the transaction price is generally the fixed contractual amount. We recognize revenue over time as the services are provided throughout the contract term. We offer payment terms ranging from 0 to 6 months, depending on customers’ credit profiles and service requirements.
We do not provide warranties for our services or offer service-type warranty arrangements.
The following is a description of our principal activities from which we generate our revenue under ASC 606.
(i) Revenue for intelligent computing power service
We leverage our expertise in high-performance computing and cloud-native architectures to build and operate stable, efficient, and scalable GPU computing platforms through modular data center design and liquid cooling technology. We use these platforms to provide computing resources for large-scale AI training, model inference, and high-performance scientific computing to commercial enterprise clients with substantial GPU computing requirements. Supporting services include GPU server environment deployment, cluster scheduling and performance optimization, high-speed network interconnection, real-time monitoring and intelligent alerting systems, as well as industry-compliant security and regulatory assurance.
We account for the above promises as a single performance obligation because they are highly integrated and not separately identifiable in the context of the contract. We provide an integrated, managed GPU computing platform in which computing capacity, deployment/configuration, scheduling, networking, monitoring, and security/compliance are interdependent and together deliver a single combined service—continuous access to a functioning and secured platform over the contractual term.
We provide intelligent computing power services under two pricing models: (i) reserved capacity arrangements and (ii) on-demand (pay-as-you-go) arrangements. The following table presents revenue recognized during the period by arrangement type:
| For the Years Ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| $ | $ | |||||||
| Reserved capacity arrangements | 6,501,569 | 14,652,429 | ||||||
| On-demand arrangements | 44,680 | 12,508 | ||||||
| Total | 6,546,249 | 14,664,937 | ||||||
15
Reserved capacity arrangements
We enter into reserved capacity arrangements, which generally provide committed intelligent computing power services for a defined service term ranging from 3 months to 3 years, with the majority of such arrangements having a one-year term. These contracts typically are non-cancelable, or may be canceled only under limited conditions with early notifications required. Payment terms generally range from 0-6 months upon the completion of services, and certain arrangements require prepayments. Any prepayments are recorded as contract liabilities and recognized over the service term.
The performance obligation is satisfied over time because the customer simultaneously receives and consumes the benefits. Revenue is recognized using a time-elapsed output method over the contractual service period.
On-demand (pay-as-you-go) arrangements
We provide customers with on-demand access to intelligent computing power and GPU resources under a pay-as-you-go model, which requires advance payment. Customer advances are recorded as contract liabilities and recognized as revenue over time during the provision of the related services underlying the contract term. We recognize revenue over time because the customer simultaneously receives and consumes the benefits during the service period. These arrangements generally do not include a fixed contractual term or minimum usage commitments.
(ii) Revenue from comprehensive data center service
We leverage our project experience in infrastructure management, cluster optimization, and system monitoring to provide full-cycle operational support to data center asset owners. Services encompass facility environment deployment, network architecture implementation, security and compliance system development, daily operational monitoring, and emergency fault response. Under ASC 606, revenue from each distinct service, which constitutes a separate performance obligation, is recognized on a straight-line basis over the contractual service period.
For the years ended June 30, 2025 and 2026, $7.0 million and $14.8 million of our revenue was recognized over time, respectively. Revenue is recognized over time because our services are performed throughout the contract term and the customer benefits as the services are provided.
Revenue disaggregated by service lines for the years ended June 30, 2025 and 2026 is disclosed in the table below:
| For the Years Ended June 30, |
||||||||
| 2025 | 2026 | |||||||
| $ | $ | |||||||
| Revenue from intelligent computing power service | 6,546,249 | 14,664,937 | ||||||
| Revenue from comprehensive data center service | 469,263 | 157,862 | ||||||
| Total | 7,015,512 | 14,822,799 | ||||||
Contract Liabilities
We receive advance payments from our customers for services to be provided in the future. These payments are recorded as contract liabilities on the balance sheet within “Contract liabilities”.
Contract liabilities are recognized when consideration is received from a customer prior to us satisfying our related performance obligations. For these service contracts, we recognize revenue, and reduce the contract liabilities over time as the services are rendered and the performance obligations are satisfied. Revenue recognized during the years ended June 30, 2025 and 2026 that was included in the contract liability balance at the beginning of the period was $95,326 and $392,152, respectively.
16
Crypto assets
Our crypto assets classified in current assets are held primarily for use in the ordinary course of business, which is expected to be actively utilized or converted within the normal operating cycle, and such crypto assets can be sold in a highly liquid marketplace. During the year ended June 30, 2026, we only held crypto assets of USDT and USDC, which were principally funded by SAFE investors and as a form of collection from revenue transactions. Our crypto assets are held with a qualified third-party custodian that provides secure storage and safeguarding of our crypto assets.
USDC
USDC is a stablecoin redeemable on a one-to-one basis for U.S. dollars and is accounted for as a financial instrument in the consolidated balance sheets.
Crypto assets other than USDC
On December 13, 2023, the FASB issued ASU 2023-08, which addresses the accounting and disclosure requirements for certain cryptocurrencies. The new guidance requires entities to subsequently measure certain cryptocurrencies at fair value, with changes in fair value recorded in net income in each reporting period. We applied the ASU since our holding of crypto assets in December 2025.
Digital assets that are received as noncash consideration in our revenue arrangements and paid in purchases of professional services and others are presented as cash flows from operating activities in other operating activities settled in digital assets and USDC. Digital assets that are received in our revenue arrangements and sold for cash within seven days are presented as cash flows from operating activities, while other digital asset activity held longer than seven days is reflected as cash flows from investing activities under disposal of digital assets and USDC held in the consolidated statements of cash flows. We present crypto assets other than USDC separately from other intangible assets and USDC, recorded as digital assets on the consolidated balance sheets.
For the year ended June 30, 2026, we recorded receipt and disbursement of digital assets amounting to $991,601 and $991,601, respectively, which resulted in an ending balance of nil. Our balances related to digital assets and stablecoins during the period included USDT and USDC, both of which are USD-pegged stablecoins. No fair value gain or loss on digital assets was recognized for the year ended June 30, 2026, considering the low volatility in the fair value of digital assets during the year ended June 30, 2026.
Simple agreements for future equity
SAFEs issued by us are freestanding financial instruments. As they contain certain redemption or liquidation features that may require us to settle the obligation in cash upon the occurrence of defined events (e.g., a change of control or dissolution), the instruments create an obligation that meets the definition of a liability. Accordingly, the SAFEs are classified in their entirety as liabilities on the consolidated balance sheets.
These liabilities are measured at fair value upon initial recognition and are subsequently remeasured at fair value at each reporting date. All changes in their fair value are recognized in the consolidated statement of operations and comprehensive loss in the period in which they occur.
17
Income taxes
Current income taxes are provided on the basis of income before income taxes for financial reporting purposes, and adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. Deferred income taxes are provided using the liability method. Under this method, deferred income tax assets and liabilities are recognized for the tax effects of temporary differences and are determined by applying enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or tax laws is recognized in the statements of comprehensive income in the period the change in tax rates or tax laws is enacted. A valuation allowance is provided to reduce the amount of deferred income tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred income tax assets will not be realized.
We apply a “more likely than not” recognition threshold in the evaluation of uncertain tax positions. We recognize the benefit of a tax position in the financial statements if the tax position is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realized upon settlement. Unrecognized tax benefits may be affected by changes in interpretation of laws, rulings of tax authorities, tax audits, and expiry of statutory limitations. In addition, changes in facts, circumstances and new information may require us to adjust the recognition and measurement estimates with regard to individual tax positions. Accordingly, unrecognized tax benefits are periodically reviewed and re-assessed. Adjustments, if required, are recorded in our financial statements in the period in which the change that necessities the adjustments occur. The ultimate outcome for a particular tax position may not be determined with certainty prior to the conclusion of a tax audit and, in certain circumstances, a tax appeal or litigation process. We record interest and penalties related to unrecognized tax benefits (if any) in interest expenses and general and administrative expenses, respectively.
RECENT ACCOUNTING PRONOUNCEMENTS
Please refer to Note 2 to our audited consolidated financial statements included as Exhibit 99.1 to the Amendment. We have reviewed all the recently issued, but not yet effective, accounting pronouncements and we do not believe any of these pronouncements will have a material impact on our financial statements.
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Exhibit 99.3
UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION
Introduction
Capitalized terms used and not defined in this Exhibit shall have the meanings assigned to them in the Current Report on Form 8-K/A to which this Exhibit is attached.
As previously disclosed, On January 11, 2026, BCAR, Exascale, PubCo and Merger Sub entered into the Business Combination Agreement. The Business Combination closed on August 27, 2026.
BCAR is a blank check company incorporated in the British Virgin Islands on March 20, 2025. BCAR was formed for the purpose of effecting a merger, amalgamation, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses.
On August 1, 2025, BCAR consummated its initial public offering of 28,000,000 public units at $10.00 per unit, which included 3,000,000 units issued upon the underwriters’ partial exercise of their over-allotment option, generating gross proceeds of $280,000,000. Simultaneously, BCAR completed the private placement of 200,000 units to the Sponsor at $10.00 per unit, generating additional proceeds of $2,000,000. Total transaction costs amounted to $3,582,634, which included a non-cash expense of $2,419,400 representing the fair value of 1,000,000 Class A ordinary shares issued to the representative of the underwriters, and $1,163,234 of other cash offering costs.
D. Boral ARC Merger Corporation (“PubCo”) is a Delaware company formed by D. Boral ARC Acquisition I Corp. (“BCAR”) on December 19, 2025 (inception). PubCo was formed to be the surviving company in connection with a contemplated business combination between BCAR and a target company. PubCo has no principal operations or revenue producing activities.
Exascale Labs Inc. (“Exascale”) is a next-generation AI infrastructure provider operating an asset-light, software-defined GPU compute platform and related AI infrastructure solutions. Exascale’s core business includes GPU as a Service (“GaaS”), through which it provides reserved and on-demand access to high-performance GPU compute capacity sourced from third-party data centers globally, as well as GPU cluster management and optimization services for AIDC operators. In addition, Exascale has developed certain modular data center, high-density liquid cooling, HVDC power, data center interconnectivity and energy storage solutions that are designed to address deployment bottlenecks in AI infrastructure and that Exascale believes are ready for commercial engagement, although these capabilities have not yet generated revenue as of the date of the Current Report on Form 8-K/A to which this Exhibit is attached.
Upon the closing of the Business Combination, D. Boral ARC Merger Corporation was renamed as “Exascale Labs Holdings Inc.” Exascale Labs Holdings Inc. is providing the following unaudited pro forma condensed combined financial information to aid in the analysis of the financial aspects of the Business Combination and other events contemplated by the Business Combination Agreement. The following unaudited pro forma condensed combined financial information presents the combination of the financial information of BCAR and Exascale, adjusted to give effect to the Business Combination and other events contemplated by the Business Combination Agreement.
The unaudited pro forma condensed combined balance sheet as of June 30, 2026 combines the historical balance sheet of BCAR as of June 30, 2026 with the historical balance sheet of Exascale as of June 30, 2026 on a pro forma basis as if the Business Combination had been consummated on June 30, 2026. This presentation has been prepared in accordance with Article 11 of Regulation S-X to facilitate understanding of the financial impacts.
The unaudited pro forma condensed combined statement of operations for the year ended June 30, 2026 combines the historical statement of operations of BCAR for the year ended June 30, 2026 and the historical statement of operations of Exascale for the year ended June 30, 2026 on a pro forma basis as if the Business Combination had been consummated on July 1, 2025.
The unaudited pro forma condensed combined financial information was derived from and should be read in conjunction with the following historical financial statements and the accompanying notes, which are incorporated by reference in the Current Report on Form 8-K/A to which this Exhibit is attached:
| ● | the historical unaudited financial statements of BCAR as of and for the period from March 20, 2025 (inception) through June 30, 2025, the historical audited financial statements of BCAR as of and for the period from March 20, 2025 (inception) through December 31, 2025 and the historical unaudited financial statements of BCAR as of and for the six months ended June 30, 2026; |
| ● | the historical audited financial statements of Exascale as of and for the year ended June 30, 2025 and 2026; and |
| ● | other information relating to Exascale and BCAR, including the Business Combination Agreement and the description of certain terms thereof and the financial and operational condition of BCAR and Exascale. |
The unaudited pro forma condensed combined financial statements have been presented for illustrative purposes only and do not necessarily reflect what Exascale’s financial condition or results of operations would have been had the Business Combination been consummated on the dates indicated. The unaudited pro forma condensed combined financial information also may not be useful in predicting the future financial condition and results of operations of the post-combination company. The unaudited pro forma condensed combined financial statements include certain assumptions, which may ultimately not come to fruition. The actual financial position and results of operations may differ significantly from the pro forma amounts reflected herein due to a variety of factors. The unaudited pro forma adjustments and the assumptions included in these unaudited pro forma condensed combined financial statements represent management’s estimates based on information available as of the date of these unaudited pro forma condensed combined financial statements and are subject to change as additional information becomes available and analyses are performed. In addition, the unaudited pro forma condensed combined financial statements do not purport to project the future financial position or operating results of the post-Closing company.
Description of the Transactions
On January 11, 2026, BCAR, Exascale, PubCo and Merger Sub entered into the Business Combination Agreement. Pursuant to the Business Combination Agreement, the Business Combination was effected in two steps: (i) a merger of BCAR with and into PubCo for the purpose of redomiciling BCAR from the British Virgin Islands to the State of Delaware (the “Domestication Merger”), with PubCo continuing as the surviving corporation and, upon effectiveness of the Domestication Merger, changing its name to “Exascale Labs Holdings Inc.”; and (ii) immediately thereafter, a merger of Merger Sub with and into Exascale, with Exascale surviving as a wholly owned subsidiary of PubCo (the “Acquisition Merger” and, together with the Domestication Merger, the “Business Combination”).
2
On August 27, 2026 (the “Closing Date”), the parties consummated the Business Combination, following approval by BCAR’s shareholders at an extraordinary general meeting held on July 29, 2026. In the Domestication Merger, BCAR continued out of the British Virgin Islands and into the State of Delaware pursuant to the Business Companies Act (Revised Edition 2020), as amended, of the British Virgin Islands and Section 388 and other applicable provisions of the General Corporation Law of the State of Delaware, with PubCo surviving as a Delaware corporation under the name “Exascale Labs Holdings Inc.” At the effective time of the Domestication Merger, (i) 1,200,000 issued and outstanding BCAR Class A ordinary shares and 12,000,000 BCAR Class B ordinary shares, together with 1,134,789 BCAR Class A ordinary shares that remained issued and outstanding and were not redeemed in connection with the shareholder vote (in each case, other than shares held as treasury shares, shares held by subsidiaries of BCAR, shares held by BCAR shareholders who properly exercised dissenter’s rights under applicable law, and BCAR Class A ordinary shares that were redeemed in connection with the shareholder vote) were cancelled and converted into 14,334,789 shares of Class A common stock, par value $0.0001 per share, of PubCo (“PubCo Class A Ordinary Common Stock”), and (ii) each warrant of BCAR outstanding immediately prior to the Domestication Merger (each, a “BCAR Warrant”) was assumed by PubCo and became a warrant of PubCo (each, a “PubCo Warrant”), exercisable for PubCo Class A Ordinary Common Stock on the same terms as were applicable to the BCAR Warrants, subject to adjustments contemplated by the Business Combination Agreement.
In connection with the extraordinary general meeting and the Business Combination, holders of 26,865,211 BCAR Class A ordinary shares exercised their redemption rights and redeemed their shares for cash. On the Closing Date, there were 1,134,789 shares of PubCo Class A Ordinary Common Stock outstanding that were held by former BCAR public shareholders.
Following the Domestication Merger, Merger Sub merged with and into Exascale, with Exascale surviving as a wholly owned subsidiary of PubCo. At the closing of the Acquisition Merger, the aggregate consideration payable to Exascale and its securityholders (the “Merger Consideration”) was $500,000,000, payable in the form of 50,000,000 newly issued shares of common stock of PubCo, valued at $10.00 per share. The Merger Consideration was allocated among Exascale’s various securityholder groups based on their respective “implied ownership percentages,” determined by reference to Exascale’s fully diluted capitalization and the specific contractual terms applicable to each category of security. In particular:
| (i) | each Simple Agreement for Future Equity (“SAFE”) between Exascale and a SAFE holder was cancelled and converted into the right to receive a number of shares of PubCo Class A Ordinary Common Stock based on the SAFE’s implied ownership percentage (which, in general, was equal to the product of (x) the quotient obtained by dividing the SAFE’s purchase amount by its post-money valuation cap and (y) 100, subject to capitalization and rounding adjustments), with all outstanding SAFEs as of the proxy statement/prospectus filing date collectively entitled to receive 8,864,761 shares of PubCo Class A Ordinary Common Stock, representing an aggregate implied ownership percentage of 17.730%; |
| (ii) | that certain Base Camp Investment Agreement, dated May 9, 2023 (the “Base Camp Investment Agreement”), was cancelled and converted into the right to receive 312,500 shares of PubCo Class A Ordinary Common Stock, representing an implied ownership percentage of 0.625%; |
| (iii) | each outstanding Exascale equity incentive award was cancelled and converted into the right to receive PubCo Class A Ordinary Common Stock based on the implied ownership percentage attributable to such award, which, based on Exascale’s capitalization as of the proxy statement/prospectus filing date, was 0.154%, entitling such award holders to receive an aggregate of 77,000 shares of PubCo Class A Ordinary Common Stock; |
| (iv) | each issued and outstanding share of Exascale Class A common stock was cancelled and converted into the right to receive PubCo Class A Ordinary Common Stock based on the implied ownership percentage attributable to Exascale’s Class A common stock, which, based on the same capitalization date, was 20.200%, entitling the holders of Exascale Class A common stock to receive an aggregate of 10,100,000 shares of PubCo Class A Ordinary Common Stock; and |
| (v) | each issued and outstanding share of Exascale Class B common stock was cancelled and converted into the right to receive PubCo Class B common stock, par value $0.0001 per share (“PubCo Class B Super Common Stock”), based on the implied ownership percentage attributable to Exascale’s Class B common stock, which, based on the same capitalization date, was 61.291%, entitling the holders of Exascale Class B common stock to receive an aggregate of 30,645,739 shares of PubCo Class B Super Common Stock. |
3
Each share of PubCo Class A Ordinary Common Stock carries one vote per share, and each share of PubCo Class B Super Common Stock carries twenty votes per share. No fractional shares of PubCo Common Stock were issued in connection with the Business Combination. On the Closing Date, there were 19,354,261 shares of PubCo Class A Ordinary Common Stock and 30,645,739 shares of PubCo Class B Super Common Stock outstanding that were held by former Exascale securityholders.
As of the Closing Date and upon completion of the Business Combination, PubCo had approximately 64,334,789 shares of PubCo Common Stock issued and outstanding, consisting of approximately 33,689,050 shares of PubCo Class A Ordinary Common Stock and 30,645,739 shares of PubCo Class B Super Common Stock, and no shares of preferred stock outstanding. In addition, as of the Closing Date, PubCo had 14,099,992 PubCo Warrants outstanding, each whole PubCo Warrant entitling the holder to purchase one share of PubCo Class A Ordinary Common Stock at an exercise price of $11.50 per share.
The pro forma combined financial information takes into account the actual redemptions of BCAR Ordinary Shares that occurred as of the Closing Date of the Business Combination.
The pro forma shares of the combined common stock issued and outstanding immediately after the Business Combination are as below:
| Actual Redemption | ||||
| Common Stock | ||||
| PubCo Class A Ordinary Common Stock held by BCAR stockholders(1) | 1,134,789 | |||
| PubCo Class A Ordinary Common Stock held by BCAR sponsor and affiliates(2) | 12,200,000 | |||
| PubCo Class A Ordinary Common Stock held by underwriter(3) | 1,000,000 | |||
| PubCo Class A Ordinary Common Stock held by Exascale SAFEholders(4) | 8,864,761 | |||
| PubCo Class A Ordinary Common Stock held by Base Camp Investment Agreement Investor(5) | 312,500 | |||
| PubCo Class A Ordinary Common Stock held by Exascale Equity Incentive Recipients(6) | 77,000 | |||
| PubCo Class A Ordinary Common Stock held by Exascale Class A common stockholders(7) | 10,100,000 | |||
| PubCo Class B Super Common Stock held by Exascale Class B common stockholders(8) | 30,645,739 | |||
| Total | 64,334,789 | |||
| 1. | Consists of 1,134,789 shares of PubCo Class A Ordinary Common Stock, resulting from the conversion by BCAR’s public stockholders on a one-for-one basis. |
| 2. | Consists of (i) 200,000 shares of PubCo Class A Ordinary Common Stock converted from private units held by the Sponsor, and (ii) 12,000,000 shares of PubCo Class A Ordinary Common Stock converted from founder shares held by the Sponsor. |
| 3. | Consists of 1,000,000 shares of PubCo Class A Ordinary Common Stock converted from representative shares held by the underwriter in BCAR’s initial public offering. |
| 4. | Consists of 8,864,761 shares of PubCo Class A Ordinary Common Stock converted from Exascale SAFEholders. |
| 5. | Consists of 312,500 shares of PubCo Class A Ordinary Common Stock converted from Base Camp Investment Agreement Investor. |
| 6. | Consists of 77,000 shares of PubCo Class A Ordinary Common Stock converted from Exascale Equity Incentive Recipients. |
| 7. | Consists of 10,100,000 shares of PubCo Class A Ordinary Common Stock converted from Exascale Class A common stockholders. |
| 8. | Consists of 30,645,739 shares of PubCo Class B Super Common Stock converted from Exascale Class B common stockholders. |
4
Accounting Treatment of the Business Combination
The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, while BCAR was the legal acquirer, it was treated as the acquired company for financial reporting purposes. Accordingly, the financial statements of Exascale represented a continuation of the financial statements of Exascale, with the Business Combination treated as the equivalent of Exascale issuing stock for the net assets of BCAR, accompanied by a recapitalization. The net assets of BCAR were stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Business Combination will be presented as those of Exascale in future reports of Exascale Labs Holdings Inc.
Exascale has been determined to be the accounting acquirer based on the evaluation of the following facts and circumstances:
| ● | Exascale stockholders had a significant majority of the voting power of PubCo; |
| ● | PubCo’s board of directors consisted of five members, all of whom were designated by Exascale; |
| ● | Exascale’s senior management comprised the senior management of PubCo and were responsible for the day-to-day operations of PubCo; |
| ● | Exascale is the larger entity based on historical operating activity and employee base; and |
| ● | Exascale’s operations comprise the ongoing operations of PubCo. |
Exascale has been designated as the accounting acquirer and has a fiscal year end of June 30. Upon the Closing of the Business Combination, PubCo changed its fiscal year end from December 31 to June 30, which is the fiscal year end historically used by Exascale.
Basis of Pro Forma Presentation
The historical financial information has been adjusted to give pro forma effect to events that are related and/or directly attributable to the Business Combination, are factually supportable, and as it relates to the unaudited pro forma combined statement of operations, are expected to have a continuing impact on the results of the post-combination company. The adjustments presented on the unaudited pro forma combined financial statements have been identified and presented to provide relevant information necessary for an accurate understanding of the post-combination company upon consummation of the Business Combination.
The unaudited pro forma combined financial information is for illustrative purposes only. The financial results may have been different had the companies always been combined. You should not rely on the unaudited pro forma combined financial information as being indicative of the historical financial position and results that would have been achieved had the companies always been combined or the future financial position and results that the post-combination company will experience. Exascale and BCAR have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
The pro forma adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2026, and in the unaudited pro forma condensed combined statement of operations for the year ended June 30, 2026 are based on the actual values as of the Closing Date. The differences that may occur between the presented value and the final purchase accounting could have a material impact on the accompanying unaudited pro forma condensed combined financial information.
5
UNAUDITED PRO FORMA CONDENSED COMBINED BALANCE SHEET
As of June 30, 2026
| Actual Redemptions | ||||||||||||||||||
| Exascale Labs Inc. | BCAR | Transaction Accounting Adjustments |
Pro Forma Combined |
|||||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| ASSETS | ||||||||||||||||||
| Current assets: | ||||||||||||||||||
| Cash and cash equivalents | 2,693,586 | 41,733 | 289,883,138 | A | 13,989,461 | |||||||||||||
| (126,615 | ) | B1 | ||||||||||||||||
| (1,367,679 | ) | B2 | ||||||||||||||||
| (278,134,702 | ) | C | ||||||||||||||||
| 1,000,000 | E1 | |||||||||||||||||
| U.S. Dollar Coin | 2,160,746 | - | 2,160,746 | |||||||||||||||
| Accounts receivable, net | 1,107,210 | - | 1,107,210 | |||||||||||||||
| Advance to suppliers | 112,343 | - | 112,343 | |||||||||||||||
| Refundable deposits receivable | 450,000 | - | 450,000 | |||||||||||||||
| Prepayment and other receivable | - | 151,886 | 151,886 | |||||||||||||||
| Total Current Assets | 6,523,885 | 193,619 | 11,254,142 | 17,971,646 | ||||||||||||||
| Non-current assets: | ||||||||||||||||||
| Cash and securities held in Trust Account | - | 289,883,138 | (289,883,138 | ) | A | - | ||||||||||||
| Property, equipment and software, net | 12,840 | - | 12,840 | |||||||||||||||
| Deferred Offering Cost | 190,000 | - | (190,000 | ) | B1 | - | ||||||||||||
| Total Non-current Assets | 202,840 | 289,883,138 | (290,073,138 | ) | 12,840 | |||||||||||||
| TOTAL ASSETS | 6,726,725 | 290,076,757 | (278,818,996 | ) | 17,984,486 | |||||||||||||
| LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||||||||||||
| Accounts payable | 916,422 | - | 916,422 | |||||||||||||||
| Simple agreement for future equity | 29,121,268 | - | - | |||||||||||||||
| - | 1,000,000 | E1 | ||||||||||||||||
| - | (30,121,268 | ) | E2 | |||||||||||||||
| Contract liabilities | 1,070,378 | 1,070,378 | ||||||||||||||||
| Refundable deposits payable | 359,481 | 359,481 | ||||||||||||||||
| Accrued expense and other current liabilities | 417,951 | 812,530 | (812,530 | ) | B2 | 367,951 | ||||||||||||
| (50,000 | ) | D | ||||||||||||||||
| Total Current Liabilities | 31,885,500 | 812,530 | (29,983,798 | ) | 2,714,232 | |||||||||||||
| Total Liabilities | 31,885,500 | 812,530 | (29,983,798 | ) | 2,714,232 | |||||||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||||||||||||
| Temporary equity: | ||||||||||||||||||
| Common stock subject to possible redemption | - | 289,883,138 | (289,883,138 | ) | C | - | ||||||||||||
| Stockholders’ Equity (Deficit) | ||||||||||||||||||
| Class A common shares | 3 | 120 | 113 | C | 3,368 | |||||||||||||
| 31 | D | |||||||||||||||||
| 886 | E2 | |||||||||||||||||
| 1,200 | F | |||||||||||||||||
| 1,015 | G | |||||||||||||||||
| Class B common shares | 12 | 1,200 | (1,200 | ) | F | 3,065 | ||||||||||||
| 3,065 | G | |||||||||||||||||
| (12 | ) | G | ||||||||||||||||
| Additional paid-in capital | 220,636 | (297,000 | ) | B1 | 41,198,396 | |||||||||||||
| 11,748,322 | C | |||||||||||||||||
| 49,969 | D | |||||||||||||||||
| 30,120,382 | E2 | |||||||||||||||||
| (643,913 | ) | G | ||||||||||||||||
| Accumulated deficit | (25,379,426 | ) | (620,231 | ) | (19,615 | ) | B1 | (25,934,575 | ) | |||||||||
| (555,149 | ) | B2 | ||||||||||||||||
| 639,846 | G | |||||||||||||||||
| Total Stockholders’ Equity (Deficit) | (25,158,775 | ) | (618,911 | ) | 41,047,940 | 15,270,254 | ||||||||||||
| TOTAL LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ EQUITY (DEFICIT) | 6,726,725 | 290,076,757 | (278,818,996 | ) | 17,984,486 | |||||||||||||
See accompanying notes to the unaudited pro forma condensed combined financial statements.
6
Unaudited Pro Forma Condensed Combined Statement of Operations
For the year ended June 30, 2026
| For the year ended June 30, |
Actual Redemptions | |||||||||||||||||
| 2026 | Pro Forma | Pro Forma | ||||||||||||||||
| Exascale | BCAR | Adjustments | Combined | |||||||||||||||
| $ | $ | $ | $ | |||||||||||||||
| Revenue | 14,822,799 | 14,822,799 | ||||||||||||||||
| Cost of revenues | (12,404,546 | ) | (12,404,546 | ) | ||||||||||||||
| Operating costs and expenses: | ||||||||||||||||||
| Selling and marketing expenses | (499,392 | ) | - | (499,392 | ) | |||||||||||||
| General and administrative expenses | (1,229,516 | ) | - | (1,229,516 | ) | |||||||||||||
| Research and development expenses | (5,490,185 | ) | - | (5,490,185 | ) | |||||||||||||
| Formation and operational costs | - | (1,484,012 | ) | 220,000 | I | (1,264,012 | ) | |||||||||||
| Total operating expenses | (7,219,093 | ) | (1,484,012 | ) | 220,000 | (8,483,105 | ) | |||||||||||
| Income (loss) from operations | (4,800,840 | ) | (1,484,012 | ) | 220,000 | (6,064,852 | ) | |||||||||||
| Other income (expense): | ||||||||||||||||||
| Other income | 15,832 | - | 15,832 | |||||||||||||||
| Change in fair value of simple agreements for future equity | (7,377,383 | ) | - | 7,377,383 | H | - | ||||||||||||
| Interest income on cash held in trust account | - | 9,883,138 | (9,883,138 | ) | J | - | ||||||||||||
| Total other income (expense) | (7,361,551 | ) | 9,883,138 | (2,505,755 | ) | 15,832 | ||||||||||||
| Loss before income tax expense | (12,162,391 | ) | 8,399,126 | (2,285,755 | ) | (6,049,020 | ) | |||||||||||
| Income tax expense | - | - | - | - | ||||||||||||||
| Net (loss) income | (12,162,391 | ) | 8,399,126 | (2,285,755 | ) | (6,049,020 | ) | |||||||||||
| Basic and Diluted | ||||||||||||||||||
| Loss per share | (0.094 | ) | ||||||||||||||||
7
NOTES TO UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS
Note 1—Basis of the Pro Forma Presentation
The Business Combination was accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, BCAR, who is the legal acquirer, is treated as the accounting acquiree for financial reporting purposes and Exascale, which is the legal acquiree, was treated as the accounting acquirer for financial reporting purposes.
The unaudited pro forma condensed combined financial information has been prepared in accordance with Article 11 of Regulation S-X. Article 11 provides guidance to depict the accounting for the transaction (“Transaction Accounting Adjustments”) and present the reasonably estimable synergies and other transaction effects that have occurred or are reasonably expected to occur (“Management Adjustments”). Given such Management Adjustments, if any, would not enhance an understanding of the pro forma effects of the Transaction, BCAR has elected not to present any Management Adjustments and will only be presenting Transaction Accounting Adjustments in the following unaudited pro forma condensed combined financial information.
The pro forma adjustments reflecting the consummation of the Business Combination are based on certain currently available information and certain assumptions and methodologies that management believes are reasonable under the circumstances. The unaudited pro forma adjustments, which are described in the accompanying notes, may be revised as additional information becomes available and is evaluated. Therefore, it is likely that the actual adjustments will differ from the pro forma adjustments and it is possible the difference may be material. Management believes that its assumptions and methodologies provide a reasonable basis for presenting all the significant effects of the Business Combination based on information available to management at this time and that the pro forma adjustments give appropriate effect to those assumptions and are properly applied in the unaudited pro forma condensed combined financial information.
The unaudited pro forma condensed combined financial information does not include income tax effects as the parties to the Business Combination are evaluating the post-Closing tax implications of Exascale. Accordingly, the unaudited pro forma condensed combined provision for income taxes does not necessarily reflect the amounts that would have resulted had the parties to the Business Combination filed consolidated income tax returns during the periods presented, nor does it reflect the amounts of pro forma deferred tax assets or liabilities as of the periods presented.
The unaudited pro forma condensed combined financial information is not necessarily indicative of what the actual results of operations and financial position would have been had the Business Combination and related transactions taken place on the dates indicated, nor are they indicative of the future consolidated results of operations or financial position of Exascale Labs Holdings Inc. They should be read in conjunction with the historical financial statements and notes thereto of BCAR and Exascale.
Note 2—Pro Forma Adjustments
BCAR and Exascale have not had any historical relationship prior to the Business Combination. Accordingly, no pro forma adjustments were required to eliminate activities between the companies.
Pro Forma Adjustments to Unaudited Pro Forma Condensed Combined Balance Sheet
The adjustments included in the unaudited pro forma condensed combined balance sheet as of June 30, 2026 are as follows:
| (A) | Reflects the reclassification of cash and cash equivalents from the trust account that become available for use post-Closing. |
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| (B1) | Reflects the settlement of total estimated professional fees incurred by Exascale not yet recognized in its historical financial statements. These costs are accounted for as equity issuance costs. |
| (B2) | Reflects the settlements and accruals of total estimated professional fees incurred by BCAR not yet recognized in its historical financial statements. These costs are accounted for as expenses. |
| (C) | Reflects the reclassification of common stock subject to possible redemption to permanent equity. |
| (D) | Reflects pro forma adjustments to record (i) $50,000 of cash proceeds received under the investor provider arrangement as other current liabilities, and (ii) share-based compensation expense for services that were fully provided, the total equity conversion to 312,500 common shares, with the related liability reclassified to common shares and additional paid-in capital. |
| (E1) | Reflects Exascale’s issuance in July 2026 of an aggregate of $1.0 million in SAFE investment. |
| (E2) | Reflects the conversion of Exascale SAFEs into an aggregate of 8,864,761 shares of Class A common stock. |
| (F) | Reflects the share exchanges for the recapitalization of BCAR. |
| (G) | Reflects the share exchanges for the recapitalization of Exascale including share-based compensation. |
Transaction Accounting Adjustments to Unaudited Pro Forma Condensed Combined Statements of Operations
The pro forma adjustments included in the unaudited pro forma condensed combined statements of operations for the year ended June 30, 2026 and 2025 are as follows:
| (B2) | Reflects the settlement of total estimated professional fees incurred by BCAR not yet recognized in its historical financial statements. These costs are accounted for as expenses. |
| (H) | Reflects the elimination of remeasurement gains and losses on SAFEs. |
| (I) |
Reflects the elimination of monthly administration fee of $20,000 paid to the Sponsor after giving effect to the Business Combination as if it had occurred on July 1, 2025.
(BCAR entered into an administrative services agreement, commencing on August 1, 2025, through the earlier of BCAR’s consummation of an initial business combination or its liquidation, to pay to the Sponsor a total of $20,000 per month for office space, secretarial and administrative services provided to members of BCAR’s management team.) |
| (J) | Reflects the elimination of interest income generated from the investments held in the trust account after giving effect to the Business Combination as if it had occurred on July 1, 2025. |
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Note 3—Loss per Share
As the Business Combination is being reflected as if it had been consummated on July 1, 2025, the calculation of weighted average shares outstanding for pro forma basic and diluted net loss per share assumes the following events occurred as of July 1, 2025:
| Actual Redemptions | ||||
| Year Ended June 30, 2026 |
||||
| Pro forma net loss | $ | (6,049,020 | ) | |
| Weighted average shares outstanding – basic | 64,334,789 | |||
| Weighted average shares outstanding – diluted | 64,334,789 | |||
| Net loss per share – basic | $ | (0.094 | ) | |
| Net loss per share – diluted | $ | (0.094 | ) | |
| Weighted average shares calculation, basic and diluted | ||||
| BCAR Public Shares | 1,134,789 | |||
| BCAR private placement shares held by Sponsor | 200,000 | |||
| BCAR Founder Shares held by Sponsor | 12,000,000 | |||
| Underwriter Representative shares | 1,000,000 | |||
| Post-Combination Company ordinary shares issued in the Business Combination to Exascale Securityholders | 50,000,000 | |||
| Weighted average shares outstanding, basic and diluted | 64,334,789 | |||
| Actual Redemptions | ||||
| Year Ended June 30, 2026 |
||||
| BCAR public shares | 1.76 | % | ||
| BCAR shares private placement shares held by Sponsor | 0.31 | % | ||
| BCAR founder’s shares held by Sponsor | 18.65 | % | ||
| Underwriter Represent shares | 1.55 | % | ||
| Post-Combination Company ordinary shares issued in the Business Combination to Exascale Securityholders | 77.73 | % | ||
| Total | 100.00 | % | ||
10