| Discontinued Operations |
NOTE
4—Discontinued Operations
On
December 30, 2025, the stockholders of the Company approved the asset purchase agreement to sell the phone and hotspot manufacturing
business to Pace Car Acquisition LLC during a special stockholders’ meeting.
See
note 12. Due to the vote, the sale of assets became likely and the assets and liabilities to be sold or assumed were segregated as a
disposal group. The sale of the assets represents a strategic shift away from manufacturing hardware because of the high cost of
developing new products, higher costs of manufacturing products outside of China, and competition from larger competitors with more
resources. The asset sale closed on January 23, 2026. As of December 31, 2025, the phone and hotspot business met the criteria for
“Held for Sale” classification. Results of the phone and hotspot business have been retrospectively reclassified as
discontinued operations for all periods presented. No impairment was recognized as the fair value less costs to sell exceeded the
carrying amount.
The
following schedules present the carrying amounts of major classes of assets and liabilities associated with the disposal group:
DISCONTINUED
OPERTATIONS
CONSOLIDATED
BALANCE SHEETS
DECEMBER
31, 2025 and 2024
(IN
THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)
Schedule Of Discontinued Operations
| |
|
December
31, 2025 |
|
|
December
31, 2024 |
|
| Assets held for sale |
|
|
|
|
|
|
|
|
| Cash and cash equivalents |
|
$ |
— |
|
|
$ |
— |
|
| Accounts receivable, net |
|
|
4,720 |
|
|
|
4,339 |
|
| Non-trade receivable |
|
|
13,410 |
|
|
|
7,119 |
|
| Related party receivable |
|
|
— |
|
|
|
181 |
|
| Inventory |
|
|
6,911 |
|
|
|
10,621 |
|
| Prepaid expenses and other current assets |
|
|
1,889 |
|
|
|
4,562 |
|
| Total current assets
held for sale |
|
|
26,930 |
|
|
|
26,822 |
|
| Property and equipment, net |
|
|
105 |
|
|
|
227 |
|
| Contract fulfillment assets |
|
|
11,605 |
|
|
|
6,399 |
|
| Other assets |
|
|
322 |
|
|
|
500 |
|
| Total non-current assets held for sale |
|
|
12,032 |
|
|
|
7,126 |
|
| Total assets held for
sale |
|
$ |
38,962 |
|
|
$ |
33,948 |
|
| Liabilities held for sale |
|
|
|
|
|
|
|
|
| Accounts payable |
|
|
28,349 |
|
|
|
22,110 |
|
| Accrued liabilities |
|
|
9,708 |
|
|
|
20,642 |
|
| Total liabilities held
for sale |
|
$ |
38,057 |
|
|
$ |
42,752 |
|
DISCONTINUED
OPERTATIONS
CONSOLIDATED
STATEMENTS OF OPERATIONS
YEARS
ENDED DECEMBER 31, 2025 and 2024
(IN
THOUSANDS)
| |
|
2025 |
|
|
2024 |
|
| Net revenues |
|
$ |
56,894 |
|
|
$ |
50,919 |
|
| Related party net revenues |
|
|
— |
|
|
|
7,379 |
|
| Total net revenues |
|
|
56,894 |
|
|
|
58,298 |
|
| Cost of revenues |
|
|
48,672 |
|
|
|
48,378 |
|
| Gross
profit |
|
|
8,209 |
|
|
|
9,920 |
|
| Operating expenses |
|
|
|
|
|
|
|
|
| Research and development |
|
|
3,046 |
|
|
|
14,235 |
|
| Sales and marketing |
|
|
11,602 |
|
|
|
12,962 |
|
| General and administrative |
|
|
7,292 |
|
|
|
9,284 |
|
| Impairment of contract
fulfillment assets |
|
|
103 |
|
|
|
3,464 |
|
| Restructuring
charges |
|
|
— |
|
|
|
514 |
|
| Total
operating expenses |
|
|
22,043 |
|
|
|
40,459 |
|
| Net income (loss) from operations |
|
|
(13,834 |
) |
|
|
(30,539 |
) |
| Other income (expense) |
|
|
(14 |
) |
|
|
— |
|
| Loss before income Tax expense |
|
|
(13,848 |
) |
|
|
(30,539 |
) |
| Income tax benefit
(expense) |
|
|
1,146 |
|
|
|
(226 |
) |
| Net loss from discontinued operations |
|
$ |
(12,702 |
) |
|
$ |
(30,765 |
) |
DISCONTINUED
OPERATIONS
CONSOLIDATED
STATEMENT OF CASH FLOWS
YEARS
ENDED DECEMBER 31, 2025 and 2024
(IN
THOUSANDS)
| |
|
2025 |
|
|
2024 |
|
| Cash flows from operating activities for
discontinued operations: |
|
|
|
|
|
|
|
|
| Net loss |
|
$ |
(12,702 |
) |
|
$ |
(30,765 |
) |
| Adjustments to reconcile net loss to net
cash used in operating activities: |
|
|
|
|
|
|
|
|
| Depreciation and amortization |
|
|
4,300 |
|
|
|
3,557 |
|
| Stock-based compensation |
|
|
1,541 |
|
|
|
1,525 |
|
| Release of customer
allowance liability |
|
|
(6,207 |
) |
|
|
— |
|
| Provision for credit
losses |
|
|
— |
|
|
|
2,295 |
|
| Inventory write-downs |
|
|
— |
|
|
|
887 |
|
| Impairment of contract
fulfillment assets |
|
|
2,068 |
|
|
|
6,484 |
|
| Other |
|
|
358 |
|
|
|
110 |
|
| Changes in operating
assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts receivable |
|
|
(1,111 |
) |
|
|
7,362 |
|
| Non-trade receivable |
|
|
(5,883 |
) |
|
|
(6,158 |
) |
| Related party receivable |
|
|
181 |
|
|
|
(181 |
) |
| Inventory |
|
|
3,849 |
|
|
|
(4,991 |
) |
| Prepaid expenses and
other current assets |
|
|
2,114 |
|
|
|
(2,948 |
) |
| Contract fulfillment
assets |
|
|
(11,314 |
) |
|
|
(7,137 |
) |
| Other assets |
|
|
178 |
|
|
|
1,990 |
|
| Accounts payable |
|
|
6,239 |
|
|
|
13,683 |
|
| Accrued liabilities |
|
|
(2,412 |
) |
|
|
8,001 |
|
| Income tax payable |
|
|
— |
|
|
|
— |
|
| Net cash used in operating activities from
discontinued operations |
|
|
(18,801 |
) |
|
|
(5,774 |
) |
| Cash flows from investing activities from
discontinued operations: |
|
|
— |
|
|
|
-
|
|
| Purchase of property
and equipment |
|
|
— |
|
|
|
(214 |
) |
| Net cash used in investing activities from
discontinued operations |
|
|
— |
|
|
|
(214 |
) |
| Supplemental disclosure of cash flow information from discontinued operations: |
|
|
|
|
|
|
|
|
| Non-cash activities from discontinued operations: |
|
|
|
|
|
|
|
|
| Accrued bonus settled in equity |
|
$ |
1,215 |
|
|
$ |
— |
|
| Receivables transferred to satisfy payables |
|
$ |
— |
|
|
$ |
11,308 |
|
The
Company ceased depreciation and amortization on the property, plant, and equipment and intangible assets included in the Disposal Group
starting on December 31, 2025.
|