As disclosed in "Note 1: Basis of Presentation", we completed the disposition of PWSH on January 6, 2026 and determined that the related net assets should be presented as held-for-sale as of the December 31, 2025 consolidated balance sheet and that the results of operations of PWSH should be presented as discontinued operations for all periods presented, as the disposal completed shortly after December 31, 2025, represents a strategic shift that will have a major effect on our operations and financial results. The measurement of assets held for sale to fair value less costs to sell resulted in a gain which will not be recognized until realized on the date of sale.


	Year Ended December 31,
	2025		2024
Revenue, net	$	31,587	$	42,516
Cost of revenue:	16,370		20,792

Gross profit	15,217		21,724
Operating expenses	31,537		40,117
Government subsidies received	1,563		1,100
Interest income and other, net	175		844
Loss before income taxes	(14,582)		(16,449)
Provision for income taxes	427		434
Net loss from discontinued operations	(15,009)		(16,883)
Net loss attributable to non-controlling interests and redeemable non-controlling interest	759		818
Net loss from discontinued operations attributable to Pixelworks, Inc.	$	(14,250)	$	(16,065)


	Year Ended December 31,
	2025		2024
Assets:
Cash and cash equivalents	$	6,824	$	18,165
Accounts receivable, net	4,481		5,804
Inventories	3,484		4,210
Prepaid expenses and other current assets	1,136		591
Property and equipment, net	3,530		—
Operating lease right-of-use assets	375		—
Other assets, net	185		—
Goodwill	18,407		—
Total current assets	38,422		28,770
Property and equipment, net	—		6,152
Operating lease right-of-use assets	—		2,114
Other assets, net	—		796
Goodwill	—		18,407
Total long-term assets	—		27,469
Total assets	$	38,422	$	56,239


	Year Ended December 31,
	2025		2024
Liabilities:
Accounts payable	$	720	$	1,140
Accrued liabilities and current portion of long-term liabilities	1,941		4,572
Short-term line of credit	2,145		—
Deposit liability	12,672		—
Current portion of income taxes payable	429		325
Operating lease liabilities, net of current portion	98		—

Total current liabilities	18,005		6,037
Long-term liabilities, net of current portion	—		335
Deposit liability	—		13,109
Operating lease liabilities, net of current portion	—		670
Income taxes payable, net of current portion	—		182
Total long-term liabilities	—		14,296
Total Liabilities	$	18,005	$	20,333

We account for government assistance that is not subject to the scope of ASC 740 using a grant accounting model, by analogy to International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance, and recognize such grants when we have reasonable assurance that we will comply with the grant’s conditions and that the grant will be received. Government grants whose primary condition is the purchase, construction, or acquisition of a long-lived asset are considered asset-based grants and are recognized as a reduction to such asset’s cost basis, which reduces future amortization or depreciation. In the circumstances when the reasonable assurance of receiving the government grants is reached after the related long-lived assets are fully or partially amortized, the asset grant is pro-ratably allocated to the used life of the long-lived assets and recorded as a cumulative catch up to reduce the amortization or depreciation expense. Other government grants not related to long-lived assets are considered income-based grants, which are recognized when the grant becomes receivable and are recognized as other income. We recognize grants expected to be received directly from a government entity at their stated value. Proceeds received from asset-based grants are presented as cash inflows from investing activities on the consolidated statements of cash flows, whereas proceeds received from income-based grants are presented as cash inflows from operating activities.

PWSH received approximately $2,317 and $1,754 in the years ended December 31, 2025 and December 31, 2024, respectively, in cash subsidies from the Shanghai government to compensate the purchase of certain IPs, Electronic Design Automation (“EDA”) tools, as well as the incurred expenses in R&D and sales in accordance with the local government’s policy to support strategic emerging industry. Under the terms and conditions of the funding policies, PWSH commits to operate the business in Zhangjiang Science City in Shanghai, and the place of registration and tax registration will not be moved out of Zhangjiang Science City within ten years from the date of signing the commitment letter. Additionally, PWSH promises that the independent intellectual property rights shall belong to PWSH which is operated in Zhangjiang Science City, and sales settlements are in Zhangjiang Science City.

The Company deferred $624 of subsidies as a reduction to related fixed assets’ cost basis, which reduces future depreciation and amortization. $130 of subsidies was recognized as a reduction to depreciation and amortization expense. The remaining cash subsidies of approximately $1,563 was recognized as net loss from discontinued operations, net of income taxes in the consolidated statements of operations for the year ended December 31, 2025.

The Company deferred $437 of subsidies as a reduction to related fixed assets’ cost basis, which reduces future depreciation and amortization. $217 of subsidies was recognized as a reduction to depreciation and amortization expense. The remaining cash subsidies of approximately $1,100 was recognized as net loss from discontinued operations, net of income taxes in the consolidated statements of operations for the year ended December 31, 2024.

On August 25, 2025, PWSH entered into an Industrial and Commercial Bank of China Business Quick Loan Borrowing Contract with Industrial and Commercial Bank of China Limited, pursuant to which PWSH may borrow up to RMB 10,000 (approximately $1,406 as of December 31, 2025). As of December 31, 2025, PWSH borrowed RMB 10,000 under the Loan Agreement, which has a maturity date of August 25, 2026.