Note 2 – Discontinued Operations and Asset Sale

On October 24, 2025, the Company completed the sale of substantially all of its operating intellectual property, product inventory, and related production assets to Biamp Systems, LLC (“Biamp”) for gross cash consideration of $3,000 (the “Asset Sale”). Biamp did not assume any warranty or technical support obligations. The Company retained its books and records, all equity interests in subsidiaries, approximately $390 of inventory solely to service warranty obligations, and all public-company assets and obligations. See the Company’s Current Report on Form 8-K filed October 30, 2025 for additional information.

The sale represents the disposal of a component that qualifies as discontinued operations under ASC 205-20. The results of the disposed assets are presented as discontinued operations for all periods presented, with a hard cutoff on the legal closing date of October 24, 2025. No allocation or smoothing of results has been applied.

At September 30, 2025, the disposal group was classified as held for sale and measured at fair value less costs to sell. The carrying amount of the disposal group was $13,641 (primarily inventory of $12,856 and intangible assets of $785). Based on the executed asset purchase agreement for $3,000 cash consideration and estimated transaction costs of $100, management recorded an impairment of $10,741 to reduce the disposal group to fair value less costs to sell. The impairment is included in “Loss from discontinued operations” in the consolidated statements of operations.

Carrying amounts classified as held for sale

Assets held for sale at September 30, 2025 totaled $2,900 (comprised primarily of inventory $12,956 and intangibles $785, less impairment to fair value less costs to sell of $10,741 and transaction costs of $100).
Liabilities held for sale at September 30, 2025 were $0 (no obligations transferred).

The carrying value of net assets sold at the October 24, 2025 closing date, after the Q3 impairment and additional changes in October, was $14,055. The loss on sale recognized in the fourth quarter of 2025 was calculated as follows (in thousands):

		Amount
Description
Gross proceeds from Asset Sale	$	3,000
Less: Transaction costs		(88	)
Less: Carrying value of net assets sold (after impairment)		(14,055	)
Loss on sale	$	(11,143	)

The major classes of assets and liabilities of the disposed assets as of the October 24, 2025 closing date (gross carrying value before impairment allocation) were as follows (in thousands):

Assets		Amount
Inventories, net	$	16,114
Property and equipment, net		518
Intangible assets, net		1,568
Other assets		3,127
Total assets disposed	$	21,327

Liabilities		Amount
Accounts payable and accrued liabilities	$	2,588
Other liabilities		1,101
Total liabilities disposed		3,689
Net assets disposed	$	17,638

The difference between the gross carrying value of $17,638 and the post-impairment carrying value of $14,055 used in the loss on sale calculation is attributable to the Q3 impairment of $10,741 and additional net asset activity in October 2025.

The results of discontinued operations for the years ended December 31, 2025 and 2024 are summarized as follows (in thousands):

		Year Ended December 31,2025			Year Ended December 31,2024
Revenue	$	6,009		$	11,386
Cost of goods sold		9,030			8,563
Gross profit (loss)		(3,021	)		2,823
Operating expenses		7,296			9,899
Operating loss		(10,317	)		(7,076	)
Loss on sale		(11,143	)		—
Loss before income taxes		(21,460	)		(7,076	)
Income tax benefit (provision)		—			—
Loss from discontinued operations, net of tax	$	(21,460	)	$	(7,076	)

Following the Asset Sale, the Company continues to fulfill warranty and technical support obligations on products sold October 24, 2025 in accordance with published policies. The Company retained a limited amount of inventory solely to service these obligations. These activities are reported within continuing operations and do not constitute ongoing operations of the disposed assets.

Cash flows from discontinued operations are included in the consolidated statements of cash flows. For the year ended December 31, 2025, net cash provided by discontinued operations was $9,944.

Net proceeds from the Asset Sale are contractually earmarked to redeem the Class A Redeemable Preferred Stock. Redemption occurred after December 31, 2025 and is treated as a subsequent event.