NOTE 2: DISCONTINUED OPERATIONS

On March 23, 2026, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with a buyer to sell its SDC business division. On April 1, 2026, the Company completed the transaction whereby substantially all the assets related to SDC were sold.

NOTE 2: DISCONTINUED OPERATIONS (continued)

The aggregate consideration paid to the Company in connection with the transaction was $17.4 million. At closing, $0.9 million of the purchase price was placed in escrow to secure post-closing adjustments and indemnification obligations in accordance with the Asset Purchase Agreement. The Asset Purchase Agreement contains customary representations, warranties, covenants and indemnification provisions. The net cash proceeds from the sale of SDC received by the Company in April 2026, after payment of transaction costs and employee related liabilities, were $15.7 million. The Company expects to pay approximately $0.7 million in estimated income taxes related to the gain on the sale of SDC in the third quarter of 2026. The net gain on the sale of SDC, including related income tax expense, was $13.5 million.

The Company retained ownership of its Saugerties, New York facility and entered into a lease agreement with the buyer of SDC, pursuant to which the buyer will lease such facility for an initial term of two years following the closing for an initial annual rent of $0.2 million, subject to customary adjustments.

The transaction represents a single disposal plan that constitutes a strategic shift expected to have a material effect on our operations and financial results. Accordingly, the financial results of SDC are reflected in the condensed consolidated financial statements as discontinued operations for all periods presented.

The following table represents the gain on the disposition of SDC, net of income taxes, for the six months ended June 30, 2026 (in thousands):

SCHEDULE OF GAIN ON THE DISPOSITION OF DISCONTINUED OPERATIONS

The following table represents the amounts of assets and liabilities of the discontinued operations of SDC as of December 31, 2025 (in thousands):

SCHEDULE OF AMOUNTS OF ASSETS AND LIABILITIES OF DISCONTINUED OPERATIONS 

NOTE 2: DISCONTINUED OPERATIONS (continued)

The following table represents statements of operations information for the discontinued operations of SDC (in thousands):

The significant components included in the accompanying condensed consolidated statements of cash flow for the discontinued operations of SDC are as follows (in thousands):