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Discontinued operations | 9 Months Ended
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Sep. 30, 2024
Discontinued Operations and Disposal Groups [Abstract] |
Discontinued operations | Discontinued operations On April 17, 2024, the Company entered into the Purchase Agreement by and between the Company and GCI Holdings, which is wholly owned by a former consulting contractor of Global Cooling, for the sale of all of the issued and outstanding shares of common stock of Global Cooling to GCI Holdings. Upon the execution of the Purchase Agreement, the Global Cooling business is presented in the accompanying condensed financial statements as a discontinued operation for all periods presented. As a condition of the Purchase Agreement, Global Cooling was required to have $7.0 million in cash on its balance sheet, of which, $6.7 million in cash was funded by the Company, and the Company was required to repay approximately $2.6 million of outstanding indebtedness of Global Cooling, and assume certain other liabilities of Global Cooling of $2.6 million. Following the execution of the Purchase Agreement, the divestiture of Global Cooling was consummated on April 17, 2024. The Company recognized a loss on disposal of Global Cooling, calculated as follows:
(In thousands) |
Selling price: $1 | $ | — |
Cash to Global Cooling funded by Company | (6,652) |
Costs to sell Global Cooling(1) | (582) |
Negative selling price | (7,234) |
Global Cooling carrying basis as of April 17, 2024, inclusive of assumed liabilities | (3,589) |
Assumed liabilities: Accounts payable(2) | 2,643 |
Assumed liabilities: Debt(3) | 2,596 |
Global Cooling carrying basis as of April 17, 2024 | 1,650 |
Release of Global Cooling currency translation adjustment | (13) |
Net loss on disposal | $ | (8,897) |
(1) Represents the costs incurred in connection with the divestiture of Global Cooling, including fees to be paid to the broker, attorneys, and other external parties. (2) As a closing condition, the Company assumed certain accounts payable and accrued expenses from Global Cooling, totaling $0.5 million and $2.1 million, respectively. (3) As a closing condition, the Company repaid the balance of the Global Cooling Amended Term Notes. For additional information on the terms of the Global Cooling Term Notes, see Note 13: Long-term debt. In connection with the Company’s entry into the Purchase Agreement, the Company implemented a reduction in force (the “RIF”) related to the business of Global Cooling, which reduced the Company’s workforce by 47 employees (representing approximately 11% of its full-time employees). The Company’s Board of Directors approved the RIF on March 29, 2024, and all affected employees were informed by April 18, 2024, following the execution of the Purchase Agreement. Additionally, the Company accelerated the unvested shares granted to both the employees impacted by the RIF and Global Cooling employees that remained with Global Cooling upon the closing of the GCI Divestiture. The Company recognized the following charges in connection with the RIF and stock compensation expense acceleration:
(In thousands) | Severance |  | Stock Compensation |  | Total
RIF employee costs | $ | 291 |  |  | $ | 1,255 |  |  | $ | 1,546 |
Former Global Cooling employees | — |  |  | 1,925 |  |  | 1,925 |
Total employment related divestiture expenditures | $ | 291 |  |  | $ | 3,180 |  |  | $ | 3,471 |
In addition, upon the closing of the Transaction, the Company and Global Cooling entered into a transition services agreement ("TSA"), pursuant to which the Company agreed to provide certain transition services to Global Cooling for up to 90 days following the date of the closing of the Transaction. The TSA has since expired pursuant to its terms on the stated expiration date. The following table summarizes the major classes of assets and liabilities of discontinued operations, which are summarized separately in the condensed consolidated balance sheets:
| April 17, |  | December 31,
(In thousands) | 2024 |  | 2023
Cash and cash equivalents | $ | 275 |  |  | $ | 2,090 |
Accounts receivable, net | 2,430 |  |  | 1,728 |
Inventories | 9,152 |  |  | 11,248 |
Prepaid expenses and other current assets | 379 |  |  | 303 |
Total current assets, discontinued operations | 12,236 |  |  | 15,369 |
Property and equipment, net | 153 |  |  | 146 |
Long-term deposits and other assets | 4 |  |  | 4 |
Total assets, discontinued operations | 12,393 |  |  | 15,519 |
Accounts payable | 1,425 |  |  | 3,367 |
Accrued expenses and other current liabilities | 911 |  |  | 1,637 |
Warranty liability | 7,193 |  |  | 7,507 |
Lease liabilities, operating, current portion | 242 |  |  | 263 |
Lease liabilities, financing, current portion | 16 |  |  | 22 |
Total current liabilities, discontinued operations | 9,787 |  |  | 12,796 |
Lease liabilities, operating, long-term | 948 |  |  | 1,016 |
Lease liabilities, financing, long-term | 8 |  |  | 11 |
Total liabilities, discontinued operations | $ | 10,743 |  |  | $ | 13,823 |
Global Cooling had no remaining balances as of September 30, 2024. The key components of loss from discontinued operations were as follows:
| Three Months Ended September 30, |  | Nine Months Ended September 30,
(In thousands) | 2024 |  | 2023 |  | 2024 |  | 2023
Revenue | $ | — |  |  | $ | 9,755 |  |  | $ | 7,157 |  |  | $ | 28,546 |
Cost of revenue | — |  |  | 10,100 |  |  | 8,389 |  |  | 28,048 |
Gross profit | — |  |  | (345) |  |  | (1,232) |  |  | 498 |
Operating expenses | — |  |  | (5,789) |  |  | (9,418) |  |  | (16,259) |
Asset impairment charges | — |  |  | (7,175) |  |  | — |  |  | (7,175) |
Other income (expense), net | — |  |  | (19) |  |  | (25) |  |  | (63) |
Loss on disposal | — |  |  | — |  |  | (8,897) |  |  | — |
Loss before income taxes | — |  |  | (13,328) |  |  | (19,572) |  |  | (22,999) |
Income tax expense | — |  |  | — |  |  | (10) |  |  | (3) |
Loss from discontinued operations, net of income taxes | $ | — |  |  | $ | (13,328) |  |  | $ | (19,582) |  |  | $ | (23,002) |
During the three and nine months ended September 30, 2024, Global Cooling did not incur material depreciation, amortization, capital expenditure, or other noncash related costs. For the three months ended September 30, 2023, Global Cooling incurred depreciation and capital expenditure costs of $0.1 million and $0.2 million, respectively. During the nine months ended September 30, 2023, Global Cooling incurred depreciation, amortization, and capital expenditure costs of $0.4 million, $0.1 million, and $0.7 million, respectively. We do not anticipate incurring any material additional charges in connection with the sale of Global Cooling.

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/205-20/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 360 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org/360/tableOfContent + Details
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