Discontinued Operations

9 Months Ended

Sep. 30, 2024

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On March 1, 2024, the Company entered into an Asset Purchase Agreement by and among TDO, Valsoft Corporation Inc., a Quebec corporation, and Aspire USA LLC, a Delaware limited liability company and affiliate of Valsoft (collectively “Valsoft”), pursuant to which TDO agreed to sell to Valsoft substantially all the assets and liabilities relating to the Company’s software segment. As consideration for the transaction, Valsoft agreed to pay TDO approximately $16.0 million, with $15.0 million paid on March 1, 2024 and $1.0 million due approximately 12 months post-closing. In connection with the transaction, Valsoft agreed to make offers of employment to certain employees of the Business on terms that are comparable to those currently in effect for such employees. The Asset Purchase Agreement contains certain representations, warranties and covenants of each of TDO and Valsoft. Each of TDO and the Valsoft has agreed to indemnify the other for certain losses arising out of breaches of representations and covenants and for certain losses arising out of retained liabilities or assumed liabilities relating to the TDO business, as applicable, subject to customary limitations.

The divestiture met the criteria to be accounted for as a discontinued operation as of March 31, 2024. Accordingly, the operating results of the discontinued operations for the three and nine months ended September 30, 2024 and 2023, respectively, are presented in the Condensed Consolidated Statements of Operations and Comprehensive Loss within income from discontinued operations as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024			2023
	(in thousands)				(in thousands)
Revenue	$	—	$	2,243	$	1,478		$	6,569
Cost of sales		—		681		511			2,056
Gross profit		—		1,562		967			4,513
Operating expenses:
General and administrative		—		398		524			1,254
Selling and marketing		—		197		162			535
Research and development		—		498		476			1,599
Income (loss) from discontinued operations, net of tax		—		469		(195	)		1,125
Other income		—		—		—			22
Gain on sale of discontinued operations, net of tax		—		—		5,703			—
Net income from discontinued operations	$	—	$	469	$	5,508		$	1,147

Software is licensed via delivery to the customer or via a service arrangement under which cloud-based access is provided on a subscription basis (software-as-a-service). When a fixed up-front license fee is received in exchange for the delivery of software, revenue is recognized at the point in time when the delivery of the software has occurred. When software is licensed on a subscription basis, revenue is recognized over the respective license period.

The following table presented assets and liabilities of discontinued operations as of September 30, 2024 and December 31, 2023:

	September 30, 2024		December 31, 2023
	(in thousands)
Current assets:	$	1,000	$	656
Non-current assets:
Intangible assets, net		—		661
Goodwill		—		8,454
Other		—		482
Total assets of discontinued operations	$	1,000	$	10,253
Current liabilities:
Accounts payable	$	—	$	34
Accrued expenses		—		194
Accrued compensation		—		345
Operating lease liabilities		—		127
Total liabilities of discontinued operations	$	—	$	700

During the three months ended September 30, 2024, no depreciation and amortization of long-lived assets was recorded in the discontinued operations. During the nine months ended September 30, 2024, $60 thousand expenses of depreciation and amortization of long-lived assets was recorded in the discontinued operations. During the three and nine months ended September 30, 2023, $0.1 million and $0.4 million expenses of depreciation and amortization of long-lived assets was recorded in the discontinued operations.

For each of the three and nine months ended September 30, 2024 and 2023, no capital expenditure was recorded in the discontinued operations.

See Note 7 “Stock based Compensation.” for stock based compensation expense recorded in the discontinued operations for each of the three and nine months ended September 30, 2024 and 2023.