During the third quarter of 2025, the Company entered into and consummated an asset purchase agreement with a buyer, pursuant to which we agreed to sell our right, title and interest in and to certain assets related to the Company’s consumer brands. Cash consideration paid on the date of the agreement was $0.4 million, which related to product inventories. Additional consideration for inventories is expected to be received during the fourth quarter. The Company will also receive royalty payments related to net sales ranging between 5% to 15% for all net sales of the brands through the year 2035 (“Consumer Products Royalties”). Consumer Products Royalties payments are subject to a minimum amount of $1.5 million and maximum amount of $5.25 million, notwithstanding any other clawbacks or indemnity claims.

In determining the amount of the variable consideration related to Consumer Products Royalties, the Company used the ‘expected value’ method for estimating the variable consideration due to the Company due to the large number of possible scenarios. The Company has estimated the fair value of the variable consideration at $2.5 million. The variable consideration amount will be reduced as royalty payments are received over the term of the agreement and subject to other adjustments to reflect the financing element and other estimates within the transaction. The Company has reflected the assets, liabilities, and results of operations of the consumer products as discontinued operations.

Our Consolidated Statements of Financial Position and Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our Consolidated Statements of Equity and Statements of Cash Flows combine the results of continuing and discontinued operations. A summary of financial information related to discontinued operations is as follows:

Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Consolidated Statements of Financial Position as of:


	December 31,
	2024
Fees receivable, net	$	326
Prepaid expenses and other assets		624
Intangible assets, net		2,362
Goodwill		1,052
Assets of discontinued operations	$	4,364

Accounts payable, accrued expenses and other	$	464
Liabilities of discontinued operations	$	464

There were no assets or liabilities of discontinued operations as of December 31, 2025.

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Consolidated Statements of Operations for the twelve months ended December 31:


	Year Ended December 31,
	2025			2024
Other income and fees	$	2,171		$	1,373
Operating expenses
Compensation, related employee benefits, and cost of goods sold		1,271			1,029
Sales, distribution and marketing		799			417
Depreciation and amortization		164			103
General and administrative expenses		896			293
Impairment of goodwill		900			-
Total operating expenses		4,030			1,842
Operating income (loss) from discontinued operations		(1,859	)		(469	)
Gain on sale of discontinued operations		214			-
Income (loss) from discontinued operations before provision for income taxes		(1,645	)		(469	)
Income tax (expense) benefit		345			98
Income (loss) from discontinued operations, net of tax	$	(1,300	)	$	(371	)

Net cash used in operating activities from discontinued operations were $277 and $52 for the year ended December 31, 2025 and 2024, respectively. The Company’s loss from discontinued operations for the year ended December 31, 2025 includes an impairment of goodwill of $0.9 million. There were no capital expenditures, depreciation expense, or significant operating investing noncash items related to discontinued operations during the nine months ended December 31, 2025 and 2024, respectively.