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Assets and Liabilities Held for Sale and Discontinued Operations
 6 Months Ended
Mar. 31, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Assets and Liabilities Held for Sale and Discontinued Operations Assets and Liabilities Held for Sale and Discontinued Operations
In April 2023, we initiated a restructuring program that includes the strategic shutdown of our Broadband business segment (including our cable TV, wireless, sensing and chips product lines) and the discontinuance of our defense optoelectronics product line. During the quarter ended September 30, 2023, the Broadband business segment and defense optoelectronics product line were considered as held for sale based upon (i) the existence of an executed non-binding letter of intent to sell our Broadband business segment (other than our chips business line) and our defense optoelectronics product line and (ii) in consideration of ongoing negotiations for the sale of the chips business line.

In October 2023, the Company entered into an Asset Purchase Agreement, by and among the Company, Photonics Foundries, Inc., a Delaware corporation (“PF”), and Ortel LLC, a Delaware limited liability company and wholly owned subsidiary of PF (the “Buyer”), pursuant to which (i) the Company agreed to transfer to the Buyer, and Buyer agreed to assume, substantially all of the assets and liabilities primarily related to the Company’s cable TV, wireless, sensing and defense optoelectronics business lines (the “Businesses”), including with respect to employees, contracts, intellectual property and inventory, and (ii) Buyer agreed to provide a limited license back to the Company of patents being sold to the Buyer (the “Transaction”). The Transaction excluded the Company’s chip business, indium phosphide wafer fabrication facilities and all assets not primarily related to the Businesses.

The signing and closing of the Transaction occurred simultaneously, except with respect to the assets of the Company located in China. In November 2023, the Company transferred to the Buyer, and the Buyer assumed, substantially all of the assets and liabilities of each of the Company’s subsidiaries in China.

In connection with the Transaction, the parties entered a transition services agreement pursuant to which the Company is providing certain migration and transition services to facilitate an orderly transaction of the operation of the Businesses to the Buyer in the 12-month period following consummation of the Transaction, and the Company and the Buyer entered into a sublease pursuant to which the Company is subleasing to the Buyer one of the Company’s buildings (occupying approximately 12,500 square feet) at its Alhambra, California facility for the 12-month period immediately following the closing of the Transaction without payment of rent. With respect to the Buyer’s assumption of our manufacturing agreement with our
electronics manufacturing services (“EMS”) provider for our cable TV products, the Company (i) made a payment to the EMS provider in the amount of approximately $0.4 million immediately prior to the closing of the transaction and (ii) provided a guaranty of PF’s and the Buyer’s obligations with respect to payment of certain long-term liabilities that were originally agreed to and set forth in the manufacturing agreement and assigned to PF and the Buyer in the Transaction, in an aggregate amount expected to equal up to approximately $5.5 million, approximately $4.3 million of which will not become payable, if at all, until January 2026, provided that if such guaranty is exercised by the EMS provider, the Company will have the right to require the Buyer to reassign to the Company all intellectual property assigned to the Buyer in the Transaction and the Company will have the right to recover damages from PF and the Buyer.

On April 30 2024, the Company entered into an Asset Purchase Agreement (the “HieFo Purchase Agreement”), with HieFo Corporation, a Delaware corporation (“HieFo”), pursuant to which the Company agreed to transfer to HieFo substantially all of the assets primarily related to the Company’s discontinued chips business line, including with respect to equipment, contracts, intellectual property and inventory, including without limitation the Company’s indium phosphide wafer fabrication equipment (the “Chips Transaction”), in consideration for a purchase price equal to $2.92 million in cash and assumption by HieFo of certain assumed liabilities, $1 million of which was received by the Company in the quarter ended December 31, 2023 in connection with the execution of a non-binding letter of intent related to the Chips Transaction and $1.92 million of which was received by the Company upon closing of the Chips Transaction. The signing and closing of the Chips Transaction occurred simultaneously.

In connection with the Chips Transaction, the parties entered a transition services agreement pursuant to which the Company will provide certain migration and transition services to facilitate an orderly transition of the operation of the chips business line to HieFo in consideration for fees payable to the Company for such services as agreed between the Company and HieFo for a period of up to 12 months following consummation of the Chips Transaction, and the Company and HieFo entered into a sublease pursuant to which the Company will sublease to HieFo (i) initially, all of one building and a portion of a second building (collectively occupying approximately 21,750 square feet) and (ii) beginning January 1, 2026, all of such two buildings (collectively occupying approximately 25,000 square feet) at the Company’s Alhambra, California facility through the remaining term of the Company’s lease of such facility ending September 30, 2031, with a pro rata portion of the rent for such facility being payable to the Company beginning on July 1, 2024.

As of March 31, 2024, the chips business line was disclosed as held for sale in the condensed consolidated balance sheet. As of September 30, 2023, the Broadband business segment and defense optoelectronics business line were disclosed as held for sale in the consolidated balance sheet.

The following table presents key components of assets and liabilities that were classified as held for sale on the condensed consolidated balance sheets:
(in thousands)March 31, 2024September 30, 2023
Cash$— $81 
Accounts receivable, net of credit loss of $0
— 974 
Inventory, net3,098 10,063 
Other current assets— 1,154 
Property, plant, and equipment, net2,988 4,131 
Operating lease right-of-use assets— 56 
Total assets6,086 16,459 
Remeasurement of assets2,534 9,195 
Assets held for sale$3,552 $7,264 
Accounts payable$37 $1,854 
Accrued expenses and other current liabilities— 1,697 
Operating lease liabilities - current— 22 
Operating lease liabilities - non-current— 36 
Other comprehensive income— 1,053 
Total liabilities37 4,662 
Liabilities held for sale$37 $4,662 
For the three and six months ended March 31, 2024 and 2023, the results of the chips business line were disclosed as discontinued operations in the condensed consolidated statements of operations. For the three and six months ended March 31, 2023, the Broadband business segment and defense optoelectronics business line were disclosed as discontinued operations.

For the three and six months ended March 31, 2024, the selling costs were approximately $0.1 million and $0.3 million, respectively.

The following table presents key components of net loss that were classified as discontinued operations on the condensed consolidated statements of operations:

Three Months Ended March 31,Six Months Ended March 31,
(in thousands)2024202320242023
Revenue$— $2,569 $216 $7,544 
Cost of Revenue(720)(3,720)(2,002)(10,014)
Gross Profit(720)(1,151)(1,786)(2,470)
Selling, general, and administrative— 861 250 1,516 
Research and development— 915 — 2,051 
Severance— (17)— 442 
Other income— (48)— (96)
Loss from discontinued operations$(720)$(2,862)$(2,036)$(6,383)