In January 2019, the Board of Directors of the Company approved a strategic shift to focus on the commercialization of its B-TRAN™ technology and a plan to suspend further power converter system development and sales while the Company located a buyer for its power conversion systems division. The Company’s power conversion system division, a component supplier to energy storage system integrators, had not achieved the necessary scale to generate positive cash flows. As the division was dependent on the ability of its customers to scale in the small commercial and industrial segment of the storage market and based on the sales forecasts and commitments provided by these customers, the Company did not expect its power conversion systems division to scale sufficiently in the short term, requiring an inflow of additional capital for the business. As such, the decision was made to exit the power conversion systems business and sell the division and the Company’s PPSA™ technology and focus on the Company’s B-TRAN™ technology.

 

As a result, the assets held for sale and discontinued operations criteria have been met and the Company’s financial statements are presented in accordance with ASC 205. Under ASC 205-20-45-10, during the period in which a component meets the assets held for sale and discontinued operations criteria, an entity must present the assets and liabilities of the discontinued operation separately in the asset and liability sections of the balance sheet for the comparative reporting periods. The prior period balance sheet should be reclassified for the held for sale items. For income statements, the current and prior periods should report the results of operations of the component in discontinued operations when comparative income statements are presented.

		December 31,
		2018				2017
Accounts receivable, net		$	270,768			$	215,466
Inventories, net			131,342				251,363
Prepayments and other current assets			22,322				32,878
Current assets held for sale (1)							499,707
Property and equipment, net			329,738				534,917
Intangible assets, net (2)			342,153				697,181
Noncurrent assets held for sale (1)							1,232,098
Assets held for sale (1)		$	1,096,323			$	1,731,805
Accounts payable		$	356,113			$	236,651
Accrued expenses			521,642				632,970
Current liabilities held for sale		$	877,755			$	869,621

	(1)	The assets of the discontinued operations classified as held for sale are classified as current on the December 31, 2018 balance sheet because it is probable that the sale will occur and proceeds will be collected within one year.
	(2)	Includes an impairment charge of $360,000, calculated as the net book value of assets held for sale prior to the impairment less the expected proceeds from the planned sale. The expected proceeds are based on the estimated fair value of the net assets held for sale less the estimated cost to sell the net assets held for sale.

		December 31,
		2018				2017
Product revenue		$	1,624,773			$	1,212,270
Cost of product revenue			1,968,648				2,241,682
Research and development			2,095,138				3,469,064
General and administrative			59,873				278,043
Sales and marketing			774,500				1,448,517
Impairment			360,000				—
Loss on discontinued operations		$	(3,633,386	)		$	(6,225,036	)