textLogic (WISH) - 2024 Q3 - Quarterly Report

Asset Sale - On April 19, 2024, ContextLogic Inc. completed the Asset Sale to Qoo10, selling substantially all of its assets, including the Wish platform, while retaining net operating losses and certain cash equivalents[22]. - Following the Asset Sale, the company no longer has revenues from marketplace and logistics operations[42]. - The Company completed an asset sale on April 19, 2024, resulting in total proceeds of $214 million[48]. - Following the asset sale, accrued liabilities decreased by 100% to $4 million, down from $90 million as of December 31, 2023[51][52]. - The Company terminated its Revolving Credit Agreement, which previously allowed borrowing up to $280 million, on April 19, 2024[50]. - Following the asset sale, the company received $162 million in cash from Qoo10, which included certain purchase price adjustments[113]. - The company's long-lived tangible assets were previously located 56% in the U.S. and 44% in China, but it no longer owns such assets post-asset sale[80]. Financial Performance - The Company generated marketplace revenue of $24 million and logistics revenue of $36 million for 2023, totaling $60 million in revenue[41]. - The provision for income taxes was $0 million for the three months ended September 30, 2024, compared to $3 million for the same period in 2023, primarily due to withholding taxes on intercompany dividends[75]. - The Company reported a net loss of $1 million for the three months ended September 30, 2024, compared to a net loss of $80 million for the same period in 2023[77]. - China accounted for nearly all marketplace and logistics revenue for the nine months ended September 30, 2024, with U.S. revenue being immaterial[80]. Cash and Assets - As of September 30, 2024, the Company reported total financial assets of $148 million, including $31 million in cash equivalents and $117 million in marketable securities[43][46]. - The Company’s marketable securities as of September 30, 2024, had an amortized cost of $117 million, with an estimated fair value of $117 million[47]. - As of September 30, 2024, the company had 556 total stock options and restricted stock units outstanding, a decrease from 3,125 in the previous year[78]. Stock and Compensation - The total stock-based compensation expense for the nine months ended September 30, 2024, was $12 million, a decrease from $54 million for the same period in 2023[74]. - Following the Asset Sale, all outstanding equity awards became fully vested, impacting the stock-based compensation expense[73]. - The Company’s CEO, Jun Yan, received RSUs and options with a total grant date fair value of $6 million, which became fully vested upon the Asset Sale[69]. Internal Controls and Governance - The company identified material weaknesses in internal controls over financial reporting, which have not resulted in material misstatements but could lead to potential issues[112]. - Management is redesigning a new control environment and IT systems following the asset sale to align with the company's current operations[113]. - There were no significant changes in internal controls over financial reporting during the third quarter of 2024 that materially affected the company's reporting[114]. - The company does not expect its disclosure controls and procedures to prevent all errors and fraud due to inherent limitations[115]. Workforce and Costs - The company announced workforce reductions of up to 150 and 255 employees in January and August 2023, respectively, totaling approximately 17% and 34% of the global workforce[82]. - The company incurred approximately $13 million in severance and personnel reduction costs related to the workforce reductions[82]. Accounting Policies and Standards - There have been no changes to the company's significant accounting policies that have had a material impact on its condensed consolidated financial statements[36]. - The Company expects the adoption of new accounting standards to have no material impact on its financial statements[37][38]. - The Company did not identify any available-for-sale marketable securities requiring an allowance for credit loss or impairment during the periods presented[47]. Operational Aspects - The company operates as a single operating segment, with its Chief Executive Officer making all operating decisions based on consolidated financial information[32]. - The company has not experienced any significant service interruptions during the three and nine months ended September 30, 2024, and 2023[35]. - The Asset Sale did not result in the company's operations meeting the criteria for discontinued operations, as the disposed operations were not clearly distinguishable from the rest of the company[30]. - The Company’s financial instruments include cash equivalents, marketable securities, and derivative instruments, with fair value measurements categorized based on the level of judgment associated with inputs[43][46].