Having been involved in many hardware startups, the story reads like they spent WAY to much on industrial design for a unit that was going to mostly sit in a dark corner, and WAY to much on bespoke hardware when COTS stuff would have been fine.

They also seemingly had nobody on the team heavily experienced with OEM/ODM supplier arrangements. There is no reason to wind up as an extortion victim to your suppliers if you go into the arrangement properly.