I guess this device needed to connect to some remotely hosted server that enabled its functionality. And the company was losing money and hoping that sales would eventually pick up enough to make them profitable. But their latest investor decided not to put any more money in, and the company ran out of cash and can't pay its bills anymore.
The entrepreneur thought he could get more investor cash and ran the business in such a way that it would fall off a cliff if he didn't. And... He failed to secure more financing.
I have mixed feelings about products like this... If the device somehow needed to host an entire internet's worth of data to function, it certainly wouldn't have cost only $800. But when you buy a product that depends on the ongoing viability of the seller, you're in a position of caveat emptor - You better vet them out yourself, especially if they're new.
Hopefully the founders feel some emotional attachment to their product and the trust bestowed upon them by their unknowing customers, and release whatever on the back end makes the thing work so that motivated customers could reactivate their devices somehow.