We can be quite certain that components were ordered to build the devices and that they were manufactured (mind you that they already had difficulties getting all the needed components). Now the majority of the batch has been sold to Chinese retailer. It's not likely they can be pulled back from the market.

Why Jolla doesn't produce more tablets then? As per their own statement, the manufacturer doesn't have all the components and some of them are not available any more. Most likely alternative components would be available, but they would have to be sourced, tested, possibly some things had be redesigned etc. which would in best scenario be something like two months before the devices roll out if there are no hiccups. If there was a hiccup (like there have been many many times with this projects), there would be even more delays, blown budgets etc. IF the manufacturer would even agree to produce more for Jolla.

So, even if Jolla has some money, the only sensible decision is to call it quits to limit the damage already done and to avoid the risks involved in trying to continue already badly failed attempt. There are times when one simply has to admit the defeat and move on.