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Note 16 - License, Collaboration and Distribution Agreements

12 Months Ended

Dec. 31, 2021

License, Collaboration, and Distribution Agreements [Text Block]

NOTE 16. LICENSE, COLLABORATION AND DISTRIBUTION AGREEMENTS

Transactions under the Company’s major distribution agreements are recognized upon transfer of control of product sold to its major distribution partners at the amount of consideration that the Company expects to be entitled to. The Company records contract liabilities for the amounts that are estimated to be subject to significant reversal, including allowances for services, discounts, rebate programs, and product returns.

The following table presents changes in the Company's contract assets and liabilities for the year ended December 31, 2021 (in thousands):

	Balance at Beginning of the Period		Additions		Deductions			Balance at the end of the Period
Contract liabilities: deferred revenue	$	2	$	176	$	(124	)	$	54
Contract liabilities: accrued liabilities (includes contract assets)		573		1,851		(1,154	)		1,270
Total	$	575	$	2,027	$	(1,278	)	$	1,324

The following table presents changes in the Company's contract assets and liabilities for the year ended December 31, 2020 (in thousands):

	Balance at Beginning of the Period		Additions		Deductions			Balance at the end of the Period
Contract liabilities: deferred revenue	$	—	$	2	$	—		$	2
Contract liabilities: accrued liabilities (includes contract assets)		434		2,338		(2,199	)		573
Total	$	434	$	2,340	$	(2,199	)	$	575

For the years ended December 31, 2021, 2020 and 2019, the Company recognized the following revenue (in thousands):

	Year Ended December 31,
	2021		2020		2019
Revenue recognized in the period from:
Amounts included in contract liabilities at the beginning of the period:
Performance obligations satisfied	$	573	$	434	$	1,473
New activities in the period:
Performance obligations satisfied		7,848		9,500		5,126

	$	8,421	$	9,934	$	6,599

Avenova Spray Pharmacy Distribution Agreements and Specialty Pharmacies

Avenova Spray is made available in local pharmacies and major pharmacy retail chains under nationwide distribution agreements with McKesson Corporation, Cardinal Health and AmerisourceBergen. We have also entered into direct agreements with preferred pharmacy networks as part of our Partner Pharmacy Program. During the years ended December 31, 2021, 2020 and 2019, the Company earned $0.6 million, $1.7 million and $4.6 million, respectively, in sales revenue for its Avenova Spray product from these distribution and partner pharmacy agreements.

Under these product distribution arrangements, the Company had a contract liability balance of $0.9 million as of December 31, 2021 and $0.7 million as of December 31, 2020. The contract liability is included in accrued liabilities in the consolidated balance sheets. The Company also recorded a prepayment of $19 thousand and $144 thousand for rebates related to these distribution agreements as of December 31, 2021 and December 31, 2020, respectively, that is recorded in the prepaid expenses and other current assets in the consolidated balance sheets (see Note 5, “Prepaid Expenses and Other Current Assets”).

Over-the-Counter Sales of Avenova Spray

Avenova Spray was launched online on June 1, 2019 direct to U.S. customers. Avenova Spray is offered primarily for sale on Amazon.com, the Company’s website (Avenova.com) and Walmart.com. Avenova Spray was launched at select CVS stores and online on CVS.com in February 2021. These channels provide the Company with more stable pricing and provide customers with easy access to our product. During the years ended December 31, 2021, 2020, and 2019 the revenue generated from Avenova Spray in these channels was $5.1 million, $3.3 million, and $1.0 million, respectively.