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Note 3 - Business Combination | 9 Months Ended
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Sep. 30, 2022
Notes to Financial Statements |
Business Combination Disclosure [Text Block] | NOTE 3. BUSINESS COMBINATION On November 5, 2021, the Company completed the DERMAdoctor Acquisition in which NovaBay acquired 100% of the membership units of DERMAdoctor from the sellers for a closing purchase price of $12.0 million and potential future earnout payments of up to an aggregate of $3.0 million over a period of two calendar years post-closing. The Company funded the closing purchase price in part through the 2021 Private Placement (see Note 14, “Stockholders’ Equity”). The DERMAdoctor Acquisition is accounted for as a business combination in accordance with ASC 805, Business Combinations, which requires that the assets acquired and liabilities assumed be recognized at their estimated fair values as of the Acquisition Closing. Goodwill represents the excess of the consideration transferred over the estimated fair value of assets acquired and liabilities assumed in a business combination. The following table sets forth the final allocation of the purchase price for the DERMAdoctor Acquisition to the fair value of the identifiable tangible and intangible assets acquired and liabilities assumed from DERMAdoctor (in thousands):
|  | Fair Value |
Tangible net assets and liabilities: |  |  |  |
Cash and cash equivalents |  | $ | 12 |
Accounts receivable, net of allowance for doubtful accounts |  |  | 1,015 |
Inventory, net of allowance |  |  | 2,369 |
Prepaid expenses and other current assets |  |  | 150 |
Property and equipment, net |  |  | 62 |
Other intangible assets |  |  | 54 |
Accounts payable |  |  | (200 | )
Accrued liabilities |  |  | (683 | )
Total net assets |  |  | 2,779 |
Intangible Assets: |  |  |  |
Customer relationships |  |  | 290 |
Trade secrets / product formulations |  |  | 2,890 |
Trade names |  |  | 2,080 |
Total intangible assets |  |  | 5,260 |
Net assets acquired |  |  | 8,039 |
Purchased consideration |  |  | 12,561 |
Goodwill |  | $ | 4,528 |
Goodwill is primarily attributable to assembled workforce, expected synergies and other factors. The fair values of the identifiable intangible assets acquired at the date of the DERMAdoctor Acquisition are as follows (in thousands):
Intangible Asset |  | Fair Value |  |  | Useful Life (in years) |  |  | Amortization Method |
Customer relationships |  | $ | 290 |  |  |  | 7 |  |  | Straight line |
Trade secrets / product formulations |  |  | 2,890 |  |  |  | 9 |  |  | Straight line |
Trade names |  |  | 2,080 |  |  | Indefinite |  |  |  | N/A |
Goodwill |  |  | 4,528 |  |  | Indefinite |  |  |  | N/A |
|  | $ | 9,788 |  |  |  |  |  |  |  |  |
The valuations of intangible assets incorporate significant unobservable inputs and require significant judgment and estimates, including the amount and timing of future cash flows. The Company recognized approximately $1.2 million of transaction costs in the year ended December 31, 2021. These costs are recorded as general and administrative expense in the consolidated statements of operations and comprehensive loss. The Company’s management reviews financial results and manages the business on an aggregate basis in accordance with ASC 280, Segment Reporting. Therefore, financial results are reported in two operating segments: (1) Optical & Wound Care and (2) Skin Care (see Note 19, “Segment Reporting” below).

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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