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Note 16 - Distribution Agreements | 12 Months Ended
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Dec. 31, 2022
Notes to Financial Statements |
License, Collaboration, and Distribution Agreements [Text Block] | NOTE 16. 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. Product Sales Discounts and Allowances The following table presents activities and ending reserve balances for each significant category of discounts and allowance, which constitute variable consideration for the year ended December 31, 2022 (in thousands):
|  | Chargebacks, Discounts for Prompt Payment |  |  | Other Customer Fees |  |  | Rebates |  |  | Total |
Balance at December 31, 2021 |  | $ | 1,150 |  |  | $ | 83 |  |  | $ | 56 |  |  | $ | 1,289 |
Provision related to sales made in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period |  | $ | 1,865 |  |  | $ | 65 |  |  | $ | 448 |  |  | $ | 2,378 |
Payments and customer credits issued |  | $ | (1,342 | ) |  | $ | (95 | ) |  | $ | (423 | ) |  | $ | (1,860 | )
Balance at December 31, 2022 |  | $ | 1,673 |  |  | $ | 53 |  |  | $ | 81 |  |  | $ | 1,807 |
The following table presents activities and ending reserve balances for each significant category of discounts and allowance, which constitute variable consideration for the year ended December 31, 2021 (in thousands):
|  | Chargebacks, Discounts for Prompt Payment |  |  | Other Customer Fees |  |  | Rebates |  |  | Total |
Balance at December 31, 2020 |  | $ | 537 |  |  | $ | 91 |  |  | $ | 102 |  |  | $ | 730 |
Provision related to sales made in: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Current period |  | $ | 1,374 |  |  | $ | 135 |  |  | $ | 723 |  |  | $ | 2,232 |
Payments and customer credits issued |  | $ | (761 | ) |  | $ | (143 | ) |  | $ | (769 | ) |  | $ | (1,673 | )
Balance at December 31, 2021 |  | $ | 1,150 |  |  | $ | 83 |  |  | $ | 56 |  |  | $ | 1,289 |
Contract Assets and Liabilities The Company receives payments from our distribution partners established in each contract. Amounts are recorded as accounts receivable when the Company’s rights to consideration is unconditional. The Company may be required to defer recognition of revenue for upfront payments until it performs its obligations under these arrangements, and such amounts are recorded as deferred revenue upon receipt. The following table presents contract assets and liabilities reported in the consolidated balance sheets (in thousands):
|  | December 31, |  |  | December 31, |  |  | December 31, |
|  | 2022 |  |  | 2021 |  |  | 2020 |
Contract assets |  | $ | - |  |  | $ | 19 |  |  | $ | 144 |
Contract liabilities |  |  |  |  |  |  |  |  |  |  |  |
Current portion |  | $ | 4 |  |  | $ | 54 |  |  | $ | 2 |
Long-term portion |  | $ | - |  |  | $ | - |  |  | $ | - |
Total contract liabilities |  | $ | 4 |  |  | $ | 54 |  |  | $ | 2 |
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. The Company has also entered into direct agreements with preferred pharmacy networks as part of our Partner Pharmacy Program. During the years ended December 31, 2022 and 2021, the Company earned $0.1 million and $0.6 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 $1.6 million as of December 31, 2022 and $0.9 million as of December 31, 2021. The contract liability is included in accrued liabilities in the consolidated balance sheets. The Company also recorded a prepayment of $19 thousand for rebates related to these distribution agreements as of December 31, 2021, with no such prepayment recorded in the 2022 period, 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), Walmart.com, select CVS stores and online on CVS.com. These channels provide the Company with more stable pricing and provide customers with easy access to our product. During the years ended December 31, 2022 and 2021, the revenue generated from Avenova Spray in these channels was $6.5 million and $6.6 million, respectively. DERMAdoctor Products Distribution Agreements DERMAdoctor products are sold through distribution arrangements with third parties such as Costco and others. During the years ended December 31, 2022 and 2021, the Company earned $0.9 million and $0.2 million, respectively, in sales revenue for its DERMAdoctor products from these distribution agreements. Under these distribution arrangements, the Company had a contract liability balance of $0.2 million as of December 31, 2022, and $0.4 million as of December 31, 2021. The contract liability is included in accrued liabilities in the consolidated balance sheets.

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