XML 32 R21.htm IDEA: XBRL DOCUMENT

Note 15 - Wound Care Divestiture

3 Months Ended

Mar. 31, 2025

Wound Care [Member]

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

NOTE 15. WOUND CARE DIVESTITURE

On January 3, 2025, we entered into a Trademark Acquisition Agreement with Phase One that provided for the purchase by Phase One of the Company’s Wound Care Trademarks for a purchase price of $500,000 (the “Trademark Acquisition Agreement,” and such sale, the “Wound Care Divestiture”). In connection with the Wound Care Divestiture, we also entered into a Transition Services Agreement, dated January 3, 2025, with Phase One (the “Phase One Transition Services Agreement”), pursuant to which we: (i) provided limited transition services to Phase One until January 10, 2025; (ii) sold our existing wound care inventory from an outstanding purchase order to Phase One for an aggregate payment of $126,000; and (iii) provided our remaining empty wound care product bottles to Phase One. In addition, the Phase One Transition Services Agreement provided that the existing supplier and distributor relationship between NovaBay and Phase One would be terminated upon the closing of the Wound Care Divestiture. We completed the Wound Care Divestiture on January 8, 2025. We recorded a net gain of $0.5 million as a result of the Wound Care Divestiture during the quarter ended March 31, 2025.

The accounting requirements for reporting results related to the Wound Care Trademarks as discontinued operations were met during the first quarter of 2025. Accordingly, the unaudited condensed consolidated financial statements and notes to the unaudited condensed consolidated financial statements reflect the results related to the Wound Care Trademarks as a discontinued operation for the years presented.

In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of discontinued operations in the consolidated balance sheets. The assets and liabilities related to the Wound Care Trademarks have been reflected as discontinued operations in the consolidated balance sheets as of December 31, 2024, and consist of the following (in thousands):

		Balance at December 31, 2024
ASSETS
Current assets:
Accounts receivable, net		$	6
Inventory, net			48
Total current assets, discontinued operations		$	54

LIABILITIES
Liabilities:
Current liabilities:
Accounts payable		$	43
Total current liabilities, discontinued operations		$	43

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of operations. Results related to the Wound Care Trademarks for the three months ended March 31, 2025 and 2024 have been reflected as discontinued operations in the consolidated statements of operations and consist of the following (in thousands):

		Three Months Ended March 31,
		2025				2024

Net sales		$	122			$	244
Cost of goods sold			75				82
Gross profit			47				162
Operating expenses
Research and development			3				19
Total operating expenses			3				19
Operating income			44				143
Gain on divestiture			500				—
Net income from discontinued operations before income taxes			544				143
Provision for income taxes			14				—

Net income from discontinued operations, net of taxes		$	530			$	143

In accordance with the provisions of ASC 205-20, the Company has not included in the results of continuing operations the results of operations of the discontinued operations in the consolidated statements of cash flows. Results related to the Wound Care Trademarks for the three months ended March 31, 2025 and 2024 have been reflected as discontinued operations in the consolidated statements of cash flows and consist of the following (in thousands):

		Three Months Ended March 31,
		2025				2024

Operating activities:
Net income from discontinued operations		$	530			$	143
Adjustments to reconcile net loss to net cash used in operating activities:
Non-cash gain on divestiture			(500	)			—
Changes in operating assets and liabilities:
Accounts receivable			6				(108	)
Inventory			43				15
Prepaid expenses and other current assets			—				(19	)
Accounts payable and accrued liabilities			(38	)			18
Net cash provided by operating activities, discontinued operations			41				49

Investing activities:
Proceeds from divestiture			500				—
Net cash provided by investing activities, discontinued operations			500				—

Net increase in cash and cash equivalents, discontinued operations		$	541			$	49