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Note 14 - Avenova Asset Divestiture and Bridge Loan | 9 Months Ended
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Sep. 30, 2025
Avenova Assets [Member] |
Notes to Financial Statements |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | NOTE 14. AVENOVA ASSET DIVESTITURE AND BRIDGE LOAN On January 17, 2025, the Company completed the sale of its eyecare products sold under the Avenova brand and related assets (the “Avenova Assets”) to PRN Physician Recommended Nutriceuticals, LLC, a Delaware limited liability company (“PRN”), which constituted substantially all of the Company’s revenue generating and operating assets (the “Avenova Asset Divestiture”). The Avenova Asset Divestiture was consummated pursuant to the Asset Purchase Agreement, dated September 19, 2024, as amended by Amendment No. 1 to the Asset Purchase Agreement, dated November 5, 2024 (as so amended, the “Purchase Agreement”). The Purchase Agreement provided for, among other terms, a base purchase price of $11.5 million for the Avenova Assets and for PRN to provide the Company with up to a $1.0 million secured promissory note (the “Bridge Loan”). Amounts borrowed under the Bridge Loan were required to be used for working capital purposes, bore interest at a rate of 10% per annum and were secured by all of the Company’s assets as collateral. On November 22, 2024, the Company requested and received $0.5 million under the Bridge Loan. In accordance with the Purchase Agreement, at the closing of the Avenova Asset Divestiture the Company received the cash purchase price equal to $11.5 million, less (i) the $507,954 balance of the Bridge Loan which was discharged with collateral released and (ii) $500,000, which amount was deposited into an escrow account (the “Escrow”) for up to six (6) months to be used for the Company’s indemnification obligations under the Purchase Agreement or the payment of the Net Working Capital Adjustment (as defined below) after the closing. The final amount of the purchase price that the Company received in the Avenova Asset Divestiture was subject to a post-closing working capital adjustment, upward or downward, that was limited to an amount of up to $500,000 (the “Net Working Capital Adjustment”). The Net Working Capital Adjustment was mutually determined by PRN and the Company based upon the difference between the amount of the Company’s Net Working Capital (as defined in the Purchase Agreement) immediately prior to the closing and the agreed upon target working capital value of $800,000. The Net Working Capital Adjustment was determined to be $365,566, which reduced the amount of total proceeds that we received from the Avenova Asset Divestiture. The Company recorded a gain of $10.7 million on the Avenova Asset Divestiture during the quarter ended March 31, 2025, net of the agreed upon Net Working Capital Adjustment. In connection with the closing of the Avenova Asset Divestiture on January 17, 2025, the Company entered into a Transition Services Agreement, dated January 17, 2025 with PRN, pursuant to which the Company agreed to provide services to PRN with respect to specified accounting, marketing, sales, customer service, regulatory and operational support for a period of four (4) months after the closing of the Avenova Asset Divestiture (the “PRN Transition Services Agreement”). In exchange for providing such services, PRN and the Company agreed upon service fees to be paid to the Company. The Company recognized $0 and $16 thousand of revenue under the PRN Transition Services Agreement during the three and nine months ended September 30, 2025, respectively, which was included in other expense, net in the Company’s condensed consolidated statements of operations (unaudited). The accounting requirements for reporting results related to the Avenova Assets 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 Avenova Assets as a discontinued operation for the periods presented. In accordance with the provisions of ASC 205-20, the Company has separately reported the assets and liabilities of the discontinued operations in the condensed consolidated balance sheets. The assets and liabilities related to the Avenova Assets have been reflected as discontinued operations in the condensed 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 |  | $ | 352 |
Inventory, net |  |  | 765 |
Prepaid expenses and other current assets |  |  | 62 |
Total current assets, discontinued operations |  |  | 1,179 |
Property and equipment, net, discontinued operations |  |  | 9 |
Total assets, discontinued operations |  | $ | 1,188 |
LIABILITIES |  |  |  |
Liabilities: |  |  |  |
Current liabilities: |  |  |  |
Accounts payable |  | $ | 471 |
Accrued liabilities |  |  | 676 |
Total current liabilities, discontinued operations |  | $ | 1,147 |
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 condensed consolidated statements of operations. Results related to the Avenova Asset for the three and nine months ended September 30, 2025 and 2024 have been reflected as discontinued operations in the condensed consolidated statements of operations and consist of the following (in thousands):
|  | Three Months Ended September 30, |  |  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |  |  | 2025 |  |  | 2024 |
Net sales |  | $ | — |  |  | $ | 2,415 |  |  | $ | 433 |  |  | $ | 7,152 |
Cost of goods sold |  |  | — |  |  |  | 757 |  |  |  | 170 |  |  |  | 2,369 |
Gross profit |  |  | — |  |  |  | 1,658 |  |  |  | 263 |  |  |  | 4,783 |
Operating expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Sales and marketing |  |  | — |  |  |  | 955 |  |  |  | 224 |  |  |  | 3,029 |
Total operating expenses |  |  | — |  |  |  | 955 |  |  |  | 224 |  |  |  | 3,029 |
Operating income |  |  | — |  |  |  | 703 |  |  |  | 39 |  |  |  | 1,754 |
Gain on divestiture |  |  | — |  |  |  | — |  |  |  | 10,700 |  |  |  | — |
Net income from discontinued operations before income taxes |  |  | — |  |  |  | 703 |  |  |  | 10,739 |  |  |  | 1,754 |
(Benefit) Provision for income taxes |  |  | (38 | ) |  |  | — |  |  |  | 191 |  |  |  | — |
Net income from discontinued operations, net of taxes |  | $ | 38 |  |  | $ | 703 |  |  | $ | 10,548 |  |  | $ | 1,754 |
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 condensed consolidated statements of cash flows. Results related to the Avenova Asset for the nine months ended September 30, 2025 and 2024 have been reflected as discontinued operations in the condensed consolidated statements of cash flows and consist of the following (in thousands):
|  | Nine Months Ended September 30, |
|  | 2025 |  |  | 2024 |
Operating activities: |  |  |  |  |  |  |  |
Net income from discontinued operations, net of taxes |  | $ | 10,548 |  |  | $ | 1,754 |
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Non-cash gain on divestiture |  |  | (10,700 | ) |  |  | — |
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (72 | ) |  |  | (273 | )
Inventory |  |  | 73 |  |  |  | 39 |
Prepaid expenses and other current assets |  |  | — |  |  |  | (37 | )
Other assets |  |  | 9 |  |  |  | — |
Accounts payable and accrued liabilities |  |  | (252 | ) |  |  | 58 |
Net cash (used in) provided by operating activities, discontinued operations |  |  | (394 | ) |  |  | 1,541 |
Investing activities: |  |  |  |  |  |  |  |
Proceeds from divestiture |  |  | 11,000 |  |  |  | — |
Net cash provided by investing activities, discontinued operations |  |  | 11,000 |  |  |  | — |
Net increase in cash and cash equivalents, discontinued operations |  | $ | 10,606 |  |  | $ | 1,541 |

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