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DISCONTINUED OPERATIONS
 9 Months Ended
Sep. 30, 2022
Discontinued Operations and Disposal Groups [Abstract]  
DISCONTINUED OPERATIONS DISCONTINUED OPERATIONS
On January 12, 2022, the Company entered into the Purchase Agreement with Journey pursuant to which the Company sold its MST Franchise to Journey. The Company has determined that the sale of the MST Franchise represents a strategic shift that had a major effect on the business and therefore the MST Franchise met the criteria for classification as discontinued operations at March 31, 2022. Accordingly the MST Franchise is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. Amounts applicable to prior years have been recast to conform to the discontinued operations presentation. The Company recognized a gain on the sale of the MST Franchise upon closing.
The following table presents the combined results of discontinued operations of the MST Franchise:
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2022202120222021
Product sales$— $3,953 $106 $11,805 
Cost of goods sold— 1,049 80 2,445 
Operating expenses:
Research and development— 1,064 — 4,503 
Selling, general and administrative117 8,849 25 30,780 
Total operating expenses117 9,913 25 35,283 
Income (loss) from discontinued operations(117)(7,009)1 (25,923)
(Loss) gain on the sale of the MST Franchise(87)— 12,918 — 
Income (loss) from discontinued operations, before income taxes(204)(7,009)12,919 (25,923)
Income tax expense— — — — 
Net income (loss) from discontinued operations$(204)$(7,009)$12,919 $(25,923)
The following table presents the carrying amounts of the classes of assets and liabilities related to the discontinued operations of the MST Franchise as of September 30, 2022 and December 31, 2021:
(in thousands)September 30, 2022December 31, 2021
Current assets:
Inventory$— $7,291 
Prepaid expenses and other assets— 554 
Total current assets of discontinued operations$— $7,845 
The following table presents non-cash items related to discontinued operations, which are included in the Company's unaudited condensed consolidated statement of cash flows for the nine months ended September 30, 2022 and 2021:
(in thousands)Nine months ended September 30, 2022Nine months ended September 30, 2021
Cash Flows From Operating Activities:
Stock-based compensation (income) expense*$(352)$1,079 
Gain on the sale of the MST Franchise(12,918)— 
Total non-cash items of discontinued operations$(13,270)$1,079 
Supplemental disclosure of cash flow information:
Amount due from sale of MST Franchise$5,000 $— 
*Income from stock-based compensation is related to forfeitures.
The following table presents the gain on the sale of the MST Franchise:

(in thousands)Nine months ended September 30, 2022
Cash proceeds$20,000 
Proceeds to be paid in January 20235,000
25,000 
Less transaction costs(4,334)
Less book value of sold assets(7,748)
Gain on sale, before income taxes12,918
Income tax expense— 
Gain on sale net of tax$12,918 
In accordance with ASC 205-20, only expenses specifically identifiable and related to a business to be disposed may be presented in discontinued operations. As such, the research and development, marketing, selling and general and administrative expenses in discontinued operations include corporate costs incurred directly to solely support the MST Franchise.

The milestone payment for sales of ZILXI, AMZEEQ and FCD105 represent contingent consideration. Contingent consideration has been accounted for as a gain contingency in accordance with ASC 450, Contingencies, and will be recognized in earnings in the period when realizable.