DISCONTINUED OPERATIONS

12 Months Ended

Dec. 31, 2023

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

The Company determined that the sale of the MST Franchise represented a strategic shift that had a major effect on the business and therefore the MST Franchise met the criteria for classification as discontinued operations. Accordingly the MST Franchise is reported as discontinued operations in accordance with ASC 205-20, Discontinued Operations. The Company recognized a gain on the sale of the MST Franchise upon closing. The negative product sales for the years ended December 31, 2023 and 2022 were primarily attributable to a change in the product returns provision following the sale of the MST Franchise.

The following table presents the combined results of discontinued operations of the MST Franchise:

	Year ended December 31,
(in thousands)	2023		2022
Product sales, net	$	(525)	$	(1,844)
Cost of goods sold	—		80
Operating expenses:
Selling, general and administrative	55		259
Total operating expenses	55		259
Loss from discontinued operations	(580)		(2,183)
Gain on the sale of the MST Franchise	—		12,918
Income (loss) from discontinued operations, before income taxes	(580)		10,735
Income tax expense	—		—
Net income (loss) from discontinued operations	$	(580)	$	10,735

The following table presents non-cash items related to discontinued operations, which are included in the Company's consolidated statement of cash flows for the year ended December 31, 2022:

	Year ended December 31,
(in thousands)	2022
Cash Flows From Operating Activities:
Stock-based compensation (income) expense*	$	(352)
Gain on the sale of the MST Franchise	(12,918)
Total non-cash items of discontinued operations	$	(13,270)
Supplemental disclosure of cash flow information:
Amount due from sale of MST Franchise	$	5,000

*Income from stock-based compensation is related to forfeitures.

There were no non-cash items related to discontinued operations for the year ended December 31, 2023.

The following table presents the gain on the sale of the MST Franchise:

(in thousands)	Year ended December 31, 2022
Cash proceeds	20,000
Proceeds received in January 2023	5,000
	25,000
Less transaction costs	(4,334)
Less carrying value of assets sold	(7,748)
Gain on sale, before income taxes	12,918
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 potential milestone payments 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.