Note 3 - Held for Sale Classification and Discontinued Operations Presentation

3 Months Ended

Mar. 31, 2026

Notes to Financial Statements

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

3. HELD FOR SALE CLASSIFICATION AND DISCONTINUED OPERATIONS PRESENTATION

Held for sale classification—We report and classify a business or a component of an entity as held-for-sale (Held-For-Sale Business) when management has approved the sale or received approval to sell the business and is committed to a formal plan, the business is available for immediate sale, the business is being actively marketed, the sale is anticipated to occur during the next 12 months and certain other specified criteria are met. A Held-For-Sale Business is recorded at the lower of its carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value, a loss is recognized. As of March 31, 2026, assets and liabilities related to a Held-For-Sale Business are reported in Assets held for sale and Liabilities held for sale, respectively, in our Condensed Consolidated Balance Sheets.

The following table summarizes the components of assets and liabilities held-for-sale on the Condensed Consolidated Balance Sheets at March 31, 2026 (in thousands):

	March 31, 2026		December 31, 2025
ASSETS
Accounts receivable		2,352		2,455
Inventory, net		12,956		13,724
Prepaid and other current assets		801		871
Property and equipment, net		66		69
Intangibles, net		735		4,371
Total assets held for sale	$	16,910	$	21,490
LIABILITIES
Accounts payable		2,573		2,765
Accrued and other current liabilities		1,119		1,047
Total liabilities held for sale	$	3,692	$	3,812

Discontinued operations presentation—We present a business, or a component of an entity, as discontinued operations if a) it meets the held-for-sale criteria, or is disposed of by sale, or is disposed of other than by sale, and b) the disposal of the business, or component of an entity, represents a strategic shift that has (or will have) a major effect on the Company's financial results. As of March 31, 2026, we have retrospectively adjusted our Condensed Consolidated Statement of Operations to reflect the classification of continuing and discontinued operations.

The following table presents the amounts related to the operations of the Company that have been reflected in net loss from discontinued operations (in thousands):

	Three Months Ended March 31,
	2026			2025
Net revenue	$	12,414		$	15,297
Cost of goods sold		4,434			5,923
Gross profit		7,980			9,374
Operating expenses:
Sales and distribution		7,187			9,624
General and administrative		65			105
Impairment loss on intangibles(1)		3,427			—
Total operating expenses from discontinued operations		10,679			9,729
Operating loss from discontinued operations		(2,699	)		(355	)
Other (income) expense, net		(14	)		102
Loss from discontinued operations before income taxes		(2,685	)		(457	)
Provision for income taxes		(13	)		(20	)
Net loss from discontinued operations	$	(2,698	)	$	(477	)

(1) On April 27, 2026, the Company entered into a definitive Asset Purchase Agreement with Trademark Global, LLC, to sell certain marquee brands for $18 million in cash.  Based on the definitive deal terms, specifically the $18.0 million base purchase price and the estimated purchase price adjustments, the Company evaluated the carrying value of its brand intangible assets. The Company determined that the estimated allocated proceeds from the Asset Purchase Agreement were lower than the carrying values for certain definite-lived brand assets. Accordingly, the Company recorded a non-cash impairment charge of $3.4 million during the first quarter of 2026. This charge, recorded within Loss from Discontinued Operations on the Condensed Consolidated Statement of Operations, adjusts the carrying amount of the disposal group to its fair value less costs to sell, based on the $18.0 million cash consideration and estimated purchase price adjustments.