10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-13458

SCOTT’S LIQUID GOLD-INC.

(Exact name of registrant as specified in its charter)

Colorado	84-0920811
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
8400 E. Crescent Parkway, Suite 450, Greenwood Village, CO	80111
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (303) 373-4860

Securities registered pursuant to Section 12(b) of the Exchange Act.

Title of each class	Trading Symbol	Name of exchange on which registered
None	None	None

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of, November 13, 2022 the registrant had 12,805,663 shares of its common stock, $0.10 par value per share, outstanding.

CAUTIONARY NOTE ON FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q (this “Report”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, in addition to historical information. All statements, other than statements of historical facts, included in this Report that address activities, events, or developments with respect to our financial condition, results of operations, or economic performance that we expect, believe, or anticipate will or may occur in the future, or that address plans and objectives of management for future operations, are forward-looking statements. You can typically identify forward-looking statements by the use of words, such as “may,” “could,” “should,” “assume,” “project,” “believe,” “anticipate,” “expect,” “estimate,” “potential,” “plan,” and other similar words. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

The forward-looking statements contained in this Report are based on management’s current expectations and are subject to uncertainty and changes in circumstances. We cannot assure you that future developments affecting us will be those that we have anticipated. Forward-looking statements and our performance inherently involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors that would cause or contribute to such differences include, but are not limited to:

•the impact of the COVID-19 pandemic on our business, suppliers, consumers, customers, and employees;

•disruptions or inefficiencies in the supply chain, including any impact of the COVID-19 pandemic;

•dependence on third-party vendors and on sales to major customers;

•regulations, economic conditions, and tariffs in the People’s Republic of China (“PRC”), as well as the transition from our exclusive distributor in the PRC to market and sell our products there;

•a continued shift in the retail market from food and drug stores to mass merchandisers, club stores, dollar stores, e-commerce retailers, and subscription services;

•competition from large consumer products companies in the United States;

•competitive factors, including any decrease in distribution of (i.e., retail stores carrying) our significant products;

•new competitive products and/or technological changes;

•the need for effective advertising of our products and limited resources available for such advertising;

•unfavorable economic conditions;

•changing consumer preferences and the continued acceptance of each of our significant products in the marketplace;

•the degree of success of any new product or product line introduction by us;

•the degree of success of the integration of product lines or businesses we may acquire;

•the degree of success of our conversion to outsourced manufacturing and dependence on third-party manufacturers;

•changes in the regulation of our products, including applicable environmental, U.S. and international Food and Drug Administration regulations and process-audit compliance;

•the loss of any executive officer or other personnel;

•future losses which could affect our liquidity;

•the risk that we may not be able to remediate the existing material weakness related to the impairment assessment of goodwill and develop and maintain effective internal controls over financial reporting;

•other matters discussed in this Report, including the risks described in the Risk Factors section of this Report and in our Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent Quarterly Reports on Form 10-Q.

We caution you that forward-looking statements are not guarantees of future performance and that actual results or performance may be materially different from those expressed or implied in the forward-looking statements. The forward-looking statements in this Report speak as of the filing date of this Report. Although we may from time to time voluntarily update our prior forward-looking statements, we undertake no obligation to revise any forward-looking statements in order to reflect events or circumstances that may arise after the date of this Report.

TABLE OF CONTENTS

		Page
PART I
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 4.	Controls and Procedures	22
PART II
Item 1A.	Risk Factors	23
Item 6.	Exhibits	23

PART I

ITEM 1. FINANCIAL STATEMENTS.

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Operations (Unaudited)

(in thousands, except per share data)

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2022			2021			2022			2021
Net sales	$	4,277		$	7,970		$	15,449		$	24,583
Cost of sales		2,358			5,100			8,337			14,624
Gross profit		1,919			2,870			7,112			9,959
Operating expenses:
Advertising		166			144			492			506
Selling		1,691			2,542			5,752			7,388
General and administrative		578			836			2,020			3,782
Intangible asset amortization		87			278			313			834
Impairment of goodwill and intangible assets		-			-			3,589			-
Total operating expenses		2,522			3,800			12,166			12,510
Loss from operations		(603	)		(930	)		(5,054	)		(2,551	)
Interest expense		(139	)		(109	)		(419	)		(219	)
Loss before income taxes and discontinued operations		(742	)		(1,039	)		(5,473	)		(2,770	)
Income tax expense		(2	)		(1,224	)		(55	)		(798	)
Loss from continuing operations		(744	)		(2,263	)		(5,528	)		(3,568	)
Loss from discontinued operations, net of taxes		-			(205	)		-			(246	)
Net loss	$	(744	)	$	(2,468	)	$	(5,528	)	$	(3,814	)
Basic and diluted net loss per common shares:
Loss from continuing operations	$	(0.06	)	$	(0.18	)	$	(0.43	)	$	(0.28	)
Loss from discontinued operations	$	-		$	(0.02	)	$	-		$	(0.02	)
Net loss	$	(0.06	)	$	(0.20	)	$	(0.43	)	$	(0.30	)
Weighted average shares outstanding:
Basic and diluted		12,749			12,642			12,747			12,628

See accompanying notes to these Condensed Consolidated Financial Statements.

1

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except par value amounts)

	September 30,			December 31,
	2022			2021
Assets
Current assets:
Cash	$	14		$	770
Restricted cash		125			500
Accounts receivable, net		1,791			3,516
Inventories		6,289			5,677
Income taxes receivable		247			320
Prepaid expenses		214			436
Total current assets		8,680			11,219
Property and equipment, net		3			7
Goodwill		838			1,710
Intangible assets, net		2,272			5,160
Operating lease right-of-use assets		2,553			2,735
Other assets		38			38
Total assets	$	14,384		$	20,869
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	1,750		$	2,647
Accrued expenses		397			747
Current portion of long-term debt		2,684			1,000
Operating lease liabilities, current portion		264			251
Total current liabilities		5,095			4,645
Long-term debt, net of current portion and debt issuance costs		555			1,876
Operating lease liabilities, net of current		2,581			2,780
Other liabilities		27			27
Total liabilities		8,258			9,328
Shareholders’ equity:
Preferred Stock, no par value, authorized 20,000 shares; no shares issued and outstanding		-			-
Common Stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,749 shares (2022) and 12,727 shares (2021)		1,275			1,273
Capital in excess of par		7,900			7,789
(Accumulated deficit) retained earnings		(3,049	)		2,479
Total shareholders’ equity		6,126			11,541
Total liabilities and shareholders’ equity	$	14,384		$	20,869

See accompanying notes to these Condensed Consolidated Financial Statements.

2

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Shareholders’ Equity (Unaudited)

(in thousands)

	Common Stock
	Shares		Amount		Capital in Excess of Par			(Accumulated Deficit) Retained Earnings			Total
Balance, December 31, 2021		12,727	$	1,273	$	7,789		$	2,479		$	11,541
Stock-based compensation		-		-		35			-			35
Net loss		-		-		-			(451	)		(451	)
Restricted stock unit vesting		22		2		26			-			28
Balance, March 31, 2022 (Unaudited)		12,749		1,275		7,850			2,028			11,153
Stock-based compensation		-		-		22			-			22
Net loss		-		-		-			(4,333	)		(4,333	)
Balance, June 30, 2022 (Unaudited)		12,749		1,275		7,872			(2,305	)		6,842
Stock-based compensation		-		-		28			-			28
Net loss		-		-		-			(744	)		(744	)
Balance, September 30, 2022 (Unaudited)		12,749	$	1,275	$	7,900		$	(3,049	)	$	6,126
Balance, December 31, 2020		12,618	$	1,262	$	7,633		$	13,570		$	22,465
Stock-based compensation		-		-		69			-			69
Net loss		-		-		-			(280	)		(280	)
Balance, March 31, 2021 (Unaudited)		12,618		1,262		7,702			13,290			22,254
Stock-based compensation		-		-		33			-			33
Net loss		-		-		-			(1,066	)		(1,066	)
Balance, June 30, 2021 (Unaudited)		12,618		1,262		7,735			12,224			21,221
Stock-based compensation		-		-		(3	)		-			(3	)
Stock options exercised		45		4		53			-			57
Restricted stock unit vesting		3		-		-			-			-
Net loss		-		-		-			(2,468	)		(2,468	)
Balance, September 30, 2021 (Unaudited)		12,666	$	1,266	$	7,785		$	9,756		$	18,807

See accompanying notes to these Condensed Consolidated Financial Statements.

3

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2022			2021
Cash flows from operating activities:
Net loss	$	(5,528	)	$	(3,568	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		480			1,357
Stock-based compensation		113			99
Deferred income taxes		-			784
Impairment of goodwill and intangible assets		3,589			-
Change in operating assets and liabilities:
Accounts receivable		1,725			228
Inventories		(612	)		(2,651	)
Prepaid expenses and other assets		222			175
Income taxes receivable		73			192
Accounts payable, accrued expenses, and other liabilities		(1,251	)		1,990
Total adjustments to net loss		4,339			2,174
Net cash used in operating activities		(1,189	)		(1,394	)
Cash flows from investing activities:
Purchase of software		(142	)		(262	)
Net cash used in investing activities		(142	)		(262	)
Cash flows from financing activities:
Repayments on term loans		(2,000	)		(750	)
Proceeds from revolving credit facility		20,763			29,824
Repayments of revolving credit facility		(18,563	)		(27,222	)
Proceeds from exercise of stock options		-			57
Net cash provided by financing activities		200			1,909
Net (decrease) increase in cash and restricted cash		(1,131	)		253
Cash and restricted cash, beginning of period		1,270			5
Cash and restricted cash, end of period	$	139		$	258
Supplemental disclosures:
Cash paid during the period for interest	$	256		$	372

See accompanying notes to these Condensed Consolidated Financial Statements.

4

SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Notes to Condensed Consolidated Financial Statements (Unaudited)

(in thousands, except per share data)

Note 1. Organization and Summary of Significant Accounting Policies

(a) Company Background

Scott’s Liquid Gold-Inc., a Colorado corporation was incorporated on February 15, 1954. Scott’s Liquid Gold-Inc. and its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our,” or “us”) develop, market and sell high quality products in two segments: household products and health and beauty care products.

(b) Principles of Consolidation

Our Condensed Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Dryel® product line. We have reflected the operations of the Dryel® product line as discontinued operations for all periods presented, which were previously classified under our household products segment. See Note 3 for further information.

(c) Basis of Presentation

The unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows included in this Report have been prepared by the Company. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2022 and results of operations and cash flows for all periods have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the period ended September 30, 2022 are not necessarily indicative of the operating results for the full year and are unaudited.

(d) Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, fair value of assets acquired in business combinations, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

(e) Cash and Restricted Cash

Cash and restricted cash consist of the following:

	September 30, 2022		December 31, 2021
Cash	$	14	$	770
Restricted Cash		125		500
	$	139	$	1,270

(f) Inventories Valuation and Reserves

Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve, which is generally not material to our financial statements, for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted.

5

Inventories were comprised of the following at:

	September 30, 2022		December 31, 2021
Finished goods		5,986	$	5,499
Raw materials		303		178
	$	6,289	$	5,677

Our remaining raw materials balance is to be sold to contract manufacturing partners based on production demand.

(g) Property and Equipment

Property and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Office furniture and office machines are estimated to have useful lives of 10 to 20 years and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized.

(h) Leases

Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Certain nonlease components, such as maintenance and other services provided by the lessor, are included in the valuation of the lease. Leases with an initial term of 12 months or less, which are not material to our financial statements, are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component.

The Company evaluates reimbursable leasehold improvements based on whether improvements are indicative of a lessor or lessee asset. The Company concluded that all of its reimbursable leasehold improvement payments have qualified as lessor assets and, as such, have accounted for leasehold improvement payments as prepaid rent included in prepaid expenses on the Condensed Consolidated Balance Sheets.

(i) Intangible Assets and Goodwill

Goodwill is subject to impairment tests at least annually or when events or changes in circumstances indicate that an asset may be impaired. Other intangible assets with finite lives, such as customer relationships, trade names, and formulas, are amortized over their estimated useful lives, generally ranging from 5 to 20 years. Amortization expense related to intangible assets is included in Operating Expenses on the Condensed Consolidated Statement of Operations.

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. Amortization will be recorded over the estimated useful life of the software once the software is ready for its intended use and placed into service. In the second quarter of 2022, our internal-use software was implemented for its intended use. The estimated useful life for internal-use software is five years and will be periodically reassessed based on considerations for obsolescence, technology, competition, and other economic factors.

(j) Financial Instruments

Financial instruments which potentially subject us to concentrations of credit risk include cash, restricted cash, and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. Historically, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts, which is generally not material to our financial statements, based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements.

The recorded amounts for cash, restricted cash, receivables, other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these financial instruments.

6

(k) Income Taxes

Income taxes reflect the tax effects of transactions reported in the Condensed Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Condensed Consolidated Statements of Income or accrued on the Condensed Consolidated Balance Sheets.

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and nine months ended September 30, 2022 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to valuation allowance. The effective tax rate for the nine months ended September 30, 2022 and 2021 was 0.0% and 21.6% respectively.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to realize deferred tax assets. Based upon the historical and anticipated future losses, management has determined that the deferred tax assets do not meet the more likely than not threshold for realizability. Accordingly, a valuation allowance has been recorded against the Company’s net deferred tax assets as of September 30, 2022, and December 31, 2021.

On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. The tax impact of the carryback of the 2020 loss was recorded in the first quarter 2021 income tax provision. We elected to defer our portion of social security tax payments, and we paid this liability in the third quarter of 2021.

(l) Revenue Recognition

Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Our revenue contracts are identified when purchase orders are received and accepted from customers and represent a single performance obligation to sell our products to a customer.

Net sales reflect the transaction prices for contracts, which include products shipped at selling list prices reduced by variable consideration. Variable consideration includes estimates for expected customer allowances, promotional programs for consumers, and sales returns. Based on our customer-by-customer history, our variable consideration estimates are generally accurate and subsequent adjustments are generally immaterial.

7

Variable consideration is primarily comprised of customer allowances. Customer allowances primarily include reserves for trade promotions to support price features, displays, slotting fees, and other merchandising of our products to our customers. Promotional programs for consumers primarily include coupons, rebates, and certain other promotional programs, and do not represent a significant portion of variable consideration. The costs of both customer allowances and promotional programs for consumers are estimated using either the expected value or most likely amount approach, depending on the nature of the allowance, using all reasonably available information, including our historical experience and current expectations. Customer allowances and promotional programs for consumers are reflected in the transaction price when sales are recorded. We may adjust our estimates based on actual results and consideration of other factors that cause allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Sales returns are generally not material to our financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce our revenue in that period.

Sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted.

Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the Condensed Consolidated Balance Sheets and were as follows:

	September 30, 2022		December 31, 2021
Trade promotions	$	379	$	1,242
Allowance for doubtful accounts		44		14
	$	423	$	1,256

(m) Advertising Costs

We expense advertising costs as incurred.

(n) Stock-Based Compensation

We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options with only service conditions using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the vesting period using the straight-line method, which approximates the service period.

The Company issues restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting) and satisfaction of market conditions targeted to our Company’s stock price. For those RSU awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with both market and service conditions, the Company starts recognizing compensation cost over the requisite service period, with the effect of the market conditions reflected in the calculation of the award's fair value at grant date. The Company values awards with only service vesting requirements based on the grant date share price. The Company values awards with market and service conditions using a Monte Carlo simulation. The Company determines the requisite service period for awards with both market and service conditions based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the average number of shares that would be issued based on the highest 30-day average market price during the reporting periods, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used.

8

(o) Operating Costs and Expenses Classification

Cost of sales includes costs associated with the purchase of goods from our third-party manufacturing partners, which include labor, materials, and other expenses associated with the manufacturing of our products, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for warehousing and distribution, sales and sales support personnel, brokerage commissions, customer compliance fines, and promotional costs. Freight-out costs included in selling expenses totaled $429 and $624 for the three months ended September 30, 2022 and 2021, respectively, and totaled $1,725 and $2,163 for the nine months ended September 30, 2022 and 2021, respectively.

General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility related expenses, and other general support costs.

On April 29, 2021, the Company announced that Mark E. Goldstein, the President and Chief Executive Officer of the Company and a member of the Board of Directors, retired effective as of April 26, 2021. In connection with Mr. Goldstein’s retirement, the Company and Mr. Goldstein entered into a Separation Agreement, Waiver and Release (the “Separation Agreement”), pursuant to which the Company will pay Mr. Goldstein $720 in severance payments (equal to 18 months base salary) over a period of 30 months and reimbursement for the costs of continuing health benefits for a period of 18 months. Severance costs of $805 were recognized in the second quarter of 2021 and are included in general and administrative expenses. Accrued severance costs are included in accrued expenses on the Condensed Consolidated Balance Sheets.

(p) Recently Adopted Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The purpose of ASU 2020-04 is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply amendments prospectively through December 31, 2022. The Company adopted ASU 2020-04 effective July 1, 2022. The adoption of this standard did not have a material impact on our financial statements.

(q) Recently Issued Accounting Standards

In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. We are currently assessing the impact of this guidance on our financial statements.

Note 2. Going Concern

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern.

The Company had cash and restricted cash of $139 and $944 of available borrowing capacity under our revolving credit facility as of September 30, 2022. Primarily due to a decline in net sales and increases in costs associated with the manufacture and distribution of our products, the Company used net cash in operating activities of $1,189 during the nine months ended September 30, 2022. The Company’s debt agreements with UMB Bank, N.A. and La Plata Capital, LLC mature on July 1, 2023 and November 9, 2023, respectively. Management’s assessment of cash flow forecasts indicate that, absent any other action, the Company likely will require additional liquidity to continue its operations over the next 12 months.

Management has implemented actions to reduce the Company’s operating expenses and has approved a plan to extend and restructure debt facilities. Management is considering additional various strategic actions including asset sales, workforce reduction, deferring or eliminating certain capital expenditures, and further reduction of other operating expenses to ensure alignment with customer demand in order to address liquidity needs and pursue its business plan. The Company expects that these strategic actions will reduce expenses and outstanding debt balances and provide required liquidity for ongoing operations. If these plans aren't successfully implemented there could be substantial doubt about the Company's ability to continue as a going concern.

9

Note 3. Discontinued Operations

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Dryel® product line. The total consideration paid to us was $4,850, plus an amount equal to the value of the Dryel® inventory of $440, subject to post-close adjustment. At closing, $500 of the total consideration was held in escrow for a twelve-month period following the closing date, to be released ratably in four installments in 2022. We received the first three installment payments during the first nine months ended September 30, 2022. This consideration is reflected as Restricted Cash on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively. Dryel® generated approximately $2,800 of net sales in the trailing twelve-month period ending December 31, 2021.

Under ASC 360, a long-lived asset group should be classified as held for sale if all of the established criteria are met. The sale of Dryel® did not meet these criteria in the year ending December 31, 2021, because we had not established an active program to locate a buyer and because the brand was not being marketed for sale. All efforts between the buyer and the Company occurred during the fourth quarter of 2021. As a result, there was no adjustment to fair value under ASC 360 guidance related to held for sale assets, and the difference between the consideration paid to us and the carrying amount of all assets is reflected in the loss on sale of discontinued operations.

We have reflected the operations of the Dryel® product line as discontinued operations. Our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our Condensed Consolidated Statements of Equity and Statements of Cash Flows combine the results of continuing and discontinued operations. As of the three and nine months ended September 30, 2022, there were no operating results from discontinued operations included in the Condensed Consolidated Statements of Operations. As of September 30, 2022 and December 31, 2021, respectively, there were no assets and liabilities relating to discontinued operations presented separately in the Condensed Consolidated Balance Sheets. There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the nine months ended September 30, 2022 and 2021, respectively. A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30:

	Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
Net sales	$	585		$	1,856
Cost of sales		313			1,013
Gross profit		272			843
Operating expenses:
Selling		144			367
Intangible asset amortization		123			369
Interest expense		99			298
Loss from discontinued operations, before tax		(94	)		(191	)
Income tax expense		(111	)		(55	)
Loss from discontinued operations, net of tax	$	(205	)	$	(246	)

Note 4. Stock-Based Compensation

On January 18, 2022, we granted 25 RSUs to an employee (the “2022 Individual Employee Grant”) with a grant date fair value of $10. The 2022 Individual Employee Grant vested one-third on the initial grant date, and the remaining two-thirds will vest on each anniversary of the grant date.

On March 2, 2022, we granted 15 shares of restricted stock to one executive all of which vested on the grant date with a fair value of $18.

Compensation cost related to stock options totaled $10 and $44 in the nine months ended September 30, 2022 and 2021, respectively. The stock options were fully vested in the second quarter of 2022. There was no tax benefit from recording the non-cash expense as it relates to the options granted to employees, as these were qualified stock options which are not normally tax deductible.

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Compensation cost related to RSUs totaled $103 and $55 for the nine months ended September 30, 2022 and 2021, respectively. Approximately $170 of total unrecognized compensation costs related to non-vested RSUs is expected to be recognized over the next three years.

Note 5. Earnings per Share

Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock.

Basic earnings per share include no dilution and are computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings.

A reconciliation of the weighted average number of common shares outstanding (in thousands) is as follows. The dilutive effect of stock options and RSUs are excluded for periods in which the Company has a net loss because the impact is anti-dilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Common shares outstanding, beginning of the period		12,749		12,618		12,727		12,618
Weighted average common shares issued		-		24		20		10
Weighted average number of common shares outstanding		12,749		12,642		12,747		12,628
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,749		12,642		12,747		12,628

Common stock equivalents (in thousands) that have been excluded from the calculation of earnings per share because they would have been anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Stock options		153		15		153		15

Note 6. Segment Information

We operate in two different segments: household products and health and beauty care products. We have chosen to organize our business around these segments based on differences in the products sold. Accounting policies for our segments are the same as those described in Note 1. We evaluate segment performance based on segment income or loss from operations.

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The following provides information on our segments for the three and nine months ended September 30:

	Three Months Ended September 30, 2022
	Household Products			Health and Beauty Care Products			Total
Net sales	$	2,748		$	1,529		$	4,277
Loss from operations		(371	)		(232	)		(603	)
Capital and intangible asset expenditures		-			-			-
Depreciation and amortization		99			41			140

	Three Months Ended September 30, 2021
	Household Products			Health and Beauty Care Products			Total
Net sales	$	3,846		$	4,124		$	7,970
Loss from operations		(382	)		(548	)		(930	)
Capital and intangible asset expenditures		113			-			113
Depreciation and amortization		297			155			452

	Nine Months Ended September 30, 2022
	Household Products			Health and Beauty Care Products			Total
Net sales	$	9,103		$	6,346		$	15,449
Loss from operations		(4,854	)		(200	)		(5,054	)
Capital and intangible asset expenditures		142			-			142
Depreciation and amortization		386			93			480

	Nine Months Ended September 30, 2021
	Household Products			Health and Beauty Care Products			Total
Net sales	$	10,762		$	13,821		$	24,583
Loss from operations		(1,960	)		(591	)		(2,551	)
Capital and intangible asset expenditures		262			-			262
Depreciation and amortization		893			464			1,357

Note 7. Goodwill and Intangible Assets

There was no impairment in the three months ended September 30, 2022 and 2021, respectively.

During the second quarter of 2022, we experienced a significant decline in our stock price and market capitalization and revised internal forecasts relating to all reporting units due to inflationary related pressures at our customers which have caused sales decreases. We concluded that the changes in circumstances in these reporting units triggered the need for a quantitative review of the carrying values of goodwill and certain intangible assets and resulted in impairment charges to our All-Purpose reporting unit during the nine months ended September 30, 2022 and resulted in the following impairment charges:

	Intangible Assets		Goodwill		Total
All-Purpose		2,717		872		3,589

There was no impairment in the nine months ended September 30, 2021.

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The changes in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2022 and 2021 were as follows:

	Detergent		Shampoo		All-Purpose			Total
Balance, January 1, 2022	$	-	$	-	$	1,710		$	1,710
Additions		-		-		-			-
Impairment		-		-		(872	)		(872	)
Balance, September 30, 2022	$	-	$	-	$	838		$	838
Balance, January 1, 2021	$	593	$	1,520	$	1,710		$	3,823
Additions		-		-		-			-
Impairment		-		-		-			-
Balance, September 30, 2021	$	593	$	1,520	$	1,710		$	3,823

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use or are related to our acquisition of our Prell®, Denorex®, BIZ® and Kids N Pets® brands, consisted of the following:

	As of September 30, 2022						As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Intangible assets:
Customer relationships	$	-	$	-	$	-	$	2,103	$	329	$	1,774
Trade names		970		99		871		1,850		151		1,699
Formulas and batching processes		1,000		441		559		1,370		452		918
Internal-use software		898		60		838		756		-		756
Non-compete agreement		33		29		4		48		35		13
	$	2,901	$	629	$	2,272	$	6,127	$	967	$	5,160

The change in the net carrying amounts of intangible assets during 2022 was due to capitalization of costs related to our internal-use software, the impact of impairment charges related to intangible assets in our All-Purpose reporting unit, and amortization expense. Amortization expense for the three months ended September 30, 2022 and 2021 was $87 and $278, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021 was $313 and $433, respectively.

Estimated amortization expense for 2022 and subsequent years is as follows:

Remainder of 2022	$	86
2023		344
2024		344
2025		343
2026		342
Thereafter		813
Total	$	2,272

Note 8. Long-Term Debt and Line-of-Credit

On July 1, 2020, we entered into a Loan and Security Agreement (as amended, the “UMB Loan Agreement”) with UMB Bank, N.A. (“UMB”). Under the UMB Loan Agreement we obtained a $3,000 term loan, with equal monthly payments fully amortized over three years, and interest at the LIBOR Rate + 4.50% with a floor of 5.50%, and a revolving credit facility, with a maximum commitment of $7,000 with interest at the LIBOR Rate + 3.75%, with a floor of 4.75%. On August 10, 2022, the revolving credit facility was reduced to a maximum commitment of $4,000 with interest at the one month term SOFR rate + 6.83%, with a floor of 7.75%. The revolving credit facility will terminate on July 1, 2023, unless terminated earlier pursuant to the terms of the UMB Loan Agreement. The loans are secured by all of the assets of the Company and all of its subsidiaries.

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The UMB Loan Agreement requires compliance with affirmative, negative, and financial covenants, as determined on a monthly basis. The UMB Loan Agreement also contains covenants typical of transactions of this type, including among others, limitations on our ability to: create, incur or assume any indebtedness or lien on our assets; pay dividends or make other distributions; redeem, retire or acquire outstanding common stock, options, warrants or other rights; make fundamental changes to our corporate structure or business; make investments or sell assets; or engage in certain other activities as set forth in the UMB Loan Agreement. The Company was in compliance with the UMB Loan Agreement financial covenants as of September 30, 2022.

As of September 30, 2022, our UMB revolving credit facility and UMB term loan had an outstanding balance of $2,414 and $0, respectively, with an all-in interest rate of 9.87% and 9.13%, respectively. Unamortized loan costs were as $149 of September 30, 2022.

On November 9, 2021, we entered into a loan and security agreement (the “La Plata Loan Agreement”) with La Plata Capital, LLC (“La Plata”). Under the La Plata Loan Agreement, we obtained a $2,000 term loan that bears interest at 14% and a maturity date of November 9, 2023. Interest-only payments are required on a monthly basis beginning in January 2022 and ending on December 1, 2022. Beginning on January 1, 2023, monthly principal payments of $30 are required in addition to accrued and unpaid interest. All remaining unpaid principal and interest are fully due on November 9, 2023.

The La Plata Loan Agreement requires compliance with affirmative, negative, and financial covenants, as determined on a monthly basis beginning in July 2022. The La Plata Loan Agreement is secured by all of the assets of the Company and all of its subsidiaries, subordinate to the security of the UMB Loan Agreement. In conjunction with this agreement, we also entered into an intercreditor and subordination agreement with UMB and La Plata, effective November 9, 2021. The Company was in compliance with the La Plata Loan Agreement as of September 30, 2022.

As of September 30, 2022, our La Plata term loan had an outstanding balance of $1,000. La Plata unamortized loan costs were $26 as of September 30, 2022.

As of September 30, 2022, the total principal payments due on our outstanding debt were as follows:

	Revolving Credit Facility		Term Loan		Total
Remainder of 2022	$	-		-		-
2023		2,414		1,000		3,414
Total minimum principal payments	$	2,414	$	1,000	$	3,414

Note 9. Leases

We have entered into a lease for our corporate headquarters with a remaining lease term of 9 years. This lease includes both lease and nonlease components, which are accounted for as a single lease component as we have elected the practical expedient to combine these components for all leases. As this lease does not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.

Information related to leases was as follows:

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Operating lease information:
Operating lease cost	$	100		$	300
Operating cash flows from operating leases		100			300
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		8.17			8.17
Weighted average discount rate		5.1	%		5.1	%

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Future minimum annual lease payments are as follows:

Remainder of 2022	$	99
2023		406
2024		413
2025		420
2026		427
Thereafter		1,739
Total minimum lease payments	$	3,504
Less imputed interest		(659	)
Total operating lease liability	$	2,845

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Company’s Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2021. This Item 2 contains forward-looking statements. The matters discussed in these forward-looking statements are subject to risk, uncertainties, and other factors that could cause actual results to differ materially from those made, projected, or implied in the forward-looking statements. Please refer to "Item 1A. Risk Factors" in this Report and in our Annual Report on Form 10-K for the year ended December 31, 2021 for a discussion of the uncertainties, risks and assumptions associated with these statements.

Executive Overview

Our Business

Scott’s Liquid Gold-Inc. exists to positively impact consumers’ lives in the markets we serve while creating shareholder value. We develop, market, and sell high-quality, high-value household and health and beauty care products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors.

COVID-19 Pandemic

For our fiscal quarter ended September 30, 2022, the coronavirus (COVID-19) pandemic continued to cause economic and social disruptions that led to ongoing uncertainties. During the first quarter of 2020, the global economy began experiencing a downturn related to the impacts of the COVID-19 global pandemic. Such impacts have included significant volatility in the global stock markets, and uncertainty in the costs and performance of our supply chain and logistics partners. We expect to see continued volatility in these areas, which could impact our operating results in future periods.

Supply Chain and Outsourcing Partners

As a result of COVID-19, we have encountered, and expect to continue to experience, various supply chain disruptions impacting the availability and lead times of certain raw materials for our finished goods products. We have been proactively identifying alternative sources for raw materials to mitigate the impacts of these disruptions. All of our outsourcing partners, including contract manufacturing plants and third-party logistics warehouses, have remained open during the entirety of COVID-19, however, they have had difficulties with staffing their workforce to keep production lines running.

Inflation

Inflationary trends in certain markets and global supply chain challenges have, and are expected to continue to, negatively affect our sales and operating performance. We experienced the impact of greater inflation on material, logistical and other costs during the third quarter. We are aiming to offset these inflationary costs through a combination of pricing and cost savings strategies. We currently anticipate the impact of inflation in certain markets will be increasingly significant continuing into the fourth quarter and fiscal 2023. We will continue to implement mitigation strategies and price increases to offset these trends; however, such measures may not fully offset the impact to our operating performance.

Distribution Agreement with Church & Dwight

Our distribution agreement with Church & Dwight Co., Inc. (“Church & Dwight”) and our subsidiary, Neoteric Cosmetics, Inc., was not extended beyond the Expiration Date of December 31, 2021. As a result, the distribution agreement expired on its own terms as of the Expiration Date and the Company ceased to distribute Batiste Dry Shampoo products. Unless offset by increased sales of our other products, the conclusion of this distribution agreement is expected to have a material impact on our net sales and result of operations. Net sales of Batiste were $4,704 for the nine months ended September 30, 2021.

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Sale of Dryel® Brand

On December 23, 2021, we sold the Dryel® brand to a company that markets and distributes household cleaning products. We have reflected the operations of Dryel® as discontinued operations for all periods presented. These results are excluded from our segment results of household products, which previously included Dryel® operating results. See Note 3 - “Discontinued Operations” in the Notes to Condensed Consolidated Financial Statements for further information.

Results of Operations

Three months ended September 30, 2022 compared to three months ended September 30, 2021

	Three Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Net sales	$	4,277		$	7,970		$	(3,693	)		(46.3	%)
Cost of sales		2,358			5,100			(2,742	)		(53.8	%)
Gross profit		1,919			2,870			(951	)		(33.1	%)
Gross margin		44.9	%		36.0	%
Operating expenses:
Advertising		166			144			22			15.3	%
Selling		1,691			2,542			(851	)		(33.5	%)
General and administrative		578			836			(258	)		(30.9	%)
Intangible asset amortization		87			278			(191	)		(68.7	%)
Total operating expenses		2,522			3,800			(1,278	)		(33.6	%)
Loss from operations		(603	)		(930	)		327			35.2	%
Interest expense		(139	)		(109	)		(30	)		(27.5	%)
Loss before income taxes and discontinued operations		(742	)		(1,039	)		297			28.6	%
Income tax expense		(2	)		(1,224	)		1,222			99.8	%
Loss from continuing operations		(744	)		(2,263	)		1,519			67.1	%
Loss from discontinued operations		-			(205	)		205			100.0	%
Net loss	$	(744	)	$	(2,468	)	$	1,724			69.9	%

Change in net loss was primarily due to the following:

•Lower sales and gross profits from the conclusion of our distribution agreement with Church & Dwight for Batiste products, as well as reduced sales and gross profits from various product lines due to changes in our customers’ purchasing strategies related to inventory and inflationary pressures.

•Gross margin increased due to product sales mix including the elimination of our Church and Dwight distribution agreement, as distributed products required higher promotional activity with customers which reduced our margins.

•Decrease in selling expenses was a result of lower logistics and warehousing costs from lower sales as well as a reduction in personnel costs.

•Decrease in general and administrative costs due to changes in personnel and related costs.

•Decrease in income tax expense as a valuation allowance on our deferred tax asset was established during the third quarter of 2021.

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Segment Results

Household products

The following table shows comparative net sales, gross margin, gross profit, loss from operations, volume, and percentage changes for household products between periods:

	Three Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Net sales	$	2,748		$	3,846		$	(1,098	)		(28.5	%)
Gross profit	$	1,084		$	1,514		$	(430	)		(28.4	%)
Gross margin		39.4	%		39.4	%
Loss from operations	$	(371	)	$	(382	)	$	11			2.9	%

•Net sales and gross profits decreased due to changes in our customers’ purchasing strategies related to inventory and inflationary pressures. In addition, supply chain affected in-stock levels of certain products. Due to low inventory levels in the third quarter of 2022, sales of BIZ powder products decreased compared to the same period in the prior year.

•Loss from operations was offset due to decreases in selling expenses and general and administrative costs.

Health and beauty care products

The following table shows comparative net sales, gross margin, gross profit, loss from operations, volume and percentage changes for health and beauty care products between periods:

	Three Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Net sales - distributed products	$	-		$	1,535		$	(1,535	)		(100.0	%)
Net sales - manufactured products		1,529			2,589			(1,060	)		(40.9	%)
Total health and beauty net sales	$	1,529		$	4,124		$	(2,595	)		(62.9	%)
Gross profit	$	835		$	1,356		$	(521	)		(38.4	%)
Gross margin		54.6	%		32.9	%
Loss from operations	$	(232	)	$	(548	)	$	316			57.7	%

•Net sales of distributed health and beauty care products decreased due to the termination of our Batiste distribution agreement with Church & Dwight in December 2021.

•Net sales and gross profits from manufactured products decreased due to the elimination of sales to our exclusive China distributor of Alpha® Skin Care products. During the first quarter of 2022 we also eliminated sales of our Prell® and Denorex® brands to certain customers with minimal profitability.

•Gross margins increased due to the elimination of our Church & Dwight distribution agreement and elimination of sales of our shampoo products to certain customers, as these sales required higher promotional activity which reduced our margins.

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Nine months ended September 30, 2022 compared to nine months ended September 30, 2021
 

	Nine Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Net sales	$	15,449		$	24,583		$	(9,134	)		(37.2	%)
Cost of sales		8,337			14,624			(6,287	)		(43.0	%)
Gross profit		7,112			9,959			(2,847	)		(28.6	%)
Gross margin		46.0	%		40.5	%
Operating expenses:
Advertising		492			506			(14	)		(2.8	%)
Selling		5,752			7,388			(1,636	)		(22.1	%)
General and administrative		2,020			3,782			(1,762	)		(46.6	%)
Intangible asset amortization		313			834			(521	)		(62.5	%)
Impairment of goodwill and intangible assets		3,589			-			3,589			100.0	%
Total operating expenses		12,166			12,510			(344	)		(2.7	%)
Loss from operations		(5,054	)		(2,551	)		(2,503	)		(98.1	%)
Interest expense		(419	)		(219	)		(200	)		(91.3	%)
Loss before income taxes and discontinued operations		(5,473	)		(2,770	)		(2,703	)		(97.6	%)
Income tax expense		(55	)		(798	)		743			93.1	%
Loss from continuing operations		(5,528	)		(3,568	)		(1,960	)		(54.9	%)
Loss from discontinued operations		-			(246	)		246			100.0	%
Net loss	$	(5,528	)	$	(3,814	)	$	(1,714	)		(44.9	%)

Change in net loss was primarily due to the following:

•Lower sales and gross profits from the conclusion of our distribution agreement with Church & Dwight for Batiste products, as well as reduced sales and gross profits from various product lines due to changes in our customers’ purchasing strategies related to inventory and inflationary pressures. In addition, supply chain affected in-stock levels of certain products and impacted our sales to customers.

•Gross margin increased due to product sales mix including the elimination of our Church and Dwight distribution agreement, as distributed products required higher promotional activity with customers which reduced our margins.

•Decrease in selling expenses caused by lower logistics and warehousing costs from lower sales as well as a reduction in personnel costs.

•Decrease in general and administrative costs due to changes in personnel and related costs as well as reductions in restructuring costs associated with separation of employees during 2021.

•Decreased intangible asset amortization is primarily from reduced carrying amounts related to impairments recognized in the fourth quarter of 2021.

•Impairment of goodwill and intangible assets associated with our All-Purpose reporting unit.

19

Segment Results

Household products

The following table shows comparative net sales, gross margin, gross profit, loss from operations, volume, and percentage changes for household products between periods:
 

	Nine Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Net sales	$	9,103		$	10,762		$	(1,659	)		(15.4	%)
Gross profit	$	3,714		$	4,213		$	(499	)		(11.8	%)
Gross margin		40.8	%		39.1	%
Loss from operations	$	(4,854	)	$	(1,960	)	$	(2,894	)		(147.7	%)

•Net sales and gross profit decreased due to changes in our customers’ purchasing strategies related to inventory and inflationary pressures as well as supply chain disruptions.

•Loss from operations primarily due to the impairment of goodwill and intangible assets associated with our All-Purpose reporting unit and partially offset by reductions in selling and general and administrative costs.

Health and beauty care products

The following table shows comparative net sales, gross margin, gross profit, loss from operations, volume and percentage changes for health and beauty care products between periods:

	Nine Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Net sales- distributed products	$	-		$	4,704		$	(4,704	)		(100.0	%)
Net sales- manufactured products		6,346			9,117			(2,771	)		(30.4	%)
Total healthcare and beauty net sales	$	6,346		$	13,821		$	(7,475	)		(54.1	%)
Gross profit	$	3,398		$	5,746		$	(2,348	)		(40.9	%)
Gross margin		53.5	%		41.6	%
Loss from operations	$	(200	)	$	(591	)	$	391			66.2	%

•Net sales of distributed health and beauty care products decreased due to the termination of our Batiste distribution agreement with Church & Dwight in December 2021.

•Net sales and gross profits from manufactured products decreased due to the elimination of sales to our exclusive China distributor of Alpha® Skin Care products. During the first quarter of 2022 we also eliminated sales of our Prell® and Denorex® brands to certain customers with minimal profitability.

•Gross margins increased due to the elimination of our Church & Dwight distribution agreement and elimination of sales of our shampoo products to certain customers, as these sales required higher promotional activity which reduced our margins.

20

Liquidity and Capital Resources

Overview

Our primary sources of funds include cash expected to be generated from operations and borrowings from our line of credit. Our principal uses of cash are to fund planned operating expenditures, interest payments, and any principal payments on our line of credit. Working capital movements are influenced by the sourcing of finished goods inventories.

Financing Agreements

Please see Note 8 to our Condensed Consolidated Financial Statements for information on our UMB Loan Agreement and La Plata Loan Agreement.

Liquidity and Changes in Cash Flows

At September 30, 2022, we had $944 available on our revolving credit facility with UMB, and $139 in cash on hand, a decrease of $1,131 when compared to the balance as of December 31, 2021 as this cash was utilized to reduce long-term debt balances.

The following is a summary of cash provided by or (used in) each of the indicated types of activities:

	Nine Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2022			2021			$			%
Operating activities	$	(1,189	)	$	(1,394	)	$	205			14.7	%
Investing activities		(142	)		(262	)		120			45.8	%
Financing activities		200			1,909			(1,709	)		(89.5	%)

•Net cash used in operating activities was primarily related to conversion of working capital from accounts receivable and offset by investments in finished goods inventories.

•Net cash used in investing activities was due to purchases relating to our internal-use software.

•Net cash provided by financing activities was from proceeds of our various debt facilities which is used for working capital.

The uncertainty related to the COVID-19 outbreak has impacted our operations and could affect our future results. Our liquidity has been affected by inflationary pressures at our customers which have caused sales decreases and higher costs on materials, logistics, and other purchases.

Primarily due to a decline in net sales and increases in costs associated with the manufacture and distribution of our products, the Company used net cash in operating activities of $1,189 during the nine months ended September 30, 2022. The Company’s debt agreements with UMB Bank, N.A. and La Plata Capital, LLC mature on July 1, 2023 and November 9, 2023, respectively. Management’s assessment of cash flow forecasts indicate that, absent any other action, the Company likely will require additional liquidity to continue its operations over the next 12 months.

Management has implemented actions to reduce the Company’s operating expenses and has approved a plan to extend and restructure debt facilities. Management is considering additional various strategic actions including asset sales, workforce reduction, deferring or eliminating certain capital expenditures, and further reduction of other operating expenses to ensure alignment with customer demand in order to address liquidity needs and pursue its business plan. The Company expects that these strategic actions will reduce expenses and outstanding debt balances and provide required liquidity for ongoing operations. If these plans aren't successfully implemented there could be substantial doubt about the Company's ability to continue as a going concern.

21

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation was performed as of September 30, 2022, under the supervision and with the participation of our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based on that evaluation, our President and Chief Financial Officer concluded that our disclosure controls and procedures were not effective due to the previously disclosed material weakness relating to the operating effectiveness of the review of the impairment assessment of goodwill prepared by a third-party firm. We believe the actions described in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2022 will be sufficient to remediate the identified material weakness and related disclosure controls and procedures. However, we do not believe that the new and enhanced controls and procedures have been implemented for a sufficient amount of time for management to conclude that the material weakness in the Company’s internal controls over financial reporting and effectiveness of related disclosure controls and procedures has been fully remediated, and we are still in the process of improving those controls and procedures. We will continue to improve and monitor the effectiveness of these controls and will make any further changes that management determines to be appropriate.

Changes in Internal Control over Financial Reporting

In June 2022, we implemented an enterprise resource planning (“ERP”) software system on a company-wide basis. Despite this transition in software, there has not been a significant change in internal controls over financial reporting. Over the remainder of 2022, certain internal controls over financial reporting will be automated, modified, or implemented to address the new control environment associated with the ERP system. Additionally, the Company completed pre-implementation and post-implementation internal control monitoring associated with the launch. While we believe that this new system will enhance its internal control over financial reporting, there are inherent risks in implementing any new system, and we will continue to monitor and evaluate these control changes as part of our assessment of the control design and effectiveness throughout 2022.

There have been no other changes in our internal control over financial reporting that occurred during the third quarter of 2022 that materially affected or are reasonably likely to materially affect our internal control over financial reporting.

22

PART II

ITEM 1A. RISK FACTORS

We have identified a material weakness in our internal control over financial reporting.

We are a public reporting company subject to the rules and regulations established from time to time by the SEC. As a public company we are required to document and test our internal control over financial reporting pursuant to Section 404 of the Sarbanes-Oxley Act so that our management can certify as to the effectiveness of our internal control over financial reporting.

As disclosed in Part I, Item 4, “Disclosure Controls and Procedures,” we have identified a material weakness in our controls related to the operating effectiveness of the review of the impairment assessment of goodwill prepared by a third-party firm as of June 30, 2022. We did not maintain effective controls to sufficiently review the completeness and accuracy of the impairment assessment.

This material weakness did not result in any restatements to our Condensed Consolidated Financial Statements. Our management is committed to remediating this material weakness and is in the process of developing a remediation plan to address the material weakness.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Item 1A, “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and subsequent quarterly reports on Form 10-Q, which could materially affect our business, financial condition, or future results.

ITEM 6. EXHIBITS

Exhibit Number	Document
31.1	Rule 13a-14(a) Certification of the President.
31.2	Rule 13a-14(a) Certification of the Chief Financial Officer.
32.1*	Section 1350 Certification.
101.INS	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because XBRLtags are embedded within the Inline XBRL document.
101.SCH	Inline XBRL Taxonomy Extension Schema Document.
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document.
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document.
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Furnished, not filed.

23

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

SCOTT’S LIQUID GOLD-INC.
By:	/s/ Tisha Pedrazzini
	Tisha Pedrazzini, President
	(Principal Executive Officer)
By:	/s/ David M. Arndt
	David M. Arndt, Chief Financial Officer
	(Principal Financial and Chief Accounting Officer)

Date: November 14, 2022

24

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Tisha Pedrazzini, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Scott’s Liquid Gold-Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2022	/s/ Tisha Pedrazzini
	Tisha Pedrazzini
	President

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, David M. Arndt, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Scott’s Liquid Gold-Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 14, 2022	/s/ David M. Arndt
	David M. Arndt
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF ANNUAL REPORT ON FORM 10-Q OF

SCOTT’S LIQUID GOLD-INC.

FOR THE QUARTER ENDED SEPTEMBER 30, 2022

Each of the undersigned hereby certifies, for the purposes of Section 1350 of Chapter 63 of Title 18 of the United States Code, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his or her capacity as an officer of Scott’s Liquid Gold-Inc. (“Scott’s Liquid Gold”), that to his or her knowledge:

1. This Quarterly Report on Form 10-Q fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in such Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Scott’s Liquid Gold.

This written statement is being furnished to the Securities and Exchange Commission as an exhibit to the Quarterly Report on Form 10-Q. A signed original of this statement has been provided to Scott’s Liquid Gold and will be retained by Scott’s Liquid Gold and furnished to the Securities and Exchange Commission or its staff upon request.

This Certification is executed as of November 14, 2022.

/s/ Tisha Pedrazzini

Tisha Pedrazzini

President

/s/ David M. Arndt

David M. Arndt

Chief Financial Officer

XML

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2022	Nov. 13, 2022
Cover [Abstract]
Entity Registrant Name	SCOTT’S LIQUID GOLD-INC.
Entity Central Index Key	0000088000
Document Type	10-Q
Document Period End Date	Sep. 30, 2022
Amendment Flag	false
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q3
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		12,805,663
Entity Interactive Data Current	Yes
Entity Shell Company	false
Entity File Number	001-13458
Entity Incorporation, State or Country Code	CO
Entity Tax Identification Number	84-0920811
Entity Address, Address Line One	8400 E. Crescent Parkway
Entity Address, Address Line Two	Suite 450
Entity Address, City or Town	Greenwood Village
Entity Address, State or Province	CO
Entity Address, Postal Zip Code	80111
City Area Code	(303)
Local Phone Number	373-4860
Document Quarterly Report	true
Document Transition Report	false
Entity Current Reporting Status	Yes

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Income Statement [Abstract]
Net sales	$ 4,277	$ 7,970	$ 15,449	$ 24,583
Cost of sales	2,358	5,100	8,337	14,624
Gross profit	1,919	2,870	7,112	9,959
Operating expenses:
Advertising	166	144	492	506
Selling	1,691	2,542	5,752	7,388
General and administrative	578	836	2,020	3,782
Intangible asset amortization	87	278	313	834
Impairment of goodwill and intangible assets			3,589
Total operating expenses	2,522	3,800	12,166	12,510
Loss from operations	(603)	(930)	(5,054)	(2,551)
Interest expense	(139)	(109)	(419)	(219)
Loss before income taxes and discontinued operations	(742)	(1,039)	(5,473)	(2,770)
Income tax expense	(2)	(1,224)	(55)	(798)
Loss from continuing operations	(744)	(2,263)	(5,528)	(3,568)
Income (loss) from discontinued operations, net of taxes		(205)		(246)
Net loss	$ (744)	$ (2,468)	$ (5,528)	$ (3,814)
Basic net loss per common shares:
Loss from continuing operations	$ (0.06)	$ (0.18)	$ (0.43)	$ (0.28)
Loss from discontinued operations		(0.02)		(0.02)
Net loss	(0.06)	(0.20)	(0.43)	(0.30)
Diluted net loss per common shares:
Loss from continuing operations	(0.06)	(0.18)	(0.43)	(0.28)
Loss from discontinued operations		(0.02)		(0.02)
Net loss	$ (0.06)	$ (0.20)	$ (0.43)	$ (0.30)
Weighted average shares outstanding:
Basic	12,749	12,642	12,747	12,628
Diluted	12,749	12,642	12,747	12,628

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Current assets:
Cash	$ 14	$ 770
Restricted cash	125	500
Accounts receivable, net	1,791	3,516
Inventories	6,289	5,677
Income taxes receivable	247	320
Prepaid expenses	214	436
Total current assets	8,680	11,219
Property and equipment, net	3	7
Goodwill	838	1,710
Intangible assets, net	2,272	5,160
Operating lease right-of-use assets	2,553	2,735
Other assets	38	38
Total assets	14,384	20,869
Current liabilities:
Accounts payable	1,750	2,647
Accrued expenses	397	747
Current portion of long-term debt	2,684	1,000
Operating lease liabilities, current portion	264	251
Total current liabilities	5,095	4,645
Long-term debt, net of current portion and debt issuance costs	555	1,876
Operating lease liabilities, net of current	2,581	2,780
Other liabilities	27	27
Total liabilities	8,258	9,328
Shareholders’ equity:
Preferred Stock, no par value, authorized 20,000 shares; no shares issued and outstanding
Common Stock; $0.10 par value, authorized 50,000 shares; issued and outstanding 12,749 shares (2022) and 12,727 shares (2021)	1,275	1,273
Capital in excess of par	7,900	7,789
(Accumulated deficit) retained earnings	(3,049)	2,479
Total shareholders’ equity	6,126	11,541
Total liabilities and shareholders’ equity	$ 14,384	$ 20,869

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2022	Dec. 31, 2021
Statement Of Financial Position [Abstract]
Preferred stock, par value	$ 0	$ 0
Preferred stock, shares authorized	20,000,000	20,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock par value	$ 0.10	$ 0.10
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	12,749,000	12,727,000
Common stock, shares outstanding	12,749,000	12,727,000

XML

Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Capital in Excess of Par	(Accumulated Deficit) Retained Earnings
Beginning Balance, Value at Dec. 31, 2020	$ 22,465	$ 1,262	$ 7,633	$ 13,570
Beginning Balance, Shares at Dec. 31, 2020	12,618	12,618
Stock-based compensation, Value	$ 69		69
Net loss	(280)			(280)
Ending Balance, Value at Mar. 31, 2021	22,254	$ 1,262	7,702	13,290
Ending Balance, Shares at Mar. 31, 2021		12,618
Beginning Balance, Value at Dec. 31, 2020	$ 22,465	$ 1,262	7,633	13,570
Beginning Balance, Shares at Dec. 31, 2020	12,618	12,618
Net loss	$ (3,814)
Ending Balance, Value at Sep. 30, 2021	18,807	$ 1,266	7,785	9,756
Ending Balance, Shares at Sep. 30, 2021		12,666
Beginning Balance, Value at Mar. 31, 2021	22,254	$ 1,262	7,702	13,290
Beginning Balance, Shares at Mar. 31, 2021		12,618
Stock-based compensation, Value	33		33
Net loss	(1,066)			(1,066)
Ending Balance, Value at Jun. 30, 2021	$ 21,221	$ 1,262	7,735	12,224
Ending Balance, Shares at Jun. 30, 2021	12,618	12,618
Stock-based compensation, Value	$ (3)		(3)
Stock options exercised, Value	57	$ 4	53
Stock options exercised, Shares		45
Restricted stock unit vesting, Shares		3
Net loss	(2,468)			(2,468)
Ending Balance, Value at Sep. 30, 2021	18,807	$ 1,266	7,785	9,756
Ending Balance, Shares at Sep. 30, 2021		12,666
Beginning Balance, Value at Dec. 31, 2021	$ 11,541	$ 1,273	7,789	2,479
Beginning Balance, Shares at Dec. 31, 2021	12,727	12,727
Stock-based compensation, Value	$ 35		35
Restricted stock unit vesting	28	$ 2	26
Restricted stock unit vesting, Shares		22
Net loss	(451)			(451)
Ending Balance, Value at Mar. 31, 2022	11,153	$ 1,275	7,850	2,028
Ending Balance, Shares at Mar. 31, 2022		12,749
Beginning Balance, Value at Dec. 31, 2021	$ 11,541	$ 1,273	7,789	2,479
Beginning Balance, Shares at Dec. 31, 2021	12,727	12,727
Net loss	$ (5,528)
Ending Balance, Value at Sep. 30, 2022	$ 6,126	$ 1,275	7,900	(3,049)
Ending Balance, Shares at Sep. 30, 2022	12,749	12,749
Beginning Balance, Value at Mar. 31, 2022	$ 11,153	$ 1,275	7,850	2,028
Beginning Balance, Shares at Mar. 31, 2022		12,749
Stock-based compensation, Value	22		22
Net loss	(4,333)			(4,333)
Ending Balance, Value at Jun. 30, 2022	$ 6,842	$ 1,275	7,872	(2,305)
Ending Balance, Shares at Jun. 30, 2022	12,749	12,749
Stock-based compensation, Value	$ 28		28
Net loss	(744)			(744)
Ending Balance, Value at Sep. 30, 2022	$ 6,126	$ 1,275	$ 7,900	$ (3,049)
Ending Balance, Shares at Sep. 30, 2022	12,749	12,749

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021
Cash flows from operating activities:
Net loss	$ (5,528)	$ (3,568)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	480	1,357
Stock-based compensation	113	99
Deferred income taxes		784
Impairment of goodwill and intangible assets	3,589
Change in operating assets and liabilities:
Accounts receivable	1,725	228
Inventories	(612)	(2,651)
Prepaid expenses and other assets	222	175
Income taxes receivable	73	192
Accounts payable, accrued expenses, and other liabilities	(1,251)	1,990
Total adjustments to net loss	4,339	2,174
Net cash used in operating activities	(1,189)	(1,394)
Cash flows from investing activities:
Purchase of software	(142)	(262)
Net cash used in investing activities	(142)	(262)
Cash flows from financing activities:
Repayments on term loans	(2,000)	(750)
Proceeds from revolving credit facility	20,763	29,824
Repayments of revolving credit facility	(18,563)	(27,222)
Proceeds from exercise of stock options		57
Net cash provided by financing activities	200	1,909
Net (decrease) increase in cash and restricted cash	(1,131)	253
Cash and restricted cash, beginning of period	1,270	5
Cash and restricted cash, end of period	139	258
Supplemental disclosures:
Cash paid during the period for interest	$ 256	$ 372

XML

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Organization and Summary of Significant Accounting Policies

Note 1. Organization and Summary of Significant Accounting Policies

(a) Company Background

Scott’s Liquid Gold-Inc., a Colorado corporation was incorporated on February 15, 1954. Scott’s Liquid Gold-Inc. and its wholly-owned subsidiaries (collectively, the “Company,” “we,” “our,” or “us”) develop, market and sell high quality products in two segments: household products and health and beauty care products.

(b) Principles of Consolidation

Our Condensed Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Dryel® product line. We have reflected the operations of the Dryel® product line as discontinued operations for all periods presented, which were previously classified under our household products segment. See Note 3 for further information.

(c) Basis of Presentation

The unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows included in this Report have been prepared by the Company. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2022 and results of operations and cash flows for all periods have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the period ended September 30, 2022 are not necessarily indicative of the operating results for the full year and are unaudited.

(d) Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, fair value of assets acquired in business combinations, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

(e) Cash and Restricted Cash

Cash and restricted cash consist of the following:

	September 30, 2022		December 31, 2021
Cash	$	14	$	770
Restricted Cash		125		500
	$	139	$	1,270

(f) Inventories Valuation and Reserves

Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve, which is generally not material to our financial statements, for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Inventories were comprised of the following at:

	September 30, 2022		December 31, 2021
Finished goods		5,986	$	5,499
Raw materials		303		178
	$	6,289	$	5,677

Our remaining raw materials balance is to be sold to contract manufacturing partners based on production demand.

(g) Property and Equipment

Property and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Office furniture and office machines are estimated to have useful lives of 10 to 20 years and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized.

(h) Leases

Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Certain nonlease components, such as maintenance and other services provided by the lessor, are included in the valuation of the lease. Leases with an initial term of 12 months or less, which are not material to our financial statements, are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component.

The Company evaluates reimbursable leasehold improvements based on whether improvements are indicative of a lessor or lessee asset. The Company concluded that all of its reimbursable leasehold improvement payments have qualified as lessor assets and, as such, have accounted for leasehold improvement payments as prepaid rent included in prepaid expenses on the Condensed Consolidated Balance Sheets.

(i) Intangible Assets and Goodwill

Goodwill is subject to impairment tests at least annually or when events or changes in circumstances indicate that an asset may be impaired. Other intangible assets with finite lives, such as customer relationships, trade names, and formulas, are amortized over their estimated useful lives, generally ranging from 5 to 20 years. Amortization expense related to intangible assets is included in Operating Expenses on the Condensed Consolidated Statement of Operations.

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. Amortization will be recorded over the estimated useful life of the software once the software is ready for its intended use and placed into service. In the second quarter of 2022, our internal-use software was implemented for its intended use. The estimated useful life for internal-use software is five years and will be periodically reassessed based on considerations for obsolescence, technology, competition, and other economic factors.

(j) Financial Instruments

Financial instruments which potentially subject us to concentrations of credit risk include cash, restricted cash, and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. Historically, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts, which is generally not material to our financial statements, based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements.

The recorded amounts for cash, restricted cash, receivables, other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these financial instruments.

(k) Income Taxes

Income taxes reflect the tax effects of transactions reported in the Condensed Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Condensed Consolidated Statements of Income or accrued on the Condensed Consolidated Balance Sheets.

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and nine months ended September 30, 2022 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to valuation allowance. The effective tax rate for the nine months ended September 30, 2022 and 2021 was 0.0% and 21.6% respectively.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to realize deferred tax assets. Based upon the historical and anticipated future losses, management has determined that the deferred tax assets do not meet the more likely than not threshold for realizability. Accordingly, a valuation allowance has been recorded against the Company’s net deferred tax assets as of September 30, 2022, and December 31, 2021.

On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. The tax impact of the carryback of the 2020 loss was recorded in the first quarter 2021 income tax provision. We elected to defer our portion of social security tax payments, and we paid this liability in the third quarter of 2021.

(l) Revenue Recognition

Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Our revenue contracts are identified when purchase orders are received and accepted from customers and represent a single performance obligation to sell our products to a customer.

Net sales reflect the transaction prices for contracts, which include products shipped at selling list prices reduced by variable consideration. Variable consideration includes estimates for expected customer allowances, promotional programs for consumers, and sales returns. Based on our customer-by-customer history, our variable consideration estimates are generally accurate and subsequent adjustments are generally immaterial.

Variable consideration is primarily comprised of customer allowances. Customer allowances primarily include reserves for trade promotions to support price features, displays, slotting fees, and other merchandising of our products to our customers. Promotional programs for consumers primarily include coupons, rebates, and certain other promotional programs, and do not represent a significant portion of variable consideration. The costs of both customer allowances and promotional programs for consumers are estimated using either the expected value or most likely amount approach, depending on the nature of the allowance, using all reasonably available information, including our historical experience and current expectations. Customer allowances and promotional programs for consumers are reflected in the transaction price when sales are recorded. We may adjust our estimates based on actual results and consideration of other factors that cause allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Sales returns are generally not material to our financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce our revenue in that period.

Sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted.

Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the Condensed Consolidated Balance Sheets and were as follows:

	September 30, 2022		December 31, 2021
Trade promotions	$	379	$	1,242
Allowance for doubtful accounts		44		14
	$	423	$	1,256

(m) Advertising Costs

We expense advertising costs as incurred.

(n) Stock-Based Compensation

We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options with only service conditions using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the vesting period using the straight-line method, which approximates the service period.

The Company issues restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting) and satisfaction of market conditions targeted to our Company’s stock price. For those RSU awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with both market and service conditions, the Company starts recognizing compensation cost over the requisite service period, with the effect of the market conditions reflected in the calculation of the award's fair value at grant date. The Company values awards with only service vesting requirements based on the grant date share price. The Company values awards with market and service conditions using a Monte Carlo simulation. The Company determines the requisite service period for awards with both market and service conditions based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the average number of shares that would be issued based on the highest 30-day average market price during the reporting periods, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used.

(o) Operating Costs and Expenses Classification

Cost of sales includes costs associated with the purchase of goods from our third-party manufacturing partners, which include labor, materials, and other expenses associated with the manufacturing of our products, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for warehousing and distribution, sales and sales support personnel, brokerage commissions, customer compliance fines, and promotional costs. Freight-out costs included in selling expenses totaled $429 and $624 for the three months ended September 30, 2022 and 2021, respectively, and totaled $1,725 and $2,163 for the nine months ended September 30, 2022 and 2021, respectively.

General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility related expenses, and other general support costs.

On April 29, 2021, the Company announced that Mark E. Goldstein, the President and Chief Executive Officer of the Company and a member of the Board of Directors, retired effective as of April 26, 2021. In connection with Mr. Goldstein’s retirement, the Company and Mr. Goldstein entered into a Separation Agreement, Waiver and Release (the “Separation Agreement”), pursuant to which the Company will pay Mr. Goldstein $720 in severance payments (equal to 18 months base salary) over a period of 30 months and reimbursement for the costs of continuing health benefits for a period of 18 months. Severance costs of $805 were recognized in the second quarter of 2021 and are included in general and administrative expenses. Accrued severance costs are included in accrued expenses on the Condensed Consolidated Balance Sheets.

(p) Recently Adopted Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The purpose of ASU 2020-04 is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply amendments prospectively through December 31, 2022. The Company adopted ASU 2020-04 effective July 1, 2022. The adoption of this standard did not have a material impact on our financial statements.

(q) Recently Issued Accounting Standards

In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. We are currently assessing the impact of this guidance on our financial statements.

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Going Concern

9 Months Ended

Sep. 30, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Going Concern

Note 2. Going Concern

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared assuming that the Company will continue as a going concern.

The Company had cash and restricted cash of $139 and $944 of available borrowing capacity under our revolving credit facility as of September 30, 2022. Primarily due to a decline in net sales and increases in costs associated with the manufacture and distribution of our products, the Company used net cash in operating activities of $1,189 during the nine months ended September 30, 2022. The Company’s debt agreements with UMB Bank, N.A. and La Plata Capital, LLC mature on July 1, 2023 and November 9, 2023, respectively. Management’s assessment of cash flow forecasts indicate that, absent any other action, the Company likely will require additional liquidity to continue its operations over the next 12 months.

Management has implemented actions to reduce the Company’s operating expenses and has approved a plan to extend and restructure debt facilities. Management is considering additional various strategic actions including asset sales, workforce reduction, deferring or eliminating certain capital expenditures, and further reduction of other operating expenses to ensure alignment with customer demand in order to address liquidity needs and pursue its business plan. The Company expects that these strategic actions will reduce expenses and outstanding debt balances and provide required liquidity for ongoing operations. If these plans aren't successfully implemented there could be substantial doubt about the Company's ability to continue as a going concern.

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Discontinued Operations

9 Months Ended

Sep. 30, 2022

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 3. Discontinued Operations

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell all of our right, title and interest in and to certain assets of the Dryel® product line. The total consideration paid to us was $4,850, plus an amount equal to the value of the Dryel® inventory of $440, subject to post-close adjustment. At closing, $500 of the total consideration was held in escrow for a twelve-month period following the closing date, to be released ratably in four installments in 2022. We received the first three installment payments during the first nine months ended September 30, 2022. This consideration is reflected as Restricted Cash on the Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021, respectively. Dryel® generated approximately $2,800 of net sales in the trailing twelve-month period ending December 31, 2021.

Under ASC 360, a long-lived asset group should be classified as held for sale if all of the established criteria are met. The sale of Dryel® did not meet these criteria in the year ending December 31, 2021, because we had not established an active program to locate a buyer and because the brand was not being marketed for sale. All efforts between the buyer and the Company occurred during the fourth quarter of 2021. As a result, there was no adjustment to fair value under ASC 360 guidance related to held for sale assets, and the difference between the consideration paid to us and the carrying amount of all assets is reflected in the loss on sale of discontinued operations.

We have reflected the operations of the Dryel® product line as discontinued operations. Our Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our Condensed Consolidated Statements of Equity and Statements of Cash Flows combine the results of continuing and discontinued operations. As of the three and nine months ended September 30, 2022, there were no operating results from discontinued operations included in the Condensed Consolidated Statements of Operations. As of September 30, 2022 and December 31, 2021, respectively, there were no assets and liabilities relating to discontinued operations presented separately in the Condensed Consolidated Balance Sheets. There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the nine months ended September 30, 2022 and 2021, respectively. A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30:

	Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
Net sales	$	585		$	1,856
Cost of sales		313			1,013
Gross profit		272			843
Operating expenses:
Selling		144			367
Intangible asset amortization		123			369
Interest expense		99			298
Loss from discontinued operations, before tax		(94	)		(191	)
Income tax expense		(111	)		(55	)
Loss from discontinued operations, net of tax	$	(205	)	$	(246	)

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2022

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Stock-Based Compensation

Note 4. Stock-Based Compensation

On January 18, 2022, we granted 25 RSUs to an employee (the “2022 Individual Employee Grant”) with a grant date fair value of $10. The 2022 Individual Employee Grant vested one-third on the initial grant date, and the remaining two-thirds will vest on each anniversary of the grant date.

On March 2, 2022, we granted 15 shares of restricted stock to one executive all of which vested on the grant date with a fair value of $18.

Compensation cost related to stock options totaled $10 and $44 in the nine months ended September 30, 2022 and 2021, respectively. The stock options were fully vested in the second quarter of 2022. There was no tax benefit from recording the non-cash expense as it relates to the options granted to employees, as these were qualified stock options which are not normally tax deductible.

Compensation cost related to RSUs totaled $103 and $55 for the nine months ended September 30, 2022 and 2021, respectively. Approximately $170 of total unrecognized compensation costs related to non-vested RSUs is expected to be recognized over the next three years.

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Earnings Per Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Earnings Per Share

Note 5. Earnings per Share

Per share data is determined by using the weighted average number of common shares outstanding. Common equivalent shares are considered only for diluted earnings per share, unless considered anti-dilutive. Common equivalent shares, determined using the treasury stock method, result from stock options with exercise prices that are below the average market price of the common stock.

Basic earnings per share include no dilution and are computed by dividing income available to common shareholders by the weighted-average number of shares outstanding during the period. Diluted earnings per share reflect the potential of securities that could share in our earnings.

A reconciliation of the weighted average number of common shares outstanding (in thousands) is as follows. The dilutive effect of stock options and RSUs are excluded for periods in which the Company has a net loss because the impact is anti-dilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Common shares outstanding, beginning of the period		12,749		12,618		12,727		12,618
Weighted average common shares issued		-		24		20		10
Weighted average number of common shares outstanding		12,749		12,642		12,747		12,628
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,749		12,642		12,747		12,628

Common stock equivalents (in thousands) that have been excluded from the calculation of earnings per share because they would have been anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Stock options		153		15		153		15

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Segment Information

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Segment Information

Note 6. Segment Information

We operate in two different segments: household products and health and beauty care products. We have chosen to organize our business around these segments based on differences in the products sold. Accounting policies for our segments are the same as those described in Note 1. We evaluate segment performance based on segment income or loss from operations.

The following provides information on our segments for the three and nine months ended September 30:

	Three Months Ended September 30, 2022
	Household Products			Health and Beauty Care Products			Total
Net sales	$	2,748		$	1,529		$	4,277
Loss from operations		(371	)		(232	)		(603	)
Capital and intangible asset expenditures		-			-			-
Depreciation and amortization		99			41			140

	Three Months Ended September 30, 2021
	Household Products			Health and Beauty Care Products			Total
Net sales	$	3,846		$	4,124		$	7,970
Loss from operations		(382	)		(548	)		(930	)
Capital and intangible asset expenditures		113			-			113
Depreciation and amortization		297			155			452

	Nine Months Ended September 30, 2022
	Household Products			Health and Beauty Care Products			Total
Net sales	$	9,103		$	6,346		$	15,449
Loss from operations		(4,854	)		(200	)		(5,054	)
Capital and intangible asset expenditures		142			-			142
Depreciation and amortization		386			93			480

	Nine Months Ended September 30, 2021
	Household Products			Health and Beauty Care Products			Total
Net sales	$	10,762		$	13,821		$	24,583
Loss from operations		(1,960	)		(591	)		(2,551	)
Capital and intangible asset expenditures		262			-			262
Depreciation and amortization		893			464			1,357

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Goodwill and Intangible Assets

9 Months Ended

Sep. 30, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 7. Goodwill and Intangible Assets

There was no impairment in the three months ended September 30, 2022 and 2021, respectively.

During the second quarter of 2022, we experienced a significant decline in our stock price and market capitalization and revised internal forecasts relating to all reporting units due to inflationary related pressures at our customers which have caused sales decreases. We concluded that the changes in circumstances in these reporting units triggered the need for a quantitative review of the carrying values of goodwill and certain intangible assets and resulted in impairment charges to our All-Purpose reporting unit during the nine months ended September 30, 2022 and resulted in the following impairment charges:

	Intangible Assets		Goodwill		Total
All-Purpose		2,717		872		3,589

There was no impairment in the nine months ended September 30, 2021.

The changes in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2022 and 2021 were as follows:

	Detergent		Shampoo		All-Purpose			Total
Balance, January 1, 2022	$	-	$	-	$	1,710		$	1,710
Additions		-		-		-			-
Impairment		-		-		(872	)		(872	)
Balance, September 30, 2022	$	-	$	-	$	838		$	838
Balance, January 1, 2021	$	593	$	1,520	$	1,710		$	3,823
Additions		-		-		-			-
Impairment		-		-		-			-
Balance, September 30, 2021	$	593	$	1,520	$	1,710		$	3,823

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use or are related to our acquisition of our Prell®, Denorex®, BIZ® and Kids N Pets® brands, consisted of the following:

	As of September 30, 2022						As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Intangible assets:
Customer relationships	$	-	$	-	$	-	$	2,103	$	329	$	1,774
Trade names		970		99		871		1,850		151		1,699
Formulas and batching processes		1,000		441		559		1,370		452		918
Internal-use software		898		60		838		756		-		756
Non-compete agreement		33		29		4		48		35		13
	$	2,901	$	629	$	2,272	$	6,127	$	967	$	5,160

The change in the net carrying amounts of intangible assets during 2022 was due to capitalization of costs related to our internal-use software, the impact of impairment charges related to intangible assets in our All-Purpose reporting unit, and amortization expense. Amortization expense for the three months ended September 30, 2022 and 2021 was $87 and $278, respectively. Amortization expense for the nine months ended September 30, 2022 and 2021 was $313 and $433, respectively.

Estimated amortization expense for 2022 and subsequent years is as follows:

Remainder of 2022	$	86
2023		344
2024		344
2025		343
2026		342
Thereafter		813
Total	$	2,272

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Long-Term Debt and Line-of-Credit

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Long-Term Debt and Line-of-Credit

Note 8. Long-Term Debt and Line-of-Credit

On July 1, 2020, we entered into a Loan and Security Agreement (as amended, the “UMB Loan Agreement”) with UMB Bank, N.A. (“UMB”). Under the UMB Loan Agreement we obtained a $3,000 term loan, with equal monthly payments fully amortized over three years, and interest at the LIBOR Rate + 4.50% with a floor of 5.50%, and a revolving credit facility, with a maximum commitment of $7,000 with interest at the LIBOR Rate + 3.75%, with a floor of 4.75%. On August 10, 2022, the revolving credit facility was reduced to a maximum commitment of $4,000 with interest at the one month term SOFR rate + 6.83%, with a floor of 7.75%. The revolving credit facility will terminate on July 1, 2023, unless terminated earlier pursuant to the terms of the UMB Loan Agreement. The loans are secured by all of the assets of the Company and all of its subsidiaries.

The UMB Loan Agreement requires compliance with affirmative, negative, and financial covenants, as determined on a monthly basis. The UMB Loan Agreement also contains covenants typical of transactions of this type, including among others, limitations on our ability to: create, incur or assume any indebtedness or lien on our assets; pay dividends or make other distributions; redeem, retire or acquire outstanding common stock, options, warrants or other rights; make fundamental changes to our corporate structure or business; make investments or sell assets; or engage in certain other activities as set forth in the UMB Loan Agreement. The Company was in compliance with the UMB Loan Agreement financial covenants as of September 30, 2022.

As of September 30, 2022, our UMB revolving credit facility and UMB term loan had an outstanding balance of $2,414 and $0, respectively, with an all-in interest rate of 9.87% and 9.13%, respectively. Unamortized loan costs were as $149 of September 30, 2022.

On November 9, 2021, we entered into a loan and security agreement (the “La Plata Loan Agreement”) with La Plata Capital, LLC (“La Plata”). Under the La Plata Loan Agreement, we obtained a $2,000 term loan that bears interest at 14% and a maturity date of November 9, 2023. Interest-only payments are required on a monthly basis beginning in January 2022 and ending on December 1, 2022. Beginning on January 1, 2023, monthly principal payments of $30 are required in addition to accrued and unpaid interest. All remaining unpaid principal and interest are fully due on November 9, 2023.

The La Plata Loan Agreement requires compliance with affirmative, negative, and financial covenants, as determined on a monthly basis beginning in July 2022. The La Plata Loan Agreement is secured by all of the assets of the Company and all of its subsidiaries, subordinate to the security of the UMB Loan Agreement. In conjunction with this agreement, we also entered into an intercreditor and subordination agreement with UMB and La Plata, effective November 9, 2021. The Company was in compliance with the La Plata Loan Agreement as of September 30, 2022.

As of September 30, 2022, our La Plata term loan had an outstanding balance of $1,000. La Plata unamortized loan costs were $26 as of September 30, 2022.

As of September 30, 2022, the total principal payments due on our outstanding debt were as follows:

	Revolving Credit Facility		Term Loan		Total
Remainder of 2022	$	-		-		-
2023		2,414		1,000		3,414
Total minimum principal payments	$	2,414	$	1,000	$	3,414

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Leases

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Leases

Note 9. Leases

We have entered into a lease for our corporate headquarters with a remaining lease term of 9 years. This lease includes both lease and nonlease components, which are accounted for as a single lease component as we have elected the practical expedient to combine these components for all leases. As this lease does not provide an implicit rate, we calculated the right-of-use assets and lease liabilities using our secured incremental borrowing rate at the lease commencement date. We currently do not have any finance leases outstanding.

Information related to leases was as follows:

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Operating lease information:
Operating lease cost	$	100		$	300
Operating cash flows from operating leases		100			300
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		8.17			8.17
Weighted average discount rate		5.1	%		5.1	%

Future minimum annual lease payments are as follows:

Remainder of 2022	$	99
2023		406
2024		413
2025		420
2026		427
Thereafter		1,739
Total minimum lease payments	$	3,504
Less imputed interest		(659	)
Total operating lease liability	$	2,845

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Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Principles of Consolidation

(b) Principles of Consolidation

Our Condensed Consolidated Financial Statements include our accounts and those of our wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Dryel® product line. We have reflected the operations of the Dryel® product line as discontinued operations for all periods presented, which were previously classified under our household products segment. See Note 3 for further information.

Basis of Presentation

(c) Basis of Presentation

The unaudited Condensed Consolidated Statements of Operations, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows included in this Report have been prepared by the Company. In our opinion, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position at September 30, 2022 and results of operations and cash flows for all periods have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These Condensed Consolidated Financial Statements should be read in conjunction with our financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2021. The results of operations for the period ended September 30, 2022 are not necessarily indicative of the operating results for the full year and are unaudited.

Use of Estimates

(d) Use of Estimates

The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts in our financial statements of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include, but are not limited to, the realization of deferred tax assets, reserves for slow moving and obsolete inventory, customer returns and allowances, intangible asset useful lives and amortization method, fair value of assets acquired in business combinations, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

Cash and Restricted Cash

(e) Cash and Restricted Cash

Cash and restricted cash consist of the following:

	September 30, 2022		December 31, 2021
Cash	$	14	$	770
Restricted Cash		125		500
	$	139	$	1,270

Inventories Valuation and Reserves

(f) Inventories Valuation and Reserves

Inventories consist of raw materials and finished goods and are stated at the lower of cost (first-in, first-out method) or net realizable value, which is defined as the estimated selling price in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. We estimate an inventory reserve, which is generally not material to our financial statements, for slow moving and obsolete products and raw materials based upon, among other things, an assessment of historical and anticipated sales of our products. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Inventories were comprised of the following at:

	September 30, 2022		December 31, 2021
Finished goods		5,986	$	5,499
Raw materials		303		178
	$	6,289	$	5,677

Our remaining raw materials balance is to be sold to contract manufacturing partners based on production demand.

Property and Equipment

(g) Property and Equipment

Property and equipment are recorded at historical cost. Depreciation is provided using the straight-line method over the estimated useful lives of the assets ranging from three to 20 years. Office furniture and office machines are estimated to have useful lives of 10 to 20 years and three to five years, respectively. Maintenance and repairs are expensed as incurred. Improvements that extend the useful lives of the asset or provide improved efficiency are capitalized.

Leases

(h) Leases

Lease assets and lease liabilities are recognized at the commencement of an arrangement where it is determined at inception that a lease exists. Lease assets represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. These assets and liabilities are initially recognized based on the present value of lease payments over the lease term calculated using our incremental borrowing rate generally applicable to the location of the lease asset, unless the implicit rate is readily determinable. Lease terms include options to extend or terminate the lease when it is reasonably certain that those options will be exercised.

Certain nonlease components, such as maintenance and other services provided by the lessor, are included in the valuation of the lease. Leases with an initial term of 12 months or less, which are not material to our financial statements, are not recorded on the balance sheet, and the expense for these short-term leases and for operating leases is recognized on a straight-line basis over the lease term. Lease agreements with lease and nonlease components are combined as a single lease component.

The Company evaluates reimbursable leasehold improvements based on whether improvements are indicative of a lessor or lessee asset. The Company concluded that all of its reimbursable leasehold improvement payments have qualified as lessor assets and, as such, have accounted for leasehold improvement payments as prepaid rent included in prepaid expenses on the Condensed Consolidated Balance Sheets.

Intangible Assets and Goodwill

(i) Intangible Assets and Goodwill

Goodwill is subject to impairment tests at least annually or when events or changes in circumstances indicate that an asset may be impaired. Other intangible assets with finite lives, such as customer relationships, trade names, and formulas, are amortized over their estimated useful lives, generally ranging from 5 to 20 years. Amortization expense related to intangible assets is included in Operating Expenses on the Condensed Consolidated Statement of Operations.

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350-40-30-1. All other internal-use software costs are expensed as incurred by the Company. Amortization will be recorded over the estimated useful life of the software once the software is ready for its intended use and placed into service. In the second quarter of 2022, our internal-use software was implemented for its intended use. The estimated useful life for internal-use software is five years and will be periodically reassessed based on considerations for obsolescence, technology, competition, and other economic factors.

Financial Instruments

(j) Financial Instruments

Financial instruments which potentially subject us to concentrations of credit risk include cash, restricted cash, and accounts receivable. We maintain our cash balances in the form of bank demand deposits with financial institutions that we believe are creditworthy. Historically, we have maintained balances in various operating accounts in excess of federally insured limits. We establish an allowance for doubtful accounts, which is generally not material to our financial statements, based upon factors surrounding the credit risk of specific customers, historical trends and other information. We have no significant financial instruments with off-balance sheet risk of accounting loss, such as foreign exchange contracts, option contracts or other foreign currency hedging arrangements.

The recorded amounts for cash, restricted cash, receivables, other current assets, accounts payable, and accrued expenses approximate fair value due to the short-term nature of these financial instruments.

Income Taxes

(k) Income Taxes

Income taxes reflect the tax effects of transactions reported in the Condensed Consolidated Financial Statements and consist of taxes currently payable plus deferred income taxes related to certain income and expenses recognized in different periods for financial and income tax reporting purposes. Deferred income tax assets and liabilities are recognized for the future income tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases. A valuation allowance is established when it is more-likely-than-not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period in which related temporary differences become deductible. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

Taxes are reported based on tax positions that meet a more-likely-than-not standard and that are measured at the amount that is more-likely-than-not to be realized. Differences between financial and tax reporting which do not meet this threshold are required to be recorded as unrecognized tax benefits or expense. We classify penalty and interest expense related to income tax liabilities as an income tax expense. There are no significant interest and penalties recognized in the Condensed Consolidated Statements of Income or accrued on the Condensed Consolidated Balance Sheets.

Income tax expense during interim periods is based on applying an estimated annual effective income tax rate to year-to-date income, plus any significant unusual or infrequently occurring items which are recorded in the interim period. The provision for income taxes for the three and nine months ended September 30, 2022 differs from the amount that would be provided by applying the statutory U.S. federal income tax rate of 21% to pre-tax income primarily due to valuation allowance. The effective tax rate for the nine months ended September 30, 2022 and 2021 was 0.0% and 21.6% respectively.

The computation of the annual estimated effective tax rate at each interim period requires certain estimates and significant judgment including, but not limited to, the expected operating income for the year, and permanent differences. The accounting estimates used to compute the provision for income taxes may change as new events occur, more experience is obtained, additional information becomes known or as the tax environment changes.

In assessing the need for a valuation allowance, management must determine that there will be sufficient taxable income to realize deferred tax assets. Based upon the historical and anticipated future losses, management has determined that the deferred tax assets do not meet the more likely than not threshold for realizability. Accordingly, a valuation allowance has been recorded against the Company’s net deferred tax assets as of September 30, 2022, and December 31, 2021.

On March 27, 2020, President Trump signed into U.S. federal law the CARES Act, which is aimed at providing emergency assistance and health care for individuals, families, and businesses affected by the COVID-19 pandemic and generally supporting the U.S. economy. The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer side social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property. In particular, under the CARES Act, NOLs arising in 2018, 2019, and 2020 taxable years may be carried back to each of the preceding five years to generate a refund. The tax impact of the carryback of the 2020 loss was recorded in the first quarter 2021 income tax provision. We elected to defer our portion of social security tax payments, and we paid this liability in the third quarter of 2021.

Revenue Recognition

(l) Revenue Recognition

Our revenue recognition policy is significant because the amount and timing of revenue is a key component of our results of operations. Certain criteria are required to be met in order to recognize revenue. If these criteria are not met, then the associated revenue is deferred until it is met. When consideration is received in advance of the delivery of goods or services, a contract liability is recorded. Our revenue contracts are identified when purchase orders are received and accepted from customers and represent a single performance obligation to sell our products to a customer.

Net sales reflect the transaction prices for contracts, which include products shipped at selling list prices reduced by variable consideration. Variable consideration includes estimates for expected customer allowances, promotional programs for consumers, and sales returns. Based on our customer-by-customer history, our variable consideration estimates are generally accurate and subsequent adjustments are generally immaterial.

Variable consideration is primarily comprised of customer allowances. Customer allowances primarily include reserves for trade promotions to support price features, displays, slotting fees, and other merchandising of our products to our customers. Promotional programs for consumers primarily include coupons, rebates, and certain other promotional programs, and do not represent a significant portion of variable consideration. The costs of both customer allowances and promotional programs for consumers are estimated using either the expected value or most likely amount approach, depending on the nature of the allowance, using all reasonably available information, including our historical experience and current expectations. Customer allowances and promotional programs for consumers are reflected in the transaction price when sales are recorded. We may adjust our estimates based on actual results and consideration of other factors that cause allowances. In the event that actual results differ from our estimates, the results of future periods may be impacted.

Sales returns are generally not material to our financial statements, and do not comprise a significant portion of variable consideration. Estimates for sales returns are based on, among other things, an assessment of historical trends, information from customers, and anticipated returns related to current sales activity. These estimates are established in the period of sale and reduce our revenue in that period.

Sales are recorded at the time that control of the products is transferred to customers. In evaluating the timing of the transfer of control of products to customers, we consider several indicators, including significant risks and rewards of products, our right to payment, and the legal title of the products. Based on the assessment of control indicators, sales are generally recognized when products are delivered to customers.

We have also established an allowance for doubtful accounts. We estimate this allowance based upon, among other things, an assessment of the credit risk of specific customers and historical trends. We believe our allowance for doubtful accounts is adequate to absorb any losses which may arise. In the event that actual losses differ from our estimates, the results of future periods may be impacted.

Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the Condensed Consolidated Balance Sheets and were as follows:

	September 30, 2022		December 31, 2021
Trade promotions	$	379	$	1,242
Allowance for doubtful accounts		44		14
	$	423	$	1,256

Advertising Costs

(m) Advertising Costs

We expense advertising costs as incurred.

Stock-based Compensation

(n) Stock-Based Compensation

We account for share based payments by recognizing compensation expense based upon the estimated fair value of the awards on the date of grant. We determine the estimated grant-date fair value of stock options with only service conditions using the Black-Scholes option pricing model. In order to calculate the fair value of the options, certain assumptions are made regarding the components of the model, including the estimated fair value of underlying common stock, risk-free interest rate, volatility, expected dividend yield and expected option life. Changes to the assumptions could cause significant adjustments to the valuation. We recognize compensation costs ratably over the vesting period using the straight-line method, which approximates the service period.

The Company issues restricted stock unit ("RSUs") awards with restrictions that lapse upon the passage of time (service vesting) and satisfaction of market conditions targeted to our Company’s stock price. For those RSU awards with only service vesting, the Company recognizes compensation cost on a straight-line basis over the service period. For awards with both market and service conditions, the Company starts recognizing compensation cost over the requisite service period, with the effect of the market conditions reflected in the calculation of the award's fair value at grant date. The Company values awards with only service vesting requirements based on the grant date share price. The Company values awards with market and service conditions using a Monte Carlo simulation. The Company determines the requisite service period for awards with both market and service conditions based on the longer of the explicit service period and the derived service period. Stock awards that contain market vesting conditions are included in the computations of diluted EPS reflecting the average number of shares that would be issued based on the highest 30-day average market price during the reporting periods, if their effect is dilutive. If the condition is based on an average of market prices over some period of time, the corresponding average for the period is used.

Operating Costs and Expenses Classification

(o) Operating Costs and Expenses Classification

Cost of sales includes costs associated with the purchase of goods from our third-party manufacturing partners, which include labor, materials, and other expenses associated with the manufacturing of our products, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for warehousing and distribution, sales and sales support personnel, brokerage commissions, customer compliance fines, and promotional costs. Freight-out costs included in selling expenses totaled $429 and $624 for the three months ended September 30, 2022 and 2021, respectively, and totaled $1,725 and $2,163 for the nine months ended September 30, 2022 and 2021, respectively.

General and administrative expenses consist primarily of wages and benefits associated with management and administrative support departments, business insurance costs, professional fees, office facility related expenses, and other general support costs.

On April 29, 2021, the Company announced that Mark E. Goldstein, the President and Chief Executive Officer of the Company and a member of the Board of Directors, retired effective as of April 26, 2021. In connection with Mr. Goldstein’s retirement, the Company and Mr. Goldstein entered into a Separation Agreement, Waiver and Release (the “Separation Agreement”), pursuant to which the Company will pay Mr. Goldstein $720 in severance payments (equal to 18 months base salary) over a period of 30 months and reimbursement for the costs of continuing health benefits for a period of 18 months. Severance costs of $805 were recognized in the second quarter of 2021 and are included in general and administrative expenses. Accrued severance costs are included in accrued expenses on the Condensed Consolidated Balance Sheets.

Recently Adopted Accounting Standards

(p) Recently Adopted Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“ASU 2020-04”). The purpose of ASU 2020-04 is to provide optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. This guidance primarily provides temporary optional expedients which simplify the accounting for contract modifications to existing debt agreements expected to arise from the market transition from LIBOR to alternative reference rates. The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. An entity may elect to apply amendments prospectively through December 31, 2022. The Company adopted ASU 2020-04 effective July 1, 2022. The adoption of this standard did not have a material impact on our financial statements.

Recently Issued Accounting Standards

(q) Recently Issued Accounting Standards

In September 2022, the FASB issued ASU No. 2022-04, "Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations". This guidance requires annual and interim disclosures for entities that use supplier finance programs in connection with the purchase of goods and services. These amendments are effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information, which is effective for fiscal years beginning after December 15, 2023. We are currently assessing the impact of this guidance on our financial statements.

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Organization and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2022

Accounting Policies [Abstract]

Schedule of Cash and Restricted Cash

Cash and restricted cash consist of the following:

	September 30, 2022		December 31, 2021
Cash	$	14	$	770
Restricted Cash		125		500
	$	139	$	1,270

Composition of Inventory

Inventories were comprised of the following at:

	September 30, 2022		December 31, 2021
Finished goods		5,986	$	5,499
Raw materials		303		178
	$	6,289	$	5,677

Summary of Customer Allowances for Trade Promotions and Allowance for Doubtful Accounts

Customer allowances for trade promotions and allowance for doubtful accounts are included in net accounts receivable on the Condensed Consolidated Balance Sheets and were as follows:

	September 30, 2022		December 31, 2021
Trade promotions	$	379	$	1,242
Allowance for doubtful accounts		44		14
	$	423	$	1,256

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Discontinued Operations (Tables)

9 Months Ended

Sep. 30, 2022

Dryel | Disposal of Product Line

Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]

Summary of Financial Information Related to Discontinued Operations

A summary of financial information related to our discontinued operations is as follows:

Reconciliation of the Line Items Constituting Pretax Loss from Discontinued Operations to the After-Tax Loss from Discontinued Operations in the Condensed Consolidated Statements of Operations for the three and nine months ended September 30:

	Three Months Ended September 30, 2021			Nine Months Ended September 30, 2021
Net sales	$	585		$	1,856
Cost of sales		313			1,013
Gross profit		272			843
Operating expenses:
Selling		144			367
Intangible asset amortization		123			369
Interest expense		99			298
Loss from discontinued operations, before tax		(94	)		(191	)
Income tax expense		(111	)		(55	)
Loss from discontinued operations, net of tax	$	(205	)	$	(246	)

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Reconciliation of the Weighted Average Number of Common Shares Outstanding

A reconciliation of the weighted average number of common shares outstanding (in thousands) is as follows. The dilutive effect of stock options and RSUs are excluded for periods in which the Company has a net loss because the impact is anti-dilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Common shares outstanding, beginning of the period		12,749		12,618		12,727		12,618
Weighted average common shares issued		-		24		20		10
Weighted average number of common shares outstanding		12,749		12,642		12,747		12,628
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,749		12,642		12,747		12,628

Common Stock Equivalents Excluded From the Calculation of Earnings Per Share

Common stock equivalents (in thousands) that have been excluded from the calculation of earnings per share because they would have been anti-dilutive:

	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Stock options		153		15		153		15

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Segment Information (Tables)

9 Months Ended

Sep. 30, 2022

Segment Reporting [Abstract]

Information on Segments

The following provides information on our segments for the three and nine months ended September 30:

	Three Months Ended September 30, 2022
	Household Products			Health and Beauty Care Products			Total
Net sales	$	2,748		$	1,529		$	4,277
Loss from operations		(371	)		(232	)		(603	)
Capital and intangible asset expenditures		-			-			-
Depreciation and amortization		99			41			140

	Three Months Ended September 30, 2021
	Household Products			Health and Beauty Care Products			Total
Net sales	$	3,846		$	4,124		$	7,970
Loss from operations		(382	)		(548	)		(930	)
Capital and intangible asset expenditures		113			-			113
Depreciation and amortization		297			155			452

	Nine Months Ended September 30, 2022
	Household Products			Health and Beauty Care Products			Total
Net sales	$	9,103		$	6,346		$	15,449
Loss from operations		(4,854	)		(200	)		(5,054	)
Capital and intangible asset expenditures		142			-			142
Depreciation and amortization		386			93			480

	Nine Months Ended September 30, 2021
	Household Products			Health and Beauty Care Products			Total
Net sales	$	10,762		$	13,821		$	24,583
Loss from operations		(1,960	)		(591	)		(2,551	)
Capital and intangible asset expenditures		262			-			262
Depreciation and amortization		893			464			1,357

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Goodwill and Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2022

Goodwill And Intangible Assets Disclosure [Abstract]

Schedule of Goodwill and Certain intangible Assets and Resulted In Impairment Charges

we experienced a significant decline in our stock price and market capitalization and revised internal forecasts relating to all reporting units due to inflationary related pressures at our customers which have caused sales decreases. We concluded that the changes in circumstances in these reporting units triggered the need for a quantitative review of the carrying values of goodwill and certain intangible assets and resulted in impairment charges to our All-Purpose reporting unit during the nine months ended September 30, 2022 and resulted in the following impairment charges:

Schedule of Changes in Carrying Amount of Goodwill by Reporting Unit

The changes in the carrying amount of goodwill by reporting unit for the nine months ended September 30, 2022 and 2021 were as follows:

	Detergent		Shampoo		All-Purpose			Total
Balance, January 1, 2022	$	-	$	-	$	1,710		$	1,710
Additions		-		-		-			-
Impairment		-		-		(872	)		(872	)
Balance, September 30, 2022	$	-	$	-	$	838		$	838
Balance, January 1, 2021	$	593	$	1,520	$	1,710		$	3,823
Additions		-		-		-			-
Impairment		-		-		-			-
Balance, September 30, 2021	$	593	$	1,520	$	1,710		$	3,823

Schedule of Intangible Assets

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use or are related to our acquisition of our Prell®, Denorex®, BIZ® and Kids N Pets® brands, consisted of the following:

	As of September 30, 2022						As of December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Intangible assets:
Customer relationships	$	-	$	-	$	-	$	2,103	$	329	$	1,774
Trade names		970		99		871		1,850		151		1,699
Formulas and batching processes		1,000		441		559		1,370		452		918
Internal-use software		898		60		838		756		-		756
Non-compete agreement		33		29		4		48		35		13
	$	2,901	$	629	$	2,272	$	6,127	$	967	$	5,160

Schedule of Estimated Amortization Expense

Estimated amortization expense for 2022 and subsequent years is as follows:

Remainder of 2022	$	86
2023		344
2024		344
2025		343
2026		342
Thereafter		813
Total	$	2,272

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Long-Term Debt and Line-of-Credit (Tables)

9 Months Ended

Sep. 30, 2022

Debt Disclosure [Abstract]

Summary of Principal Payments Due on Outstanding Debt

As of September 30, 2022, the total principal payments due on our outstanding debt were as follows:

	Revolving Credit Facility		Term Loan		Total
Remainder of 2022	$	-		-		-
2023		2,414		1,000		3,414
Total minimum principal payments	$	2,414	$	1,000	$	3,414

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Leases (Tables)

9 Months Ended

Sep. 30, 2022

Leases [Abstract]

Schedule of Information Related to Leases

Information related to leases was as follows:

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Operating lease information:
Operating lease cost	$	100		$	300
Operating cash flows from operating leases		100			300
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		8.17			8.17
Weighted average discount rate		5.1	%		5.1	%

Schedule of Future Minimum Annual Lease Payments

Future minimum annual lease payments are as follows:

Remainder of 2022	$	99
2023		406
2024		413
2025		420
2026		427
Thereafter		1,739
Total minimum lease payments	$	3,504
Less imputed interest		(659	)
Total operating lease liability	$	2,845

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Organization and Summary of Significant Accounting Policies - Additional Information (Details)	9 Months Ended
	Sep. 30, 2022 Segment
Accounting Policies [Abstract]
Number of business segment	2

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Organization and Summary of Significant Accounting Policies - Schedule of Cash and Restricted Cash (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020
Accounting Policies [Abstract]
Cash	$ 14	$ 770
Restricted cash	125	500
Cash and restricted cash	$ 139	$ 1,270	$ 258	$ 5

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Organization and Summary of Significant Accounting Policies - Composition of Inventory (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Inventory Disclosure [Abstract]
Finished goods	$ 5,986	$ 5,499
Raw materials	303	178
Inventories, net	$ 6,289	$ 5,677

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Organization and Summary of Significant Accounting Policies - Additional Information 1 (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Sep. 30, 2021
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Significant financial instruments with off-balance sheet risk	$ 0	$ 0
Interest and penalties recognized in condensed consolidated statements of income		0
Accrued interest or penalties related to uncertain tax positions	$ 0	$ 0
U.S. federal income tax rate	21.00%	21.00%
Effective income tax rate		0.00%	21.60%
Minimum
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful life of property, plant and equipment		3 years
Useful lives of intangible assets		5 years
Maximum
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful life of property, plant and equipment		20 years
Useful lives of intangible assets		20 years
Office Furniture and Equipment | Minimum
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful life of property, plant and equipment		10 years
Office Furniture and Equipment | Maximum
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful life of property, plant and equipment		20 years
Office Equipment | Minimum
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful life of property, plant and equipment		3 years
Office Equipment | Maximum
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful life of property, plant and equipment		5 years

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Organization and Summary of Significant Accounting Policies - Summary of Customer Allowances for Trade Promotions and Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Trade promotions	$ 379	$ 1,242
Allowance for doubtful accounts	44	14
Trade promotions and allowance for doubtful accounts	$ 423	$ 1,256

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Organization and Summary of Significant Accounting Policies - Additional Information 2 (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended	9 Months Ended
	Apr. 26, 2021	Sep. 30, 2022	Sep. 30, 2021	Jun. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
President and Chief Executive Officer
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Retirement effective date	Apr. 26, 2021
Severance payments	$ 720			$ 805
Retirement benefits, description					pursuant to which the Company will pay Mr. Goldstein $720 in severance payments (equal to 18 months base salary) over a period of 30 months and reimbursement for the costs of continuing health benefits for a period of 18 months. Severance costs of $805 were recognized in the second quarter of 2021 and are included in general and administrative expenses. Accrued severance costs are included in accrued expenses on the Condensed Consolidated Balance Sheets
Selling Expenses
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Freight-out costs		$ 429	$ 624		$ 1,725	$ 2,163

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Organization and Summary of Significant Accounting Policies - Additional Information 3 (Details) - ASU 2020-04	Sep. 30, 2022
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Change in Accounting Principle, Accounting Standards Update, Adopted [true false]	true
Change in Accounting Principle, Accounting Standards Update, Adoption Date	Jul. 01, 2022
Change in Accounting Principle, Accounting Standards Update, Immaterial Effect [true false]	true

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Going Concern - Additional Information (Details) - USD ($) $ in Thousands		9 Months Ended
	Jul. 01, 2020	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Cash, and restricted cash		$ 139	$ 258	$ 1,270	$ 5
Net cash used in operating activities		(1,189)	$ (1,394)
Revolving Credit Facility
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Available borrowing capacity amount		$ 944
Revolving Credit Facility | UMB Bank, N.A | Debt Agreement
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt agreement mature date	Jul. 01, 2023	Jul. 01, 2023
Revolving Credit Facility | La Plata Capital, LLC | Debt Agreement
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Debt agreement mature date		Nov. 09, 2023

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Discontinued Operations - Additional Information (Details) - Dryel - Disposal of Product Line		3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 23, 2021 USD ($)	Sep. 30, 2022 USD ($)	Sep. 30, 2021 USD ($)	Sep. 30, 2022 USD ($) Installment	Sep. 30, 2021 USD ($)	Dec. 31, 2021 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid	$ 4,850,000
Inventory	440,000
Total consideration held in escrow	$ 500,000
Consideration held in escrow term	At closing, $500 of the total consideration was held in escrow for a twelve-month period following the closing date, to be released ratably in four installments in 2022.
Net sales			$ 585,000		$ 1,856,000	$ 2,800,000
Number of installment payments | Installment				3
Disposal group, including discontinued operation, operating expense		$ 0		$ 0
Disposal group, including discontinued operation, assets		0		0		0
Disposal group, including discontinued operation, liabilities		$ 0		0		$ 0
Capital expenditure discontinued operations				0	0
Significant operating and investing noncash items related to discontinued operations				$ 0	$ 0

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Discontinued Operations - Summary of Financial Information Constituting Pretax Loss to After-Tax Loss of Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2021	Sep. 30, 2021	Dec. 31, 2021
Operating expenses:
Income (loss) from discontinued operations, net of tax	$ (205)	$ (246)
Dryel | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales	585	1,856	$ 2,800
Cost of sales	313	1,013
Gross profit	272	843
Operating expenses:
Selling	144	367
Intangible asset amortization	123	369
Interest expense	99	298
Loss from discontinued operations, before tax	(94)	(191)
Income tax expense	(111)	(55)
Income (loss) from discontinued operations, net of tax	$ (205)	$ (246)

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Stock-Based Compensation - Additional Information (Details) - USD ($)			9 Months Ended
	Mar. 02, 2022	Jan. 18, 2022	Sep. 30, 2022	Sep. 30, 2021
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation			$ 113,000	$ 99,000
Tax benefit from recording non-cash expense relates to options granted to employees			$ 0
2022 Individual Employee Grant | Anniversary Grant Date
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Vesting percentage			0.66%
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation			$ 103,000	55,000
Unrecognized compensation costs related to non-vested stock options			$ 170,000
Period over which compensation costs related to non-vested stock options recognize			3 years
Restricted Stock Units (RSUs) | 2022 Individual Employee Grant
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of restricted stock units granted		25
Restricted stock shares granted in period granted date fair value		$ 10,000
Vesting percentage		0.33%
Vesting description			The 2022 Individual Employee Grant vested one-third on the initial grant date, and the remaining two-thirds will vest on each anniversary of the grant date.
Restricted Stock Units (RSUs) | 2022 Individual Executive Grant | Anniversary Grant Date
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of restricted stock units granted	15
Restricted stock shares granted in period granted date fair value	$ 18,000
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation			$ 10,000	$ 44,000

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Earnings Per Share - Reconciliation of the Weighted Average Number of Common Shares Outstanding (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Earnings Per Share [Abstract]
Beginning Balance, Shares	12,749	12,618	12,727	12,618
Weighted average common shares issued		24	20	10
Weighted average number of common shares outstanding	12,749	12,642	12,747	12,628
Diluted weighted average number of common shares outstanding	12,749	12,642	12,747	12,628

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Earnings Per Share - Common Stock Equivalents Excluded From the Calculation of Earnings Per Share (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Stock Options
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from calculation of earnings per share	153	15	153	15

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Segment Information - Additional Information (Details)	9 Months Ended
	Sep. 30, 2022 Segment
Segment Reporting [Abstract]
Number of business segment	2

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Segment Information - Information on Segments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Segment Reporting Information [Line Items]
Net sales	$ 4,277	$ 7,970	$ 15,449	$ 24,583
Loss from operations	(603)	(930)	(5,054)	(2,551)
Capital and intangible asset expenditures		113	142	262
Depreciation and amortization	140	452	480	1,357
Household Products
Segment Reporting Information [Line Items]
Net sales	2,748	3,846	9,103	10,762
Loss from operations	(371)	(382)	(4,854)	(1,960)
Capital and intangible asset expenditures		113	142	262
Depreciation and amortization	99	297	386	893
Health And Beauty Care Products
Segment Reporting Information [Line Items]
Net sales	1,529	4,124	6,346	13,821
Loss from operations	(232)	(548)	(200)	(591)
Depreciation and amortization	$ 41	$ 155	$ 93	$ 464

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Goodwill and Intangible Assets - Schedule of Goodwill and Certain intangible Assets and Resulted In Impairment Charges (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Goodwill [Line Items]
Goodwill	$ 0	$ 0	$ 872,000	$ 0
Total			3,589,000
All-Purpose
Goodwill [Line Items]
Intangible Assets			2,717,000
Goodwill			872,000	$ 0
Total			$ 3,589,000

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Goodwill and Intangible Assets - Schedule of Changes in Carrying Amount of Goodwill by Reporting Unit (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Finite Lived Intangible Assets [Line Items]
Beginning balance			$ 1,710,000	$ 3,823,000
Impairment	$ 0	$ 0	(872,000)	0
Ending balance	838,000	3,823,000	838,000	3,823,000
Detergent
Finite Lived Intangible Assets [Line Items]
Beginning balance				593,000
Impairment				0
Ending balance		593,000		593,000
Shampoo
Finite Lived Intangible Assets [Line Items]
Beginning balance				1,520,000
Impairment				0
Ending balance		1,520,000		1,520,000
All-Purpose
Finite Lived Intangible Assets [Line Items]
Beginning balance			1,710,000	1,710,000
Impairment			(872,000)	0
Ending balance	$ 838,000	$ 1,710,000	$ 838,000	$ 1,710,000

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Goodwill and Intangible Assets - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 2,901	$ 6,127
Accumulated Amortization	629	967
Net Carrying Value	2,272	5,160
Customer Relationships
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount		2,103
Accumulated Amortization		329
Net Carrying Value		1,774
Trade Names
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	970	1,850
Accumulated Amortization	99	151
Net Carrying Value	871	1,699
Formulas and Batching Processes
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	1,000	1,370
Accumulated Amortization	441	452
Net Carrying Value	559	918
Internal-use Software
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	898	756
Accumulated Amortization	60
Net Carrying Value	838	756
Non-compete Agreement
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	33	48
Accumulated Amortization	29	35
Net Carrying Value	$ 4	$ 13

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Goodwill and Intangible Assets - Additional Information (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021
Goodwill And Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 87,000	$ 278,000	$ 313,000	$ 433,000
Impairment	$ 0	$ 0	$ (872,000)	$ 0

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Goodwill and Intangible Assets - Schedule of Estimated Amortization Expense (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Goodwill And Intangible Assets Disclosure [Abstract]
Remainder of 2022	$ 86
2023	344
2024	344
2025	343
2026	342
Thereafter	813
Total	$ 2,272

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Long-Term Debt and Line-of-Credit - Additional Information (Details) - USD ($) $ in Thousands				9 Months Ended
	Aug. 10, 2022	Nov. 09, 2021	Jul. 01, 2020	Sep. 30, 2022
Debt Instrument [Line Items]
Debt outstanding				$ 3,414
Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility amount				944
Debt outstanding				2,414
UMB Bank, N.A
Debt Instrument [Line Items]
Unamortized loan costs				$ 149
UMB Bank, N.A | Revolving Credit Facility
Debt Instrument [Line Items]
Debt outstanding interest rate				9.87%
Debt outstanding				$ 2,414
UMB Bank, N.A | Term Loan
Debt Instrument [Line Items]
Debt outstanding interest rate				9.13%
Debt outstanding				$ 0
UMB Bank, N.A | Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, terminate date			Jul. 01, 2023	Jul. 01, 2023
UMB Bank, N.A | Loan Agreement | Term Loan
Debt Instrument [Line Items]
Term loan amount			$ 3,000
Term loan, frequency of commitment fee payment			monthly
Term loan, payment term			3 years
UMB Bank, N.A | Maximum | Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility amount	$ 4,000		$ 7,000
La Plata Capital, LLC
Debt Instrument [Line Items]
Debt outstanding				$ 1,000
Unamortized loan costs				$ 26
La Plata Capital, LLC | Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility, terminate date				Nov. 09, 2023
La Plata Capital, LLC | Loan Agreement | Term Loan
Debt Instrument [Line Items]
Term loan amount		$ 2,000
Debt Instrument, Interest Rate, Effective Percentage		14.00%
Debt Instrument, Maturity Date		Nov. 09, 2021
Debt Instrument, Periodic Payment, Principal		$ 30
Debt Instrument, Payment Terms				Interest-only payments are required on a monthly basis beginning in January 2022 and ending on December 1, 2022. Beginning on January 1, 2023, monthly principal payments of $30 are required in addition to accrued and unpaid interest. All remaining unpaid principal and interest are fully due on November 9, 2023
LIBOR Rate | UMB Bank, N.A | Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, variable interest rate			3.75%
LIBOR Rate | UMB Bank, N.A | Loan Agreement | Term Loan
Debt Instrument [Line Items]
Debt instrument, variable interest rate			4.50%
Floor Rate | UMB Bank, N.A | Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, variable interest rate	7.75%		4.75%
Floor Rate | UMB Bank, N.A | Loan Agreement | Term Loan
Debt Instrument [Line Items]
Debt instrument, variable interest rate			5.50%
SOFR Rate | UMB Bank, N.A | Loan Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Debt instrument, variable interest rate	6.83%
Debt Instrument, Maturity of Variable interest rate				one month term SOFR rate

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Long-Term Debt and Line-of-Credit - Summary of Principal Payments Due on Outstanding Debt (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Debt Instrument [Line Items]
2023	$ 3,414
Total minimum principal payments	3,414
Revolving Credit Facility
Debt Instrument [Line Items]
2023	2,414
Total minimum principal payments	2,414
Term Loan
Debt Instrument [Line Items]
2023	1,000
Total minimum principal payments	$ 1,000

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Leases - Additional Information (Details)	Sep. 30, 2022
Leases [Abstract]
Remaining lease terms	9 years

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Leases - Schedule of Information Related to Leases (Details) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2022 USD ($)	Sep. 30, 2022 USD ($)
Operating lease information:
Operating lease cost	$ 100	$ 300
Operating cash flows from operating leases	$ 100	$ 300
Weighted average remaining lease term in years	8 years 2 months 1 day	8 years 2 months 1 day
Weighted average discount rate	5.10%	5.10%

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Leases - Schedule of Future Minimum Annual Lease Payments (Details) $ in Thousands	Sep. 30, 2022 USD ($)
Leases [Abstract]
Remainder of 2022	$ 99
2023	406
2024	413
2025	420
2026	427
Thereafter	1,739
Total minimum lease payments	3,504
Less imputed interest	(659)
Total operating lease liability	$ 2,845