Discontinued Operations

3 Months Ended

Mar. 31, 2023

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 3. Discontinued Operations

On January 23, 2023, 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 Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore product lines. The total consideration paid to us was $800, plus an amount equal to the value of the Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore inventory of $1,136, subject to post-close adjustment. Additionally, the buyer will pay a royalty equal to 2% of gross sales for two years after the closing date (the "Scott's Liquid Gold® Royalty"). The Scott's Liquid Gold® Royalty resulted in recognition of a gain upon the sale of assets. Because the Scott's Liquid Gold® Royalty is variable consideration and is contingent on the outcome of future events that are largely outside of the Company’s control, the variable consideration from the Scott's Liquid Gold® Royalty has been fully constrained and no amount is included in the results from discontinued operations. Consideration for the Scott's Liquid Gold® Royalty is to be recognized as received from the buyer. The constraint on the variable consideration will be reassessed at each subsequent reporting period.

On December 15, 2022, 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 Prell® product line. The total consideration paid to us was $150, plus an amount equal to the value of the Prell® inventory of $330, subject to post-close adjustment. Additionally, the buyer will pay a royalty equal to 3% of collections on net sales for four years after the closing date (the “Prell® Royalty”). The Prell® Royalty resulted in recognition of a gain upon the sale of assets. For the three months ended March 31, 2023, there were no changes in the assessment of the Prell® Royalty, which will continue to be recognized as received from the buyer. The constraint on the variable consideration will be reassessed at each subsequent reporting period.

We have reflected the operations of the Scott's Liquid Gold® and Prell® product lines 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. 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 months ended March 31:

	Three Months Ended March 31, 2023
	Prell®		Scott's Liquid Gold®			Total
Net sales	$	-	$	187		$	187
Cost of sales		-		95		$	95
Gross profit		-		92			92
Operating expenses:
Selling		-		28			28
General and administrative		-		22			22
Operating income from discontinued operations		-		42			42
Interest expense		-		(18	)		(18	)
Gain on sale of discontinued operations		-		787			787
Income from discontinued operations	$	-	$	811		$	811

	Three Months Ended March 31, 2022
	Prell®			Scott's Liquid Gold®			Total
Net sales	$	838		$	1,223		$	2,061
Cost of sales		496			474		$	970
Gross profit		342			749			1,091
Operating expenses:
Selling		290			289			579
Intangible asset amortization		12			-			12
Operating income from discontinued operations		40			460			500
Interest expense		(14	)		(54	)		(68	)
Income from discontinued operations	$	26		$	406		$	432

There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the years ended December 31, 2022 and 2021, respectively.

Reconciliation of the Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Condensed Consolidated Balance Sheets as of:
 

	March 31, 2023		December 31, 2022
Assets
Current assets:
Inventories	$	-	$	1,235
Total assets	$	-	$	1,235

All assets in the above table are related to the discontinued operations of Scott's Liquid Gold®. There were no assets related to Prell® as of March 31, 2023 and December 31, 2022, respectively.