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, 2023

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 6, 2023, the registrant had 12,999,790 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:

•disruptions or inefficiencies in the supply chain;

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

•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;

•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 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, 2022 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	17
Item 4.	Controls and Procedures	20
PART II
Item 1A.	Risk Factors	21
Item 6.	Exhibits	21

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,
	2023			2022			2023			2022
Net sales	$	907		$	733		$	2,623		$	2,315
Cost of sales		552			319			1,564			1,255
Gross profit		355			414			1,059			1,060
Operating expenses:
Advertising		89			166			363			492
Selling		382			606			1,276			2,326
General and administrative		811			655			2,069			2,164
Intangible asset amortization		45			65			135			313
Impairment of goodwill and intangible assets		-			-			-			3,589
Total operating expenses		1,327			1,492			3,843			8,884
Loss from operations		(972	)		(1,078	)		(2,784	)		(7,824	)
Interest expense		(32	)		(27	)		(145	)		(83	)
Interest income		16			-			16			-
Loss before income taxes and discontinued operations		(988	)		(1,105	)		(2,913	)		(7,907	)
Income tax expense		(4	)		(2	)		(6	)		(55	)
Loss from continuing operations		(992	)		(1,107	)		(2,919	)		(7,962	)
Income from discontinued operations, net of taxes		3,987			363			5,830			2,434
Net income (loss)	$	2,995		$	(744	)	$	2,911		$	(5,528	)
Basic and diluted net income (loss) per common shares:
Loss from continuing operations	$	(0.08	)	$	(0.09	)	$	(0.23	)	$	(0.62	)
Income from discontinued operations	$	0.31		$	0.03		$	0.45		$	0.19
Net income (loss) per common share	$	0.23		$	(0.06	)	$	0.22		$	(0.43	)
Weighted average shares outstanding:
Basic and diluted		12,997			12,749			12,901			12,747

See accompanying notes to these Condensed Consolidated Financial Statements.

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SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Balance Sheets (Unaudited)

(in thousands, except par value amounts)

	September 30,			December 31,
	2023			2022
Assets
Current assets:
Cash and cash equivalents	$	4,415		$	49
Restricted cash		250			-
Accounts receivable, net		1,083			1,833
Inventories		370			775
Income taxes receivable		-			239
Prepaid expenses		168			243
Assets of discontinued operations		-			4,261
Total current assets		6,286			7,400
Intangible assets, net		658			793
Operating lease right-of-use assets		2,299			2,491
Other assets		39			47
Total assets	$	9,282		$	10,731
Liabilities and Shareholders’ Equity
Current liabilities:
Accounts payable	$	753		$	1,407
Accrued expenses		132			311
Current portion of long-term debt, net of debt issuance costs		-			3,384
Operating lease liabilities, current portion		285			270
Total current liabilities		1,170			5,372
Operating lease liabilities, net of current		2,296			2,512
Other liabilities		27			27
Total liabilities		3,493			7,911
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 12,997 shares (2023) and 12,797 shares (2022)		1,300			1,280
Capital in excess of par		7,950			7,912
Accumulated deficit		(3,461	)		(6,372	)
Total shareholders’ equity		5,789			2,820
Total liabilities and shareholders’ equity	$	9,282		$	10,731

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, 2022		12,797	$	1,280	$	7,912	$	(6,372	)	$	2,820
Stock-based compensation		-		-		7		-			7
Net income		-		-		-		369			369
Balance, March 31, 2023 (Unaudited)		12,797		1,280		7,919		(6,003	)		3,196
Stock-based compensation		200		20		30		-			50
Net loss		-		-		-		(453	)		(453	)
Balance, June 30, 2023 (Unaudited)		12,997	$	1,300	$	7,949	$	(6,456	)	$	2,793
Stock-based compensation		-		-		1		-			1
Net income		-		-		-		2,995			2,995
Balance, September 30, 2023 (Unaudited)		12,997	$	1,300	$	7,950	$	(3,461	)	$	5,789
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

See accompanying notes to these Condensed Consolidated Financial Statements.

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SCOTT’S LIQUID GOLD-INC. & SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

	Nine Months Ended
	September 30,
	2023			2022
Cash flows from operating activities:
Net income (loss)	$	2,911		$	(5,528	)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization		281			480
Gain on disposal of discontinued operations		(4,654	)		-
Stock-based compensation		58			113
Impairment of goodwill and intangible assets		-			3,589
Change in operating assets and liabilities:
Accounts receivable		915			1,725
Inventories		961			(612	)
Prepaid expenses and other assets		84			222
Income taxes receivable		239			73
Accounts payable, accrued expenses, and other liabilities		(842	)		(1,251	)
Total adjustments to net income (loss)		(2,958	)		4,339
Net cash used in operating activities		(47	)		(1,189	)
Cash flows from investing activities:
Proceeds from sale of discontinued operations		8,167			-
Purchase of software		-			(142	)
Net cash provided by (used in) investing activities		8,167			(142	)
Cash flows from financing activities:
Proceeds from term loans		250			-
Repayments of term loans		(1,250	)		(2,000	)
Proceeds from revolving credit facility		2,795			20,763
Repayments of revolving credit facility		(5,299	)		(18,563	)
Net cash (used in) provided by financing activities		(3,504	)		200
Net increase (decrease) in cash, cash equivalents, and restricted cash		4,616			(1,131	)
Cash, cash equivalents, and restricted cash, beginning of period		49			1,270
Cash, cash equivalents, and restricted cash, end of period	$	4,665		$	139
Supplemental disclosures:
Cash paid during the period for interest	$	132		$	256

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. Our business is comprised of one segment, household 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 September 15, 2023, we entered into and consummated a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Neoteric Beauty Holdings, LLC, a Delaware limited liability company (the “Neoteric Buyer”), pursuant to which the Company agreed to sell 100% of the outstanding stock of Neoteric Cosmetics, Inc. (“Neoteric”) to the Neoteric Buyer. Neoteric owned and operated the Denorex®, Zincon®, and Neoteric Diabetic Skin Care® brands. We have reflected the operations of the Neoteric brands as discontinued operations for all periods presented. The Neoteric brands were previously classified under our health and beauty care products segment. See Note 3 for further information.

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 Alpha® Skin Care brand (the "Alpha Purchase Agreement"). We have reflected the operations of the Alpha® Skin Care brand as discontinued operations for all periods presented. The Alpha product line was previously classified under our health and beauty care products segment. See Note 3 for further information.

Effective July 2023 we entered into, and in July 2023 closed, a 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 BIZ® brand. We have reflected the operations of the BIZ® brand as discontinued operations for all periods presented. The BIZ® product line was previously classified under our household products segment. See Note 3 for further information.

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® brand, including the Wood Care and Floor Restore products. We have reflected the operations of the Scott's Liquid Gold® brand as discontinued operations for all periods presented, which was previously classified under our household products segment. See Note 3 for further information.

On December 15, 2022, 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 Prell® product line. We have reflected the operations of the Prell® product line as discontinued operations for all periods presented, which was previously classified under our health and beauty care 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, 2023 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, 2022. The results of operations for the period ended September 30, 2023 are not necessarily indicative of the operating results for the full year and are unaudited. Certain prior year amounts have been reclassified to conform to the current period presentation.

5

(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, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

(e) Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents.
 

	September 30, 2023		December 31, 2022
Cash	$	4,415	$	49
Restricted Cash		250		-
	$	4,665	$	49

(f) Inventories Valuation and Reserves

Inventories can 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. Raw materials balance are sold to contract manufacturing partners based on production demand.

(g) Discontinued Operations

Disposal groups that meet the discontinued operations criteria by the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 205-20-45 are classified as discontinued operations and are excluded from continuing operations and segment results for all periods presented.

(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.

(i) Intangible Assets

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by 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.

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(j) Financial Instruments

Financial instruments which potentially subject us to concentrations of credit risk include cash and cash equivalents, restricted cash, and accounts receivable. We maintain our cash balances in the form of money market 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 and cash equivalents, 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 Operations 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, 2023 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, 2023 and 2022 was 0.2% and 0.7% 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, 2023 and December 31, 2022.

(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, 2023		December 31, 2022
Trade promotions	$	94	$	361
Allowance for doubtful accounts		14		59
	$	108	$	420

(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.

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(o) Operating Costs and Expenses Classification

Cost of sales includes costs associated with manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs, as well as warehousing and distribution costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions, and promotional costs. Freight-out costs included in selling expenses totaled $75 and $64 for the three months ended September 30, 2023 and 2022, respectively, and totaled $157 and $443 for the nine months ended September 30, 2023 and 2022, 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.

(p) Supplier Finance Programs

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer that uses supplier finance programs to make annual disclosures about the programs’ key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated roll-forward information. The guidance was effective for the Company beginning on January 1, 2023, except for the roll-forward information, which is effective beginning on January 1, 2024. This guidance has not had and is not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

During 2022, we entered into an agreement with a third-party financial institution and an agreement with an insurance agency which allows us to obtain extended payment terms for our insurance policies. The insurance policies can be canceled by the Company at any time with 10 days’ notice. The financial institution may cancel this agreement after providing 10 days’ notice if the Company does not pay any installment payment according to the terms of the agreement. We do not provide any forms of guarantees under these agreements. Payments of our obligations are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Outstanding confirmed amounts are $0 and $218 as of September 30, 2023 and December 31, 2022, respectively, which will be recognized on the Condensed Consolidated Financial Statements as payments are due.

(q) Recently Issued Accounting Standards

In October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, “Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

Note 2. Liquidity

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company has sustained significant losses from operations in several reporting periods since 2019. Absent any other action, the Company previously believed it would require additional liquidity to continue its operations over the next 12 months.

Due to the sales of our various brands as disclosed in Note 3 to the Condensed Consolidated Financial Statements, which generated $6,396 of cash in the third quarter of 2023, we have fully repaid all long-term debt as of July 2023. While, absent any other actions, our operating activities are still expected to result in negative cash flows, we now expect to have enough liquidity to finance operations for the next 12 months. Management has recently implemented actions to reduce the Company’s operating expenses through asset sales, consolidation of vendors, and personnel reductions. To further reduce operating losses, the Company is considering additional various strategic actions including asset sales, obtaining additional debt or equity financing (potentially in conjunction with mergers or acquisitions), 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 long-term liquidity needs and pursue its business plan. The Company expects that these strategic actions will further reduce expenses and provide required liquidity for ongoing operations.

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Note 3. Divestitures

Neoteric Cosmetics, Inc.

On September 15, 2023, we entered into and consummated a Stock Purchase Agreement with Neoteric Beauty Holdings, LLC, a Delaware limited liability company, pursuant to which the Company agreed to sell 100% of the outstanding stock of Neoteric Cosmetics, Inc to the Neoteric Buyer. Neoteric owned and operated the Denorex®, Zincon®, and Neoteric Diabetic Skin Care® brands. The closing consideration paid to the Company was $1,750, with an initial deposit of $175 paid on September 5, 2023. The operations of the Neoteric brands have been classified as income from discontinued operations for all periods presented. As part of the Stock Purchase Agreement, we agreed to maintain at least $250 in accounts at our primary bank for a period of nine months following closing which is designated as restricted cash on the Condensed Consolidated Balance Sheets. Concurrent with the entry into the Stock Purchase Agreement, the Company entered into a transition services agreement with the Neoteric Buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the Stock Purchase Agreement. This transition services agreement has a term of 90 days which can be extended by the Neoteric Buyer for up to three additional 30 day periods or extended as consented by both parties.

Alpha® Skin Care

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 Alpha® Skin Care brand. The Company received payments of $2,500 and $200 in July 2023 and August 2023, respectively, representing total consideration for the sale of the Alpha Skin Care brand in the amount of $2,700. The operations of Alpha® have been classified as income from discontinued operations for all periods presented. Concurrent with the entry into the Alpha® Purchase Agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the Alpha® Purchase Agreement. This transition services agreement has a term of 90 days which can be extended by the buyer for up to three additional 30 day periods or extended as consented by both parties.

BIZ®

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 BIZ® brand. The transactions contemplated by the BIZ® Purchase Agreement were consummated on July 7, 2023. The total consideration paid to us was $1,000, plus an amount equal to the value of the BIZ® inventory, valued at $946 as of the effective date of the agreement, subject to post-close adjustment. The operations of BIZ® have been classified as income from discontinued operations for all periods presented. Concurrent with the entry into the BIZ® Purchase Agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the BIZ® Purchase Agreement. This transition services agreement has a term of 90 days which can be extended by the buyer for up to three additional 30 day periods or extended as consented by both parties.

Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore

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. The Company may continue to use the name “Scott’s Liquid Gold” and “SLG” in a manner consistent with all past and current practices for a period of 1 year following the closing date of the asset purchase agreement, at which point the Company may only use the aforementioned names in connection with retaining records and other historical documentation. Concurrent with the entry into the asset purchase agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the asset purchase agreement. This transition services agreement concluded in accordance with the end of its term on July 22, 2023.

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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 was initially fully constrained and no amount was included in the results from discontinued operations. During the three months ended September 30, 2023, we assessed the variable consideration and concluded that the volatility of external factors continue to exist and, as a result, consideration for the Scott's Liquid Gold® Royalty continues 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® product lines as discontinued operations.

Prell®

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. Because the Prell® 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 Prell® Royalty was initially fully constrained and no amount was included in the results from discontinued operations. During the three months ended September 30, 2023, we assessed the variable consideration and concluded that the volatility of external factors continue to exist and, as a result, consideration continues 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 Prell® product line as discontinued operations. Concurrent with the entry into the asset purchase agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the asset purchase agreement. This transition services agreement concluded in accordance with the end of its term on June 15, 2023.

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:

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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, 2023
	Neoteric		Alpha®			BIZ®		Prell®		Scott's Liquid Gold®		Total
Net sales	$	592	$	-		$	-	$	-	$	-	$	592
Cost of sales		318		-			-		-		-		318
Gross profit		274		-			-		-		-		274
Operating expenses:
Selling		90		-			-		-		-		90
General and administrative		47		13			-		-		-		60
Intangible asset amortization		4		-			-		-		-		4
Operating income (loss) from discontinued operations		133		(13	)		-		-		-		120
Gain on sale of discontinued operations		1,501		1,585			781						3,867
Interest expense		-		-			-		-		-		-
Income from discontinued operations	$	1,634	$	1,572		$	781	$	-	$	-	$	3,987

	Three Months Ended September 30, 2022
	Neoteric		Alpha®			BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	494	$	131		$	1,179		$	903		$	837		$	3,544
Cost of sales		172		(18	)		958			540			387			2,039
Gross profit		322		149			221			363			450			1,505
Operating expenses:
Selling		108		63			384			261			192			1,008
Intangible asset amortization		4		-			6			12			-			22
Operating income (loss) from discontinued operations		210		86			(169	)		90			258			475
Interest expense		-		-			(44	)		(14	)		(54	)		(112	)
Income (loss) from discontinued operations	$	210	$	86		$	(213	)	$	76		$	204		$	363

	Nine Months Ended September 30, 2023
	Neoteric		Alpha®		BIZ®			Prell®		Scott's Liquid Gold®			Total
Net sales	$	2,144	$	879	$	2,164		$	-	$	187		$	5,374
Cost of sales		1,132		278		1,510			-		95			3,015
Gross profit		1,012		601		654			-		92			2,359
Operating expenses:
Selling		342		141		437			-		28			948
General and administrative		47		22		12			-		22			103
Intangible asset amortization		14		-		12			-		-			26
Operating income from discontinued operations		609		438		193			-		42			1,282
Interest expense		-		-		(88	)		-		(18	)		(106	)
Gain on sale of discontinued operations		1,501		1,585		781			-		787			4,654
Income from discontinued operations	$	2,110	$	2,023	$	886		$	-	$	811		$	5,830

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	Nine Months Ended September 30, 2022
	Neoteric		Alpha®		BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	1,906	$	1,982	$	3,602		$	2,494		$	3,150		$	13,134
Cost of sales		843		659		2,665			1,506			1,409			7,082
Gross profit		1,063		1,323		937			988			1,741			6,052
Operating expenses:
Selling		374		344		1,061			753			681			3,213
Intangible asset amortization		15		-		18			36			-			69
Operating income (loss) from discontinued operations		674		979		(142	)		199			1,060			2,770
Interest expense		-		-		(132	)		(42	)		(162	)		(336	)
Income (loss) from discontinued operations	$	674	$	979	$	(274	)	$	157		$	898		$	2,434

There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the nine months ended September 30, 2023 and 2022, respectively.

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

	December 31, 2022
	Neoteric®		Alpha®		BIZ®		Scott's Liquid Gold®		Total
Assets
Current assets:
Inventories	$	322	$	1,268	$	1,092	$	1,235	$	3,917
Intangible assets, net		113		-		231		-	$	344
Assets of discontinued operations	$	435	$	1,268	$	1,323	$	1,235	$	4,261

There were no assets of discontinued operations related to Prell® in the above table. There were no assets of discontinued operations related to Prell®, Scott's Liquid Gold®, BIZ®, Alpha®, and Neoteric as of September 30, 2023.

The following summarizes the carrying values of assets and the resulting in the gain on sale of discontinued operations associated with Neoteric, Alpha®, BIZ®, and Scott's Liquid Gold® at the date of disposition:

	Neoteric		Alpha®		BIZ®		Scott's Liquid Gold®		Total
Inventories	$	150	$	1,115	$	946	$	1,149	$	3,360
Trade names		59		-		145		-		204
Formulas		40		-		71		-		111
Non-compete agreement		-		-		3		-		3
Intangible assets, net		99		-		219		-		318
Proceeds from sale		1,750		2,700		1,946		1,936		8,332
Gain on sale of discontinued operations	$	1,501	$	1,585	$	781	$	787	$	4,654

Note 4. Stock-Based Compensation

On May 11, 2023, we granted 200,000 shares of restricted stock to two directors all of which vested on the grant date with a fair value of $40.

On March 2, 2022, we granted 15,000 shares of restricted stock to one executive all of which vested on the grant date with a fair value of $18.

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On January 18, 2022, we granted 25,000 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.

Compensation cost related to stock options totaled $0 and $10 in the nine months ended September 30, 2023 and 2022, 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 $58 and $103 for the nine months ended September 30, 2023 and 2022, respectively. Approximately $38 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 is excluded for periods in which the impact is anti-dilutive and when the Company has a net loss because the impact is also anti-dilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Common shares outstanding, beginning of the period		12,997		12,749		12,797		12,727
Weighted average common shares issued		-		-		104		20
Weighted average number of common shares outstanding		12,997		12,749		12,901		12,747
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,997		12,749		12,901		12,747

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

	Three Months and Nine Months Ended September 30,
	2023		2022
Stock options		56		153
Restricted stock units		20		88

Note 6. Segment Information

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

In the third quarter of 2023, in conjunction with the divestitures brands, the Company determined it has one reportable segment. These divestitures are described in Note 3.

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Note 7. Intangible Assets

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use, consisted of the following:

	As of September 30, 2023						As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Internal-use software		898		240		658		898		105		793

Amortization expense for the three months ended September 30, 2023 and 2022 was $45 and $65, respectively. Amortization expense for the nine months ended September 30, 2023 and 2022 was $135 and $313, respectively.

Estimated amortization expense for 2023 and subsequent years is as follows:
 

Remainder of 2023	$	45
2024		180
2025		180
2026		180
2027		73
Total	$	658

Note 8. Long-Term Debt

UMB Loan Agreement

On July 1, 2020, we entered into a Loan and Security Agreement (as amended, the “UMB Loan Agreement”) with UMB Bank, N.A. Under the UMB Loan Agreement we obtained a $3,000 term loan, with equal monthly payments fully amortized over three years which was repaid in full in the second quarter of 2022, and a revolving credit facility, with a maximum commitment of $4,000 bearing interest at the one-month term SOFR rate + 6.83% with a floor of 7.75%.

The UMB Loan Agreement was terminated on February 27, 2023 and the revolving credit facility was paid in full on February 28, 2023. The loans were secured by all of the assets of the Company and its subsidiaries. Unamortized loan costs were $0 and $100 as of September 30, 2023 and December 31, 2022, respectively. Amortization of loan costs for the nine months ended September 30, 2023 was $100, including $83 that were expensed as a result of the termination of the UMB Loan Agreement. Amortization of loan costs for the nine months ended September 30, 2022 was $99.

La Plata Loan Agreement

On November 9, 2021, we entered into a loan and security agreement (as amended, 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 $250 term loan that bears interest at 15%. We repaid $1,000 of principal against the La Plata Loan Agreement during the first quarter of 2022.

Unamortized loan costs were $0 and $20 as of September 30, 2023 and December 31, 2022, respectively. Amortization of loan costs for the nine months ended September 30, 2023 and 2022 were $20 and $26, respectively.

On July 7, 2023, the La Plata term loans were paid in full and the La Plata Loan Agreement was terminated.
 

Note 9. Leases

We have entered into a lease for our corporate headquarters with a remaining lease term of 7 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.

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Information related to leases was as follows:

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Operating lease information:
Operating lease cost	$	101		$	304
Operating cash flows from operating leases		101			304
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		7.17			7.17
Weighted average discount rate		5.1	%		5.1	%

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Operating lease information:
Operating lease cost	$	100		$	200
Operating cash flows from operating leases		100			200
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 2023	$	102
2024		413
2025		420
2026		427
2027		434
Thereafter		1,305
Total minimum lease payments	$	3,101
Less imputed interest		(520	)
Total operating lease liability	$	2,581

Note 10. Subsequent Events

Related Party Transactions

In October 2023, the Company agreed to reimburse Maran Capital Management, LLC ("Maran") $200 for certain legal and other expenses incurred by Maran related to the Company between February 2021 and September 2023 and in consideration of the significant support received by the Company from Maran in sourcing, structuring, and negotiating the various asset divestitures aforementioned in Note 3 to the Condensed Consolidated Financial Statements.

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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, 2022. 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, 2022 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 have developed, marketed, and sold high-quality, high-value household products nationally and internationally to mass merchandisers, drugstores, supermarkets, hardware stores, e-commerce retailers, other retail outlets, and to wholesale distributors.

Primarily due to increases in costs associated with the manufacture and distribution of our products, the Company has experienced negative cash flows from operations for several reporting periods. In efforts to improve our financial position and liquidity, the Company has pursued asset sales of certain brands where management has determined that the brand(s) are not aligned with our long-term goals for growth and profitability.

The Company is considering a wide range of options, including one or more of the following: the sale of additional brands; a sale, merger, or other strategic transaction involving the entire company; acquisitions of other brands or companies; issuance of additional debt or equity; and continuing to operate as a public, independent company. We continue to operate our pet care brands, which is a product category we believe to have potential for organic or inorganic future growth opportunities.

Divestitures

On September 15, 2023, we entered into and consummated a Stock Purchase Agreement with a buyer to sell 100% of the outstanding stock of Neoteric. Effective June 30, 2023, and closed in July 2023, we sold the Alpha® Skin Care product line to a company that markets and distributes skin care products. Effective June 30, 2023, and closed in July 2023, we sold the BIZ® product line to a company that markets and distributes laundry products. On January 23, 2023, we sold the Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore product lines to a company that markets and distributes wood care products. On December 15, 2022, we sold the Prell® brand to a company that markets and distributes natural hair and skincare products. We have reflected the operations of Alpha® Skin Care, BIZ®, Scott's Liquid Gold® and Prell® as discontinued operations for all periods presented.

See Note 3 - “Discontinued Operations and Assets Held for Sale” in the Notes to Condensed Consolidated Financial Statements for further information on the sale of these brands.

In conjunction with the sale of the Scott’s Liquid Gold® brand, as discussed below, the Company may continue to use names “Scott’s Liquid Gold” and “SLG” for up to one year following the closing date of the agreement on January 23, 2023. Following this transitional name period, the Company will only be able to use the aforementioned names in connection with retaining records and other historical or archived documents and any use required by or permitted as a fair use or otherwise under applicable law.

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Results of Operations

Three months ended September 30, 2023 compared to three months ended September 30, 2022

	Three Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2023			2022			$			%
Net sales	$	907		$	733		$	174			23.7	%
Cost of sales		552			319			233			73.0	%
Gross profit		355			414			(59	)		(14.3	%)
Gross margin		39.1	%		56.5	%
Operating expenses:
Advertising		89			166			(77	)		(46.4	%)
Selling		382			606			(224	)		(37.0	%)
General and administrative		811			655			156			23.8	%
Intangible asset amortization		45			65			(20	)		(30.8	%)
Total operating expenses		1,327			1,492			(165	)		(11.1	%)
Loss from operations		(972	)		(1,078	)		106			9.8	%
Interest expense		(32	)		(27	)		(5	)		(18.5	%)
Interest income		16			-			16			100.0	%
Loss before income taxes and discontinued operations		(988	)		(1,105	)		117			10.6	%
Income tax expense		(4	)		(2	)		(2	)		(100.0	%)
Loss from continuing operations		(992	)		(1,107	)		115			10.4	%
Income from discontinued operations		3,987			363			3,624			998.3	%
Net income (loss)	$	2,995		$	(744	)	$	3,739			502.6	%

Our operating results were primarily impacted by the following:

•Increases in net sales and cost of sales are due to increased distribution of our products sold at existing and certain new customers. The decrease in gross profit and gross margin are primarily due to higher costs from our manufacturers and a change in the mix of our product sales to customers.

•Decrease in advertising expenses is primarily due to a reduction in personnel costs related to the creation of advertising materials due to asset divestitures.

•Decrease in selling expenses is primarily due to lower logistics and warehousing costs from a consolidation of our third-party logistics partners, and a reduction in personnel costs related to asset divestitures.

•Increased general and administrative costs primarily due to increase in performance-related incentives for personnel and professional expenses related to strategic initiatives.

•Decreased intangible asset amortization from reduced carrying amounts related to impairments recognized in 2022.

•Results from discontinued operations, which are disclosed in Note 3 to the Condensed Consolidated Financial Statements.

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Nine months ended September 30, 2023 compared to nine months ended September 30, 2022
 

	Nine Months Ended September 30, (in thousands)
							Increase / (Decrease)
	2023			2022			$			%
Net sales	$	2,623		$	2,315		$	308			13.3	%
Cost of sales		1,564			1,255			309			24.6	%
Gross profit		1,059			1,060			(1	)		(0.1	%)
Gross margin		40.4	%		45.8	%
Operating expenses:
Advertising		363			492			(129	)		(26.2	%)
Selling		1,276			2,326			(1,050	)		(45.1	%)
General and administrative		2,069			2,164			(95	)		(4.4	%)
Intangible asset amortization		135			313			(178	)		(56.9	%)
Impairment of goodwill and intangible assets		-			3,589			(3,589	)		(100.0	%)
Total operating expenses		3,843			8,884			(5,041	)		(56.7	%)
Loss from operations		(2,784	)		(7,824	)		5,040			64.4	%
Interest expense		(145	)		(83	)		(62	)		(74.7	%)
Interest income		16			-			16			100.0	%
Loss before income taxes and discontinued operations		(2,913	)		(7,907	)		4,994			63.2	%
Income tax expense		(6	)		(55	)		49			89.1	%
Loss from continuing operations		(2,919	)		(7,962	)		5,043			63.3	%
Income from discontinued operations		5,830			2,434			3,396			139.5	%
Net income (loss)	$	2,911		$	(5,528	)	$	8,439			152.7	%

Our operating results were primarily impacted by the following:

•Increases in net sales and cost of sales are due to increased distribution of our products sold at existing and certain new customers. The decrease in gross profit and gross margin are primarily due to higher costs from our manufacturers and a change in the mix of our product sales to customers.

•Decrease in advertising expenses is primarily due to a reduction in personnel costs related to the creation of advertising materials due to asset divestitures.

•Decrease in selling expenses is primarily due to lower logistics and warehousing costs from a consolidation of our third-party logistics partners, and a reduction in personnel costs related to asset divestitures.

•Decreased general and administrative costs primarily due to lower bank charges from the termination of our UMB Loan Agreement and reduced personnel costs, which are offset by performance-related incentives for personnel and professional expenses related to strategic initiatives.

•Decreased intangible asset amortization from reduced carrying amounts related to impairments recognized in 2022.

•Results from discontinued operations, which are disclosed in Note 3 to the Condensed Consolidated Financial Statements.

Liquidity and Capital Resources

Overview

Our primary sources of funds include cash from the sales of assets and cash from operating activities. Our principal uses of cash are to fund planned operating expenditures as well as historical debt paydown. Working capital movements are influenced by the sourcing of materials related to the production of products.

Financing Agreements

Please see Note 8 to our Condensed Consolidated Financial Statements for information on our La Plata Loan Agreement, which was satisfied and terminated in July 2023, and our UMB Loan Agreement, which was satisfied and terminated in February 2023.

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Liquidity and Changes in Cash Flows

At September 30, 2023, we had approximately $4,665 in cash on hand, an increase of $4,616 from December 31, 2022.

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)
	2023			2022			$			%
Operating activities	$	(47	)	$	(1,189	)	$	1,142			96.0	%
Investing activities		8,167			(142	)		8,309			5,851.4	%
Financing activities		(3,504	)		200			(3,704	)		(1,852.0	%)

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

•Net cash provided by investing activities was due to the sale of our Scott's Liquid Gold®, Biz®, Alpha® Skin Care and Neoteric brands.

•Net cash used in financing activities was from repayments and termination of our UMB and La Plata Loan Agreements.

The cash received from the sales of our BIZ® and Alpha® Skin Care brands in July 2023 was $3,700 and was partially used to pay off and terminate our La Plata Loan Agreement. Cash proceeds from the sale of Neoteric will be used to fund operations as we seek to grow our existing business or pursue other strategic transactions. While we believe that our current cash reserves represent sufficient cash to fund our operations, 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. We expect that our current cash reserves will be sufficient to meet operational cash needs during the next twelve months, but further economic impacts to our sales to customers or supply chain disruptions in the short-term could impact our liquidity.
 

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

An evaluation was performed as of September 30, 2023, 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 in our internal controls resulting from our finance department not being able to process and account for complex, non-routine transactions in accordance with GAAP. Management concluded that we lack a sufficient number of trained professionals with technical accounting expertise to process and account for complex and non-routine transactions. We believe the actions described in the Company's Quarterly Report on Form 10-Q for the period ended June 30, 2023 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

There was no change in our internal control over financial reporting during the three months ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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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 our finance department lacking a sufficient number of trained professionals with technical accounting expertise to process and account for complex, non-routine transactions in accordance with GAAP as of June 30, 2023.

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, 2022 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
10.1	Stock Purchase Agreement, by and among the Company, Neoteric Cosmetics, Inc. and Neoteric Beauty Holdings, LLC dated September 15, 2023
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 XBRL tags 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.

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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 7, 2023

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EX-10.1

EXHIBIT 10.1

STOCK PURCHASE AGREEMENT

This Stock Purchase Agreement (this “Agreement”), dated as of September 15, 2023, is by and among Neoteric Beauty Holdings, LLC, a Delaware limited liability company (“Buyer”), Neoteric Cosmetics, Inc., a corporation organized and existing under the laws of the State of Colorado (the “Company”), and Scott’s Liquid Gold-Inc., a corporation organized and existing under the laws of the State of Colorado (“Seller”). Buyer and Seller shall be collectively referred to herein as the “Parties” and, each, individually, a “Party.”

RECITALS

A.Seller owns all of the issued and outstanding capital stock of the Company (the “Company Stock”).

B.The Company owns and operates, including the commercialization and sale, and manufacturing (through third parties) of products under, the following brands: Denorex, Zincon, and Neoteric Diabetic(collectively, the “Business”).

C.Buyer desires to acquire from Seller, and Seller desires to sell to Buyer at the Closing, all of the Company Stock, upon the terms and subject to the conditions set forth in this Agreement, as a result of which, the Company will, at the Closing, become a wholly-owned subsidiary of Buyer.

D.Concurrently with the execution and delivery of this Agreement and as a condition to the willingness of Buyer to enter into this Agreement, Seller will enter into a Transition Services Agreement with Buyer, as more particularly described herein.

NOW, THEREFORE, in consideration of the foregoing recitals, which are hereby incorporated in this Agreement, the mutual promises made herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby expressly acknowledged, the Parties, intending to be legally bound hereby, agree as follows.

AGREEMENT

1.PURCHASE AND SALE OF STOCK.

1.1.Purchase and Sale of Company Stock. Upon the terms and subject to the conditions set forth in this Agreement, at the Closing, Seller shall sell, transfer, assign and convey to Buyer, and Buyer shall purchase and accept from Seller, all of Seller’s rights, title and interest in and to the Company Stock, free and clear of all Encumbrances, except for restrictions on resale pursuant to applicable state and federal securities laws. At the Closing, Seller shall deliver to Buyer one or more stock certificates representing the Company Stock, duly endorsed in blank or with duly executed stock powers attached, against payment by Buyer of the Purchase Price.

1.2.Purchase Price. The purchase price for the Company Stock (the “Purchase Price”) shall be One Million Seven Hundred and Fifty Thousand Dollars ($1,750,000), payable in accordance with the terms of this Agreement. The Purchase Price shall be paid on the Closing Date to Seller, less the deposit(s) paid by (or on behalf of) Buyer to Seller prior to the date herein as an advance to the Purchase Price, by wire transfer of immediately available funds to an account designated by Seller in writing to Buyer.

1.3.Withholding. Notwithstanding any other provision in this Agreement, Buyer and the Company shall have the right to deduct and withhold any required Taxes from any payments to be made hereunder. To the extent that amounts are so withheld, such withheld amounts shall be paid to the appropriate taxing authority and shall be treated for all purposes of this Agreement as having been delivered and paid to the applicable Person in respect of which such deduction and withholding was made.

2.CLOSING.

2.1.Closing. Subject to the terms and conditions of this Agreement, the closing of the transactions contemplated by this Agreement (the “Closing”) shall take place on the date hereof by means of an electronic closing in which the closing documentation will be delivered by electronic mail exchange of signature pages in PDF or functionally equivalent electronic format, which delivery will be effective without any further physical exchange of the original copies. The Closing will be deemed effective as of 12:01 a.m. U.S. Eastern time on the date hereof (the “Closing Date”).

2.2.Seller’s Closing Deliveries. At Closing, Seller shall deliver, or cause to be delivered, to Buyer each of the following, as applicable:

2.2.1.a certificate or certificates evidencing the Company Stock, duly endorsed in blank or accompanied by any other proper instrument of assignment endorsed in blank in proper form for transfer;

2.2.2.a certificate of the Secretary or other officer of the Company certifying the corporate charter and bylaws of the Company;

2.2.3.a transition services agreement by and between Buyer and Seller, wherein Seller agrees to provide certain services that will allow Buyer to successfully and efficiently transfer the Business, duly executed by Seller, all in form and substance reasonably satisfactory to Buyer (the “Transition Services Agreement”);

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2.2.4.a copy of all resolutions adopted by the board of directors (or other similar governing body) of Seller, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby;

2.2.5.a copy of a certificate of good standing of Seller and the Company, in each case issued by the Colorado Secretary of State;

2.2.6.a duly completed and executed IRS Form W-9 of Seller;

2.2.7.the duly completed and executed 338(h)(10) Election Forms;

2.2.8.the resignations of the directors and officers of the Company;

2.2.9.evidence in form and substance reasonably satisfactory to Buyer that all required third-party consents have been received and that no such consents have been revoked; and

2.2.10.such other instruments as shall be reasonably requested by Buyer to carry out the transactions described herein.

2.3.Buyer’s Closing Deliveries. At Closing, Buyer shall deliver, or cause to be delivered, to Seller:

2.3.1.the Purchase Price;

2.3.2.the Transition Services Agreement, duly executed by Buyer;

2.3.3.a copy of a certificate of good standing of Buyer issued by the Delaware Secretary of State;

2.3.4.a copy of all resolutions adopted by the manager(s) (or other similar governing body) of Buyer, authorizing the execution delivery and performance of this Agreement and the consummation of the transactions contemplated hereby; and

2.3.5.such other instruments as shall be reasonably requested by Seller to carry out the transactions described herein.

3.Representations and Warranties.

3.1.Seller’s Representations and Warranties. Seller represents and warrants to Buyer that, except as otherwise set forth in the disclosure schedules attached hereto(the

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“Disclosure Schedules”), the following representations and warranties are true and correct as of the Closing Date:

3.1.1.Execution and Effect of Agreement. Seller has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby and no other corporate proceeding on the part of the Seller is necessary to authorize this Agreement and the other Transaction Documents to which it is a party. The execution and delivery by Seller of this Agreement and the other Transaction Documents to which it is a party and the consummation by Seller of the transactions contemplated hereby and thereby have been duly authorized by Seller and will not violate, breach, cause a default under, or otherwise give rise to a right of termination, cancellation or acceleration with respect to (presently, with the giving of notice, or with the passage of time), any agreement, contract or instrument to which Seller is a party or by which any of its assets are bound; or result in the creation or imposition of any Encumbrance (as defined below) upon any Purchased Asset (as defined below) or other material asset of Seller. This Agreement has been, and the other Transaction Documents to which Seller is a party will be, duly executed and delivered by Seller and constitutes or, when executed by Seller, will constitute the legal, valid and binding obligation of Seller, enforceable against Seller in accordance with their respective terms.

3.1.2.Seller Organization and Good Standing; Binding Obligation. Seller is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado. Seller has all requisite power, and the general power to execute and deliver this Agreement and the other Transaction Documents to which it is a party and to perform its obligations hereunder and thereunder (including, without limitation, all right, power, capacity, and authority to sell, transfer, convey, and surrender the Company Stock as provided by this Agreement free and clear of all Encumbrances, other than Encumbrances imposed by applicable federal and state securities law restrictions). All action necessary to authorize the execution and delivery by Seller of this Agreement and the other Transaction Documents to which it is a party and other documents required to be executed, and delivered, by Seller hereunder and thereunder, and the performance of each of its obligations hereunder and thereunder, have been duly authorized and taken.

3.1.3.Company Organization and Good Standing; Binding Obligation. The Company is a corporation duly organized, validly existing, and in good standing under the laws of the State of Colorado and is in good standing in each jurisdiction where the nature of its business in such jurisdiction requires it to be so qualified. The Company has all requisite power, and the general power to own, lease, and operate its properties and assets and to carry on operations

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relating to the Business as now conducted, and to enter into this Agreement and the other Transaction Documents to which it is a party and perform all of its obligations hereunder and thereunder.

3.1.4.Ownership of Company Stock; Capitalization.

3.1.4.1.Seller is the record and beneficial owner of all outstanding shares of Company Stock, free and clear of any Encumbrances other than restrictions on resale imposed by applicable federal and state securities law restrictions and, upon delivery of and payment of the Purchase Price for such Company Stock as herein provided, Buyer will acquire good and valid title thereto, free and clear of any Encumbrances, other than restrictions on resale imposed by applicable federal and state securities law restrictions.

3.1.4.2.The authorized capital stock of the Company consists of 100 shares of common stock, no par value per share. As of the date hereof, 100 shares of common stock were issued and outstanding and all of which shares of common stock are owned by Seller.

3.1.4.3.All of the shares of Company Stock outstanding are duly authorized and validly issued, fully paid and nonassessable and free of preemptive rights.

3.1.4.4.Except for the 100 shares of common stock of the Company owned by Seller, there are no outstanding shares of capital stock of, or other equity or voting or non-voting interest in, the Company, and no outstanding (i) securities of the Company convertible into or exchangeable for shares of capital stock or voting or non-voting securities or ownership interests in the Company, (ii) options, warrants, rights or other agreements or commitments to acquire from the Company, or obligations of the Company to issue, any capital stock, voting or non-voting securities or other equity ownership interests in (or securities convertible into or exchangeable for capital stock or voting or non-voting securities or other equity ownership interests in) the Company, (iii) obligations of the Company to grant, extend or enter into any subscription, warrant, right, convertible or exchangeable security or other similar agreement or commitment relating to any capital stock, voting or non-voting securities or other ownership interests in the Company or any phantom equity or similar instrument in the Company, or (iv) obligations (excluding Taxes and other fees) by the Company to make any payments based on the market price or value of the Stock. As of the date of this Agreement, the Company has no outstanding obligations to purchase, redeem or

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otherwise acquire any securities described in clauses (i), (ii) and (iii) hereof.

3.1.5.No Subsidiaries. The Company has no subsidiaries.

3.1.6.Business Financial Statements. Schedule 3.1.6 contains true and complete copies of the unaudited gross sales, gross profit , and Net Brand Contribution of the Business for the fiscal years ended 2020, 2021 and 2022 and the six (6) month period ended June 30, 2023, and the accounts receivable, product inventory and accounts payable of the Business for the fiscal year ended December 31, 2022 and the six (6) month period ended June 30, 2023 (collectively, the “Business Financial Statements”). The Business Financial Statements are based on the books and records of the Business, and fairly present the financial condition of the Business in all material respects as of the respective dates they were prepared and the results of the operations of the Business for the periods indicated. The calculation of net sales set forth in the Business Financial Statements (i) was prepared in accordance with GAAP; (ii) presents fairly, in all material respects, as applicable, such net sales and Net Brand Contribution of the Business in accordance with Seller’s and the Company’s accounting principles, practices, methodologies and policies, at the applicable date specified in the Business Financial Statements; and (iii) is derived from the applicable financial statements of Seller and its Subsidiaries (including the Company). “Net Brand Contribution” means, for any particular period, an amount equal to the sum of (a) the gross sales of the Business for such period, minus (b) the following costs and expenses of the Business for such period, in each case, as set forth as line items in the Business Financial Statements: (1) cash discounts; (2) returns and allowances; (3) in-store or other retailer specific promotion expenses; (4) cost of goods sold including merchandise costs, freight-in and overhead allocation; (5) warehouse expense; (6) freight-out expense; (7) sales and broker commissions; and (7) advertising, marketing and promotion expense. To the extent that such costs and expenses as referenced in the prior sentence are not direct, cash costs and expenses, such costs and expenses have been allocated based on a good faith methodology by Seller, which was consistently applied.

3.1.7.Liabilities. The Company has no Liabilities, other than accounts payable and accrued expenses incurred by the Company in the ordinary course of business and that are set forth on Schedule 3.1.7 (and which accounts payable and accrued expenses will be borne and paid for by the Seller in accordance with the terms of the Transition Services Agreement).

3.1.8.Title to Purchased Assets. The Company has good and valid title to all of its properties and assets (collectively, the “Purchased Assets”), including those properties and assets exceeding $10,000 in valuethat are listed on Schedule

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3.1.8, in any case, free and clear of all Encumbrances other than Permitted Encumbrances. The Purchased Assets constitute all of the material assets used in or held for use in operation of the Business and are sufficient for Buyer to conduct the Business from and after the Closing Date. The Purchased Assets will allow Buyer to operate the Business without interruption and in the ordinary course of business consistent with past practice, as it has been conducted by the Company. Without limiting the foregoing, neither Seller nor any subsidiary thereof (excluding the Company) shares any assets or services with the Company.

3.1.9.Product Liability. Since December 31, 2019, there have been no product Liability claims against Seller or the Company with respect to any defect or alleged defect in any Product of the Business.

3.1.10.Markdowns and Allowances. Schedule 3.1.10 sets forth all Liabilities, to the Knowledge of Seller, arising from or relating to “markdowns” or allowances of Products for which Seller or the Company agreed prior to Closing to give a “markdown” or an allowance, excluding any such “markdowns” or “allowances” of $10,000, in the aggregate.

3.1.11.Recalls. Since December 31, 2019, there have been no recalls of any Products. As of the date of this Agreement, no recall or post-sale notice or warning is pending or, to the Knowledge of Seller, threatened in connection with any Product.

3.1.12.Affiliate Transactions. Except as set forth on Schedule 3.1.12, no officer, director, equity holder or Affiliate of Seller or the Company (or any Affiliate of any of the foregoing Persons) is a party to any Contract or owns any property used in the operation of the Business, and, immediately after the Closing, none of Seller or any of its Affiliates shall be party to any Contract.

3.1.13.Compliance with Law. Since December 31, 2019, each of Seller and the Company has complied in all material respects with and has operated the Business in compliance in all material respects with all applicable Laws, including all applicable environmental Laws applicable to ownership and use of the Purchased Assets. Since December 31, 2019, neither Seller nor the Company has received written notice of any violation of any law, rule or regulation of any federal, state, county, city or foreign government or any agency, body or subdivision thereof with respect to the Business, including, but not limited to, the Federal Food, Drug, and Cosmetic Act (and the Food and Drug Administration’s implementing regulations concerning cosmetic labeling and product quality requirements), California’s Proposition 65 (or the Safe Drinking Water and Toxic Enforcement Act of 1986), the Federal Trade

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Commission Act, and the Fair Packaging and Labeling Act, that has not been resolved to the satisfaction of the issuer of the notice.

3.1.14.Intellectual Property.

3.1.14.1.Schedule 3.1.14.1(a) contains a complete and correct list of (a) each Intellectual Property Asset that is registered, issued or subject to a pending application for registration or issuance with a Governmental Authority or domain name registrar (“Registered Intellectual Property Asset”), in each case enumerating the applicable filing or registration number, title, registrar, jurisdiction, date of filing/issuance and current applicant(s)/registered owner(s), as applicable, and (b) all material unregistered Intellectual Property Assets. Failure to list an item in Schedule 3.1.14.1(a) shall not mean that the omitted item is not a Registered Intellectual Property Asset or a material unregistered Intellectual Property Asset. Schedule 3.1.14.1(a) describes, with respect to each applicable Registered Intellectual Property Asset, the current status of any pending applications, registrations and filings. Except as set forth in Schedule 3.1.14.1(b), all assignments, if any, of the Registered Intellectual Property Assets to the Company have been properly executed and recorded with the appropriate Governmental Authority or domain name registrar. Company acknowledges it may still own other active trademark filings globally for NEOTERIC and DENOREX-formative marks not included in Schedule 3.1.14.1(a). Company agrees to execute and deliver additional documents and take such other actions as Buyer may reasonably request in order to record its ownership of those trademarks or to register its rights in those trademarks globally. Further, to the extent Buyer elects to cancel any existing filings in order to protect its rights in certain countries, Company will take no action in the event of any such cancellation by Buyer and allow the associated filing to lapse. Further, Company agrees not to use or file for NEOTERIC, DENOREX, ZINCON or any confusingly similar mark as a trademark anywhere in the world, and not to challenge any action by Buyer to acquire, register or record its rights in those marks globally.

3.1.14.2.The conduct of the Business, as now conducted or as currently proposed to be conducted, including the use, sale, offering for sale, making, distribution, importation, exportation, licensing or sublicensing of the Products by the Company, does not and did not since December 31, 2018 infringe upon or misappropriate any Intellectual Property Right of any other Person and since December 31, 2018, neither Seller nor the Company has received any written

8

charge, complaint, claim, demand or notice alleging any such infringement or misappropriation arising out of the operation of the Business (including any claim or offer that Seller or the Company must license or refrain from using all or any portion of the Intellectual Property Assets). To Seller’s Knowledge, no such charge, complaint, claim, demand, notice or offer has been made to the Company orally.

3.1.14.3.Since December 31, 2018, there has been no unauthorized use, infringement or misappropriation of any Intellectual Property Asset by any Person, including any employees and former employees, consultants, customers or suppliers of the Company.

3.1.14.4.The Intellectual Property Assets consist solely of items and rights which are owned solely by the Company.

3.1.14.5.Since December 31, 2019, all invention, creation, development, design and modification of the Intellectual Property Assets was undertaken by either current or former employees of the Company within the scope of their employment, all of whom have executed proprietary information and confidentiality agreements in favor of the Company on customary terms, and prior to December 31, 2019, all current or former employees of the Company who were materially involved in the research or development of any Product executed proprietary information and confidentiality agreements in favor of the Company on customary terms. No current or former employee, consultant or independent contractor has asserted, and no such party has any right, title, interest or other claim in, or the right to receive any royalties or other consideration with respect to, any Intellectual Property Assets.

3.1.14.6.All Registered Intellectual Property Assets that are registered or issued are valid, enforceable and subsisting, in good standing, with all fees, payments and filings due as of the Closing Date duly made. Schedule 3.1.14.6 sets forth any proceedings or actions before any court, tribunal (including the U.S. Patent and Trademark Office or equivalent foreign authority) related to the Registered Intellectual Property Assets, and any actions that must be taken within 180 days after the Closing for the purposes of obtaining, maintaining, perfecting or preserving or renewing any Registered Intellectual Property Asset, including the payment of any registration, maintenance or renewal fees or the filing of any responses to office actions, documents, applications or certificates. The Company (a) has made, or caused to be made, all filings required to vest ownership

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of all Registered Intellectual Property Assets in the Company, and (b) has not granted any third party any right in or to, or license under, or any covenant or other agreement not to sue, enforce or co-exist, with respect to any of the Intellectual Property Assets.

3.1.14.7.With respect to each Intellectual Property Asset, (a) the Company possesses all right, title and interest in and to such Intellectual Property Asset, free and clear of all Encumbrances other than Permitted Encumbrances; (b) such Intellectual Property Asset is not subject to any outstanding injunction, judgment, order, decree, ruling or charge affecting the Company’s use or ownership of or the validity or enforceability of such Intellectual Property Asset; and (c) no Action is pending or, to the Knowledge of Seller, is threatened that challenges the use, validity, enforceability or the Company’s ownership of such Intellectual Property Asset.

3.1.14.8.Seller and the Company have used commercially reasonable efforts to prevent unauthorized disclosure of each Intellectual Property Asset that the Company currently uses in the operation of the Business and that derives its value from being kept in confidence. All Intellectual Property Assets that are trade secrets are not part of the public domain and have not been divulged or appropriated by any other Person, and have not been used for the benefit of any Person other than the Company. The Company has taken reasonable precautions to protect the secrecy, confidentiality and value of all such Intellectual Property Assets (including the enforcement by the Company of a policy requiring each employee or contractor having access to such Intellectual Property Assets to execute proprietary information and confidentiality agreements substantially in the Company’s standard form, and all current and former employees and contractors of Seller afforded such access have executed such an agreement). To Seller’s Knowledge, no trade secrets have been disclosed other than to the respective employees, representatives and agents of the Company or of any of its affiliates, all of whom are bound by written confidentiality agreements or are otherwise under obligations of confidentiality prohibiting disclosure and misuse of the same.

3.1.14.9.Each Intellectual Property Asset will be owned and available for use by Buyer on identical terms and conditions immediately after the Closing as immediately prior to the Closing. The consummation of the transactions contemplated herein will not give rise under any circumstances to any license, transfer, assignment, grant of rights, restriction, encumbrance, covenant, obligation or transaction with

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any third party that relates in any way to any Intellectual Property Assets, nor to any obligation to license, transfer, assign, grant rights under, grant any encumbrance, incur any obligation or enter into any other transaction with any third party that relates in any way to any Intellectual Property Assets. All Intellectual Property Assets are fully transferable, alienable and licensable by the Company without restriction and without payment of any kind to any other Person.

3.1.14.10.All Products and packaging materials used by the Company in the Business, and packaging of the Products, comply with all applicable Laws, including those relating to the marking and identification of Intellectual Property Rights. All Products covered by one or more patents included within the Registered Intellectual Property Assets have been marked with the appropriate patent number or numbers in accordance with 35 U.S.C. § 287. All Products and packaging materials used by the Company in the Business and packaging of the Products that utilize any registered trademark included within the Registered Intellectual Property Assets have been marked with the ® designation in accordance with 15 U.S.C. § 1111. All Products and packaging materials used by the Company in the Business and packaging of the Products that utilize any unregistered trademark included within the Intellectual Property Assets have been marked with the ™ designation.

3.1.14.11.The Company has not made, directly or indirectly, any commitments, promises, submissions, suggestions, statements or declarations to any standards-setting bodies, industry groups or other similar organizations (“Standards Organizations”) (including any commitments, promises, submissions, suggestions, statements or declarations that would obligate the Company to grant licenses to any Person or otherwise impair or limit the Company’s control of any Intellectual Property Assets or Products). The Company is not subject or party to any membership agreements, bylaws, practices, or policies of any Standards Organization.

3.1.15.Inventory.

3.1.15.1.Schedule 3.1.15 lists all Purchased Inventory, including finished products, components and raw materials, regardless of location, consisting of a quality and quantity usable and, with respect to finished goods, saleable, in the ordinary course of business.

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3.1.15.2. As of immediately prior to the Closing, the aggregate value of the Purchased Inventory (based on the lower of (x) cost (first-in, first out method) or (y) net realizable value, in any case, consistent with the accounting principles used in the Seller’s audited annual financial statements for fiscal year 2023 and included in Seller’s Form 10-K for 2023) is as set forth in Schedule 3.1.15 (the “Closing Date Inventory Value”).

3.1.15.3.All Purchased Inventory is owned by the Company free and clear of all Encumbrances.

3.1.16.Material Contracts. Schedule 3.1.16 lists the following Contracts to which the Company is a party or by which its assets are bound (each, a “Material Contract”):

3.1.16.1.any Contract relating to the lease of personal property to or from any Person;

3.1.16.2.except for purchase orders of the Company issued or received in the ordinary course of business for the purchase or sale of supplies, products, goods or services, any Contract for the purchase or sale of supplies, products or goods, or for the furnishing or receipt of services;

3.1.16.3.any Contract that involves any partnership, strategic alliance, joint venture or sharing of profits;

3.1.16.4.any Contract relating to any indebtedness of the Company;

3.1.16.5.any Contract pursuant to which the Company (A) grants to any Person any right or license under Company Intellectual Property Rights or (B) receives any right or license under Intellectual Property Rights owned by another Person, but excluding in each case, (1) licenses or services Contracts for commercially available software or services (including software as a service) available on standard terms, (2) outbound non-exclusive licenses of the Intellectual Property Assets entered into in the ordinary course of business with

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manufacturers and service providers, (3) licenses for open source software, and (4) non-disclosure Contracts in the ordinary course of business;

3.1.16.6.any collective bargaining agreement or other agreement with any union or similar employee representative;

3.1.16.7.any Contract for the employment or engagement of any individual on a full-time, part-time or consulting basis;

3.1.16.8.any Contract with any Governmental Authority not made in the ordinary course of business;

3.1.16.9.any Contract obligating the Company: (A) to refrain from competing with any business, (B) to refrain from conducting business in any particular jurisdiction, (C) to refrain from conducting any business with certain parties, and/or (D) to refrain from soliciting any employees, consultants or other persons;

3.1.16.10.any Contract pursuant to which the Company grants most favored nation or preferred pricing, exclusive sales, distribution, marketing or other exclusive rights, rights of first refusal, rights of first negotiation or similar rights or terms to any person; and

3.1.16.11.any Contract or other arrangement that would be deemed material to the Company through its terms or financial impact by a reasonable and prudent person.

3.1.17.No Conflicts; Consent. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Seller or the Company is a party, and the consummation of the transactions contemplated hereby and thereby, by Seller or the Company: (a) will not violate in any material respect any Law or Governmental Order to which Seller or the Company is a party or to which Seller or the Company, the Business or the Purchased Assets are bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any material Contract to which Seller or the Company or any Purchased Asset is bound or subject; and (b) will not constitute a default in any material respect thereunder, or result in the creation of any Encumbrance upon any Purchased Asset. No consent, approval, permit, authorization of, declaration to or filing with any Governmental Authority or any other Person on the part of Seller or the Company is required in connection with the execution and delivery of this

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Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby.

3.1.18.Litigation. There is no Action pending or to Seller’s Knowledge, threatened against or involving the Business or any of the Purchased Assets. There are no Actions pending or, to Seller’s Knowledge, threatened against Seller or the Company or to which either of them is otherwise a party relating to this Agreement or any other Transaction Document or the transactions contemplated hereby or thereby.

3.1.19.Customer and Suppliers.

3.1.19.1.Schedule 3.1.19.1.A contains a true and complete list of the ten (10) largest customers of the Business (based on gross sales) during the 12-month period ended as of December 31, 2022 and the six month period ending June 30, 2023 (collectively, the “Major Customers”). Except as set forth on Schedule 3.1.19.1.B, since December 31, 2022, neither Seller nor the Company has received any notice (including any such notice or correspondence received at, or as part of, a planogram) from any Major Customer indicating that, and to Seller’s Knowledge, no Major Customer: (i) has stopped, materially decreased the rate of, or materially adversely changed the terms (whether related to payment, price or otherwise) with respect to the purchasing of Products from the Business; (ii) has discontinued or delisted, or had store count reductions, with respect to Products; or (iii) has communicated to Seller or the Company that it intends to stop, materially decrease the rate of, or materially adversely change the terms (whether related to payment, price or otherwise) with respect to the purchasing of Products (whether as a result of the consummation of the transactions contemplated hereby or otherwise). There are no material disputes between Seller or the Company, on the one hand, and any Major Customer, on the other hand, as of the Closing Date.

3.1.19.2.Schedule 3.1.19.2.A contains a true and complete list of the ten (10) largest suppliers of the Business (based on dollar volume) during the 12-month period ended as of December 31, 2022 and the six month period ending June 30, 2023 (collectively, the “Major Suppliers”). Except as set forth on Schedule 3.1.19.2.B, since December 31, 2022, neither Seller nor the Company has received any notice from any Major Seller indicating that, and to Seller’s Knowledge, no Major Seller: (i) has stopped, materially decreased the rate of, or materially adversely changed the terms (whether related to payment, price or otherwise) with respect to the supply of Products (or components

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thereof); or (ii) has communicated to Seller or the Company that it intends to stop, materially decrease the rate of, or materially adversely change the terms (whether related to payment, price or otherwise) with respect to the supply of Products (or components thereof) (whether as a result of the consummation of the transactions contemplated hereby or otherwise). There are no material disputes between Seller or the Company, on the one hand, and any Major Supplier, on the other hand, as of the Closing Date.

3.1.20.Employee Matters. The Company does not have any employees and has not had any employees within the last three fiscal years and, without limiting the foregoing, the Company has no Liabilities owed or payable to any former employee of the Company. The Company does not sponsor or have obligations with respect to any employee benefit plan.

3.1.21.Real Property Matters. The Company does not own or lease real property and has not owned or leased real property within the last three fiscal years.

3.1.22.Environmental Matters. There are no pending or to Seller’s Knowledge threatened Environmental Claims, or Liabilities under Environmental Laws, to the extent arising out of, or relating to or otherwise in respect of the assets or operation of the Business.

3.1.23.Brokers. Neither Seller nor the Company, nor any Person acting on behalf of either of them, has agreed to pay a commission, finder’s fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

3.1.24.Products.

3.1.24.1.All Products that have been manufactured, leased, distributed, placed or sold were merchantable, free from defects in design, specifications, processing, manufacture, material or workmanship, and suitable for the purpose for which they were sold at the time at which they were sold and during any applicable warranty period in all material respects.

3.1.24.2.Except for the warranties contained in the Company’s standard warranty for the Products, the Company has not given any warranties relating to its Products. The Company has provided Buyer with a true and accurate copy of its standard warranties for the Products.

3.1.24.3.No royalties, fees, honoraria, volume-based, milestone or other payments are payable by the Company to any Person by reason of

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the ownership, use, sale, licensing, distribution or other exploitation of any Intellectual Property Assets relating to the conduct or operation of the Business or the delivery or provision of any Product.

3.1.24.4.Seller has not engaged in any “channel-stuffing” with respect to the Business or sold Products on terms that are outside the ordinary course of business.

3.1.25.Vendor of Record Designation. The Company is a vendor of record with all of the Major Customers and neither the Seller nor the Company has received any notification that any such vendor of record designation has been or will be revoked, terminated and/or impaired. No consent of any Major Customer is needed for the transaction contemplated under this Agreement and the Company’s designation as a vendor of record with the Major Customers will continue after the Closing Date.

3.1.26.Insurance. Schedule 3.1.26 lists each insurance policy maintained by the Company. All of the insurance policies of the Company are in full force and effect, and the Company is not in breach or default with respect to its obligations under any of such insurance policies. There is no claim by the Company pending under any of such policies as to which coverage has been questioned, denied, or disputed by the underwriters of such policies. All premiums due and payable under all such policies have been paid, and the Company is otherwise in compliance with the terms of such policies. To the knowledge of the Seller, there is no threatened termination of, or premium increase with respect to, any of such policies. The Company has never been denied insurance coverage, and no insurance policy of the Company has ever been cancelled for any reason.

3.1.27.Taxes.

3.1.27.1.All Tax Returns that are required to be filed by the Company or with respect to its operations have been timely filed, and all such Tax Returns, notices and information are true, complete and accurate in all material respects.

3.1.27.2.All Taxes due with respect to the Company have been timely paid (whether or not shown on any Tax Return).

3.1.27.3.The Company has timely withheld and paid over to the appropriate taxing authority all Taxes that it is required to withhold from amounts distributed, paid or owing to any shareholder, employee or other Person.

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3.1.27.4.No deficiency for any amount of Tax has been asserted or assessed by a taxing authority against or with respect to the operations of the Company. There are no (and there have not been any) audits, examinations or any notices of inquiry with respect to any Taxes of the Company. The Company has not waived any statute of limitations in respect of Taxes or consented to extend the time in which any Tax may be assessed or collected by any taxing authority, which waiver or consent is still in effect.

3.1.27.5.The Company is not currently the beneficiary of any extension of time within which to file any Tax Return, other than an extension that is automatically granted.

3.1.27.6.The Company is tax resident only in its country of formation and has not engaged in a trade or business, had a permanent establishment (within the meaning of an applicable Tax treaty or convention between its country of formation and any other country), or otherwise been subject to taxation in any country other than the country of its formation. No claim has ever been made by any taxing authority in a jurisdiction where the Company does not file Tax Returns that such member is or may be subject to taxation by that jurisdiction.

3.1.27.7.The Company does not have any obligation to indemnify any other Person with respect to Taxes, and none is a party to or bound by any Tax allocation or Tax sharing agreement with any Person. The Company (a) has never been a member of an affiliated, consolidated, combined, unitary, aggregate or similar group (including any arrangement for group or consortium relief or similar arrangement) and (b) does not have any Liability for the Taxes of any Person under Treasury Regulation Section 1.1502-6 (or any corresponding or similar provision of state, local or non-U.S. law), as a transferee or successor, by contract, or otherwise.

3.1.27.8.The Company will not be required to include any item of income in, or exclude any item of deduction from, taxable income for any taxable period (or portion thereof) ending after the Closing Date as a result of any (a) change in method of accounting for a taxable period ending on or prior to the Closing Date; (b) “closing agreement” as described in Code Section 7121 (or any corresponding or similar provision of state, local or non-U.S. law); (c) deferred intercompany gain or any excess loss account described in Treasury Regulations under Code Section 1502 (or any corresponding or similar provision of state, local or non-U.S. law); (d) installment sale or open transaction disposition made prior to the Closing Date; (e) prepaid

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amount received on or prior to the Closing Date; (f) use of an improper method of accounting for a taxable period on or prior to the Closing Date; or (g) an election under Section 965(h) of the Code (or any corresponding or similar provision of state, local or non-U.S. law).

3.1.27.9.There are no liens for Taxes (other than for Taxes not yet due and payable) upon the assets of the Company.

3.1.27.10.The Company has not received any letter ruling from the Internal Revenue Service (or any comparable ruling from any other taxing authority in any jurisdiction).

3.1.27.11.The Company uses the accrual method of accounting for income Tax purposes.

3.1.27.12.The Company has not (i) deferred, extended or delayed the payment of any employment or payroll Taxes under any provision of the COVID-19 Tax Acts, or (ii) failed to properly comply with and duly account for all credits received under any provision of the COVID-19 Tax Acts.

3.1.27.13.The Company is classified as a corporation for U.S. federal income Tax purposes.

3.1.27.14.The Company is a member of Seller’s “selling consolidated group”, within the meaning of Section 338(h)(10)(B) of the Code.

3.1.28.Solvency. Seller is not insolvent and, immediately after giving effect to the transactions contemplated hereby, Seller shall not be insolvent. Seller has assets, and immediately after giving effect to the transactions contemplated hereby, shall have assets (both tangible and intangible) with a fair value in excess of the amount required to pay its liabilities as they come due. Seller is not involved in any proceeding by or against it as a debtor before any governmental authority under Title 11 of the United States Bankruptcy Code or any other insolvency or debtors’ relief act, whether state, federal or foreign, or for the appointment of a trustee, receiver, liquidator, assignee, sequestrator or other similar official for any part of Seller’s property.

3.1.29.Unwritten Contracts. All contracts, understandings and agreements agreed to by the Company (or by which the Company or its assets are bound) which are not in writing (collectively, “Unwritten Contracts”) were agreed to (or by which the Company or its assets were bound) in the ordinary course of business of the Company and no Unwritten Contract provides for either (x) any

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exclusivity, non-compete, non-solicitation or other restrictive covenant obligation imposed on the Company or (y) any most favored nations (or similar provision) in favor of any counterparty to such Unwritten Contract

3.2.Buyer’s Representations and Warranties. Buyer hereby represents and warrants to Seller that the following representations and warranties are true and correct as of the Closing Date:

3.2.1.Execution and Effect of Agreement. Buyer has the power and authority to execute and deliver this Agreement and the other Transaction Documents to which it is a party, to perform its obligations hereunder and thereunder and to consummate the transactions contemplated hereby and thereby. The execution and delivery by Buyer of this Agreement and the other Transaction Documents to which it is a party and the consummation by Buyer of the transactions contemplated hereby and thereby have been duly authorized by Buyer. This Agreement has been, and the other Transaction Documents to which Buyer is a party will be, duly executed and delivered by Buyer and constitutes or, when executed by Buyer, will constitute the legal, valid and binding obligation of Buyer, enforceable against the Buyer in accordance with their respective terms.

3.2.2.Organization and Good Standing. Buyer is duly organized, validly existing, and in good standing under the laws of the state of its organization. All limited liability company action necessary to authorize the execution and delivery of this Agreement by Buyer and the other Transaction Documents to which Buyer is a party, and the performance of its obligations hereunder and thereunder, have been duly authorized and taken.

3.2.3.No Conflicts; Consent. The execution, delivery and consummation of this Agreement and the other Transaction Documents to which Buyer is a party, and the consummation of the transactions contemplated hereby and thereby, by Buyer: (a) will not violate in any material respect any Law or Governmental Order to which Buyer is a party or to which Buyer is bound or subject, conflict in any material respect with or result in a material breach of, or give rise to a right of termination of, require consent under, or accelerate the performance required by, the terms of any material Contract to which Buyer is a party or to which Buyer’s business is bound or subject; and (b) will not constitute a default in any material respect thereunder. No consent, approval, permit, authorization of, declaration to or filing with any Governmental Authority or any other Person on the part of Buyer is required in connection with the execution and delivery of this Agreement or the other Transaction Documents or the consummation of the transactions contemplated hereby or thereby.

3.2.4.Litigation. There are no Actions pending or to Buyer’s Knowledge threatened against Buyer or to which Buyer is otherwise a party relating to this Agreement

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or any other Transaction Document or the transactions contemplated hereby or thereby.

3.2.5.Brokers. Neither Buyer nor any Person acting on behalf of Buyer has agreed to pay a commission, finder’s fee, investment banking fee or similar payment in connection with this Agreement or any other Transaction Document.

4.COVENANTS.

4.1.Expenses. Except as otherwise specifically provided in this Agreement, the Parties shall bear their respective expenses incurred in connection with the preparation, execution and performance of this Agreement and the consummation of the transactions contemplated hereby, including all fees and expenses of their respective Representatives.

4.2.Use of Intellectual Property. Following the Closing, neither Seller nor any Affiliate thereof shall challenge the validity or enforceability of the Intellectual Property Assets or the exclusive ownership of any of the Intellectual Property Assets by the Company, Buyer or its Affiliates or successors or assigns, and Seller and its Affiliates shall immediately cease all use of the Intellectual Property Assets, except as provided in the Transition Services Agreement or as otherwise expressly set forth in this Agreement.

4.3.Tax Matters.

4.3.1.Tax Returns. Subject to Section 5 (Indemnification), Seller shall be responsible for all Taxes of the Company relating to a Pre-Closing Tax Period; the Company shall be responsible for all Taxes of the Company relating to a taxable period (or portion thereof) beginning after the Closing Date. Seller shall be responsible for all Tax Returns of the Company relating to a Pre-Closing Tax Period (other than a Straddle Period); such Tax Returns (other than any consolidated, combined or unitary Tax Return that includes a Pre-Closing Tax Period of the Company or its subsidiaries that is filed by Seller or an Affiliate of Seller) shall be prepared consistently with the past practices of the Company, except as required by law.

4.3.2.Section 338(h)(10) Election.

4.3.2.1.Except for actions necessary to effect the transactions contemplated hereby, Seller will take or omit to take, any action, which action or omission would result in Seller or the Company not being classified as a corporation for U.S. federal income Tax purposes or Company not being a member of Seller’s “selling consolidated group” within the meaning of Section 338(h)(10)(B) of the Code.

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4.3.2.2.Seller, Buyer, and the Company shall (a) make a timely, irrevocable and effective election under Section 338(h)(10) of the Code (and any similar election under any applicable state, local or foreign income Tax Law) with respect to the purchase by Buyer of the Company Stock (collectively, the “Section 338(h)(10) Election”) (and Seller shall include any income, gain, loss, deduction, or other tax item resulting from the Section 338(h)(10) Election on its Tax Returns in accordance with applicable Law), (b) take such actions as are necessary to make and give effect to the Section 338(h)(10) Election, and (c) cooperate to provide such forms, documentation and other information reasonably necessary to make and give effect to the Section 338(h)(10) Election. Without limiting the generality of the foregoing, to facilitate the Section 338(h)(10) Election, Buyer shall deliver to Seller prior to the Closing Date, a copy of IRS Form 8023 (the “Form 8023”) and any similar forms required for the Section 338(h)(10) Election under applicable Law (collectively with the Form 8023, the “338(h)(10) Election Forms”) properly completed to the extent pertaining to Buyer and the purchase of the Company Stock. The 338(h)(10) Election Forms shall be properly completed by Seller to the extent pertaining to Seller and duly executed by Seller and an authorized Person for Buyer at the Closing. Buyer shall duly and timely file the 338(h)(10) Election Forms as prescribed by Treasury Regulations Section 1.338(h)(10)-1 and the corresponding provisions of applicable state, local or non-U.S. applicable Law.

4.3.2.3.Within forty-five (45) days after the Closing Date (the “Delivery Date”), Buyer shall provide Seller with a draft of IRS Form 8883 (including the calculation and proposed allocation of the Purchase Price payable for the Company Stock and the liabilities of the Company (plus other relevant items) in a manner consistent with the requirements of Section 338 of the Code and the Treasury Regulations promulgated thereunder) (the “Form 8883”). Seller shall review such Form 8883 and provide any comments to Buyer within fifteen (15) days following the Delivery Date, which comments Buyer shall consider in good faith, but not be bound by. Buyer’s determination of any items, including any items disputed by the Seller, shall be conclusive and binding on Buyer and the Seller. Each of Buyer, Seller and the Company shall (a) prepare and file all Tax Returns consistent with, and shall not take any Tax position inconsistent with, the Form 8883 (adjusted to reflect any payments made after the Closing that are treated as adjustments to the consideration paid for the Company Shares for applicable Tax purposes), unless otherwise required by a “determination” (within the meaning of Section 1313(a) of the Code), and (b) shall not to

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take, or cause to be taken, any action or position that would be inconsistent with or prejudice the Section 338(h)(10) Election or Form 8883.

4.3.3.Cooperation. Seller and Buyer shall cooperate fully with each other and make available or cause to be made available to each other in a timely fashion such data regarding the Business which relates to Taxes, prior Tax Returns or filings and other information as may be reasonably required for the preparation by Buyer or Seller of any Tax Returns, elections, consents or certificates required to be prepared and filed by Buyer or Seller and any audit or other examination by any taxing authority or administrative Action relating to liability for Taxes. Buyer and Seller shall retain copies of all Tax Returns, supporting work schedules and other records relating to the Business and which relate to Tax periods or portions thereof ending prior to or on the Closing Date for the amount of time required by applicable Law.

4.3.4.Transfer Taxes. All transfer, documentary, sales, use, stamp, registration, value added and other such Taxes and fees (including any penalties and interest) incurred in connection with this Agreement and the other Transaction Documents (including any real property transfer Tax and any other similar Tax) (“Transfer Taxes”) shall be borne by Seller. Seller shall, at its own expense, timely file any Tax Return or other document with respect to such Taxes or fees (and Buyer shall cooperate with respect thereto as necessary).

4.3.5.Tax Sharing Agreements. Any Tax sharing, indemnification or allocation agreement, arrangement, practice or policy to which the Company or any of its subsidiaries is a party or by which any of them are bound shall be terminated as of the Closing Date, and the Company and its subsidiaries shall not have any liability or obligation pursuant thereto after the Closing.

4.4.Confidential Information. From and after the Closing, Seller shall, and shall cause each of its respective Affiliates and Representatives to (a) treat all Confidential Information of or relating to Business, the Purchased Assets, the Company, Buyer, and/or its Affiliates (whenever and however acquired) strictly confidential; (b) not disclose such Confidential Information or permit it to be disclosed, in whole or part, to any Person without the prior written consent of Buyer; and (c) not use any such Confidential Information for any purpose except as permitted by this Agreement. Confidential Information subject to this Section 4.4 shall not include information that is or becomes generally available to the public other than through Seller’s breach of this Agreement; or is communicated to Seller by a Person that had no confidentiality obligations with respect to such information. Nothing herein shall be construed to prevent disclosure of Confidential Information of or relating to Business as may be required by applicable Law, or pursuant to the valid order of a court of competent

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jurisdiction or an authorized governmental agency, provided that the disclosure does not exceed the extent of disclosure required by such Law or order.

4.5.Refunds and Remittances. After the Closing, if either Party or any of its Affiliates receives any refund, payment, or other amount or asset which is properly due and owing to the other Party in accordance with this Agreement or any other Transaction Document, or related to claims or other matters for which the other Party is responsible under any Transaction Document, such Party shall promptly notify the other Party thereof and shall promptly remit (or shall cause to be promptly remitted) such refund, payment or other amount or asset to such Party in accordance with its instructions. In furtherance of the foregoing, from and after the Closing, each Party shall furnish the other Party with such financial and other data and information related to such Party’s assets and receivables as the other Party may reasonably request from time to time to the extent necessary to verify compliance with this Section.

4.6.Public Announcements; Communications.Unless otherwise required by applicable Law or stock exchange requirements (based upon the reasonable advice of counsel), no Party to this Agreement shall make any public announcements in respect of this Agreement or the transactions contemplated hereby or otherwise communicate with any news media without the prior written consent of the other Party (which consent shall not be unreasonably withheld or delayed), and the Parties shall cooperate as to the timing and contents of any such announcement.

4.7.Pre-Closing Cash Distribution. Seller and Buyer acknowledge and agree that prior to Closing, Seller will have caused the Company to distribute all of its cash held by the Company as of immediately prior to the Closing to Seller. Seller agrees to maintain at least $250,000 in accounts at its primary bank for a period of at least nine (9) months following Closing and will designate such cash as “restricted cash” in its financial statements that are publicly filed with the SEC.

4.8.Further Assurances. Seller and Buyer shall each deliver or cause to be delivered to the other on the Closing Date such instruments as the other may reasonably request for the purpose of carrying out the transactions contemplated by this Agreement and shall take or cause to be taken all actions necessary or appropriate to consummate the transactions contemplated hereby. At any time and from time to time after the Closing, Seller shall, at the reasonable request of Buyer and at Seller’s expense and without further consideration, execute and deliver any further deeds, bills of sale, endorsements, assignments and other instruments of conveyance and transfer, and take such other actions as Buyer may reasonably request in order to (a) transfer, convey, assign and deliver to Buyer, and to place Buyer in actual possession and operating control of, and to vest, perfect or confirm, of record or otherwise, in Buyer all right, title and interest in, to and under the Purchased Assets, (b) assist in the collection or reduction to possession of any and all of the Purchased Assets or to enable Buyer to exercise and

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enjoy all rights and benefits with respect thereto, or (c) otherwise carry out the intents and purposes of this Agreement.

4.9.Delivery of Books and Records. Seller shall deliver, or cause to be delivered, to Buyer all books and records and tangible assets of the Company in connection with Closing, including originals, or where not available, copies, of all books and records, including books of account, ledgers and general, financial and accounting records, customer lists, customer purchasing histories, price lists, distribution lists, supplier and vendor lists, production data, quality control records and procedures, product test results, submissions and filings, research and development files, correspondence with any Governmental Authority, regulatory and compliance studies or filings, all product formulas and formulations presently used and under development, in each case, related to the Business; UPC codes related to the Business, sales and marketing materials in the Company’s possession and relating to the period following December 31, 2019 (including pricing history, total sales, terms and conditions of sale, sales and pricing policies and practices), internal financial statements, marketing and promotional surveys, material and research, consumer surveys, and files and records relating to the Intellectual Property Assets.

4.10.Accounts Payable; Accounts Receivable. The Parties agree that all matters regarding the accounts receivable and accounts payable of the Company will be treated as set forth in the Transition Services Agreement.

4.11.Trademark Matters. Seller acknowledges the Company may still own other active trademark filings globally for NEOTERIC and DENOREX-formative marks not included in Schedule 3.1.14.1(a). Seller agrees to execute and deliver additional documents and take such other actions as Buyer may reasonably request in order to record the Company’s ownership of those trademarks or to register the Company’s rights in those trademarks globally. Further, to the extent Buyer elects to cancel any existing filings in order to protect its rights in certain countries, Seller will take no action in the event of any such cancellation by Buyer and allow the associated filing to lapse. Further, Seller agrees not to use or file for NEOTERIC, DENOREX, ZINCON or any confusingly similar mark as a trademark anywhere in the world, and not to challenge any action by Buyer to acquire, register or record its rights in those marks globally.

5.INDEMNIFICATION

5.1.Indemnification by Seller. Subject to the survival periods set forth in Section 5.4 (Survival), Seller agrees to defend, indemnify and hold Buyer and its Affiliates and their respective officers, directors, stockholders, members, owners, Representatives and lenders (collectively, the “Buyer Indemnified Parties”) harmless from and against any and all losses, Liabilities, damages, obligations, Actions, demands,

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penalties, interest, costs and expenses (including any and all reasonable attorneys’ fees and expenses relating thereto, including costs of investigation and litigation incurred by the indemnified party to the extent such party is the prevailing party in making or defending such claim for indemnity) (collectively, the “Losses”) arising out of (a) any breach of a representation or warranty made by Seller in this Agreement and/or any other Transaction Documents; (b) any breach of a covenant, agreement or undertaking of Seller in this Agreement and/or any other Transaction Document or in any other document or instrument attached hereto or delivered by Seller in connection with this Agreement, (c) all obligations, Liabilities and commitments, to the extent accruing or arising out of the operation or conduct of the Business or the use or ownership of the Purchased Assets, in any case, prior to the Closing, including obligations, Liabilities and commitments in respect of any and all Products manufactured and/or sold prior to the Closing (including in respect of product liability claims with respect to Products manufactured prior to the Closing), (d) the Non-Business Brands Liabilities, and (e) any Pre-Closing Taxes.

5.2.Indemnification by Buyer. Subject to the survival periods set forth in Section 5.4 (Survival), Buyer hereby agrees to defend, indemnify and hold Seller harmless from and against any and all Losses, arising out of or in connection with (a) any breach of a representation or warranty made by Buyer in this Agreement and/or any other Transaction Document; and (b) any breach of a covenant, agreement or undertaking of Buyer in this Agreement and/or any other Transaction Documents or in any other document or instrument attached hereto or delivered by Buyer in connection with this Agreement.

5.3.Notices; Defense or Prosecution of Claims. Upon becoming aware of any claim and upon having reason to believe in the possible existence of any claim entitling a Party to indemnification hereunder, the Party claiming indemnification (the “Indemnified Party”) shall give the other Party (the “Indemnifying Party”) prompt written notice of such claim setting forth in such notice all essential facts then known to the Indemnified Party in connection therewith; provided, however, that failure to give such prompt notice or specify all known facts shall not absolve the Indemnifying Party from its Liabilities under this Section. If the facts giving rise to a claim for indemnification hereunder arise out of the claim of any third party, or if there is any claim against a third party, the Indemnifying Party may, at its option, assume the defense or the prosecution thereof, with counsel satisfactory to the Indemnified Party, at the sole cost and expense of the Indemnifying Party, unless (i) such claim seeks an order, injunction or other equitable relief against the Indemnified Party or (ii) the Indemnified Party shall have reasonably concluded that there is a conflict of interest between the Indemnifying Party, on the one hand, and the Indemnified Party, on the other hand, in the defense or prosecution of such claim. After any assumption of the defense or prosecution of any claim by the Indemnifying Party, it shall not be liable to the Indemnified Party for any legal expenses thereafter incurred by the Indemnified Party in connection with the defense or prosecution thereof other than reasonable costs of investigation and any

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costs incurred in the course of such defense or prosecution. In any such event, whether or not the Indemnifying Party does so assume the defense or prosecution thereof, the Indemnifying Party and the Indemnified Party shall cooperate in the defense or prosecution thereof and shall furnish such records and information and attend at such proceedings as may be reasonably requested in connection herewith. The Indemnifying Party shall have no indemnification obligations with respect to any claim or demand that is settled by the Indemnified Party without the prior written consent of the Indemnifying Party (which consent shall not be unreasonably withheld), other than any claim or demand as to which the Indemnifying Party shall not have assumed the defense or prosecution thereof.

5.4.Survival. (a) The representations and warranties made by the Parties in this Agreement shall survive the Closing and shall continue in full force and effect without limitation after the Closing for a period of 18 months following the Closing Date, except that (i) claims related to fraud shall survive indefinitely; and (ii) claims arising from the breach of Fundamental Representations shall survive for the applicable statute of limitations plus sixty (60) days; and (b) covenants and agreements made by the Parties in this Agreement shall survive for the period provided in such covenants and agreements, if any, or until fully performed; provided, however, that any obligations under Section 5.1 and Section 5.2 shall not terminate with respect to any Losses as to which the Indemnified Party shall have given notice to the Indemnifying Party in accordance with Section 5.3 before the termination of the applicable survival period.

5.5.Limitations. Notwithstanding anything herein to the contrary, the maximum amount subject to indemnification under Section 5.1(a) shall not exceed $250,000, other than with respect to any breach of any Fundamental Representation or fraud. Further, Buyer shall not make a claim under Section 5.1(a) until such claim or claims in the aggregate exceed $50,000 (“Basket”), in which event Seller shall be liable for all such losses from the first dollar; provided, however, the Basket shall not apply with respect to claims with respect to any breach of any Fundamental Representation or fraud. The maximum aggregate Liability subject to indemnification under Section 5.1 shall not exceed the Purchase Price, excluding fraud or Pre-Closing Taxes, which amount subject to indemnification shall not be limited. The maximum aggregate Liability of Buyer subject to indemnification under Section 5.2 shall not exceed the Purchase Price, excluding fraud by Buyer. No Party shall have Liability under this Agreement to the extent that such Liability resulted from the willful misconduct or gross negligence of the other Party hereto. Each Party hereto shall use commercially reasonable efforts to mitigate any Losses for which it may be indemnified against under this Agreement if required by applicable Law.

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6.MISCELLANEOUS.

6.1.Amendment and Modification; Waiver. This Agreement may only be amended, modified or supplemented by an agreement in writing signed by each Party. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the Party so waiving. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

6.2.Successors and Assigns. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and permitted assigns. None of the Parties may assign its rights or obligations hereunder without the prior written consent of the other parties hereto, which consent shall not be unreasonably withheld or delayed.

6.3.No Third Party Beneficiaries. Except as provided in Section 5 (Indemnification), this Agreement is for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

6.4.Choice of Law; Submission to Jurisdiction; Waiver of Jury Trial.

6.4.1.This Agreement shall be governed by and construed under and the rights of the Parties determined in accordance with the Laws of the State of Delaware (without reference to the choice of law provisions of the State of Delaware).

6.4.2.Each of the Parties irrevocably consents to the service of any process, pleading, notices or other papers by the mailing of copies thereof by registered, certified or first class mail, postage prepaid, to such Party at such Party’s address set forth herein, or by any other method provided or permitted under the Laws of the State of Delaware.

6.4.3.To the extent that a Party has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether through service or notice, attachment prior to judgment, attachment in aid of execution, execution or otherwise) with respect to itself or its property, such Party hereby irrevocably waives such immunity in respect of its obligations pursuant to this Agreement.

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6.4.4.Except as otherwise provided in this Agreement, any proceeding or litigation arising out of relating to this Agreement or any contemplated transaction hereunder shall be brought in the courts of the State of Delaware, and each of the Parties irrevocably submits to the exclusive jurisdiction of each such court in any such proceeding or litigation, waives any objection it may now or hereafter have to venue or to convenience of forum, agrees that all claims in respect of such proceeding or litigation shall be heard and determined only in any such court, and agrees not to bring any proceeding or litigation arising out of or relating to this Agreement or any contemplated transaction hereunder in any other court. Each Party acknowledges and agrees that this Section 6.4.4 constitutes a voluntary and bargained-for agreement between the Parties.

6.4.5.EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY PROCEEDING (WHETHER BASED IN CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION OR AGREEMENT CONTEMPLATED HEREBY OR THE ACTIONS OF ANY PARTY IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT HEREOF.

6.5.Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient or (d) on the third (3rd) day after the date mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective Parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 6.5):

If to Seller:	Scott’s Liquid Gold-Inc. 8400 E. Crescent Parkway, Suite 450 Greenwood Village, CO 80111 E-mail: darndt@slginc.com Attention: Chief Financial Officer
with a copy to:	Holland & Hart LLP 555 17th Street Denver, CO 80202 E-mail: abowler@hollandhart.com Attention: Amy L. Bowler

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If to Buyer:	Neoteric Beauty Holdings, LLC 330 West 72nd Street, Suite 15B New York, NY 10023 Email: pglafleche@outlook.com Attention: Peter LaFleche
with a copy to:	Wilson Sonsini Goodrich & Rosati, P.C. 12235 El Camino Real San Diego, CA 92130 Attention: Martin Waters; Jason Skolnik Email: mwaters@wsgr.com; jskolnik@wsgr.com

6.6.Entire Agreement. This Agreement, together with the exhibits and schedules hereto, the other Transaction Documents, and the Confidentiality Agreement, constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior understandings and agreements, whether written or oral, and no Party shall be liable or bound to any other Party in any manner by any warranties, representations or covenants except as specifically set forth herein.

6.7.Interpretation. For purposes of this Agreement, (a) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without limitation”; (b) the word “or” is not exclusive; and (c) the words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this Agreement as a whole. Unless the context otherwise requires, references herein: (i) to Sections, Schedules and Exhibits mean the Sections of, and Schedules and Exhibits attached to, this Agreement; (ii) to an agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and modified from time to time to the extent permitted by the provisions thereof; and (iii) to a statute means such statute as amended from time to time and includes any successor legislation thereto and any regulations promulgated thereunder. This Agreement shall be construed without regard to any presumption or rule requiring construction or interpretation against the Party drafting an instrument or causing any instrument to be drafted. The Disclosure Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein.

6.8.Headings. The headings in this Agreement are for reference only and shall not affect the interpretation of this Agreement.

6.9.Severability. If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction. Upon such determination that any term or other provision is invalid, illegal or unenforceable, the

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Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the greatest extent possible.

6.10.Specific Performance. The Parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

6.11.Non-disclosure. This Agreement is confidential to the Parties and their Representatives, and is subject to that certain Confidentiality and Non-Disclosure Agreement dated July 7, 2022, entered into by and between Inspired Beauty Brands, Inc. and Seller (the “Confidentiality Agreement”), which continues in full force and effect and shall continue in full force and effect after Closing, except that Seller expressly acknowledges and agrees that Buyer can exercise all rights and remedies of Inspired Beauty Brands, Inc. under the Confidentiality Agreement as if it were directly a party thereto.

6.12.Attorneys’ Fees. In the event of any action to enforce, interpret or construe this Agreement, in addition to any other relief to which it may be entitled at law or in equity, the prevailing party shall be entitled to its reasonable costs incurred, including attorneys’ fees and the costs of appeal, if any.

6.13.Counterparts; Electronic Signatures. This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, e-mail or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

7.DEFINITIONS. For purposes of this Agreement, terms capitalized herein shall be defined in accordance with the following definitions.

7.1.“Action” shall mean any claim, action, cause of action, demand, lawsuit, arbitration, inquiry, audit, notice of violation, proceeding, litigation, citation, summons, subpoena or investigation of any nature, civil, criminal, administrative, regulatory or otherwise, whether at law or in equity.

7.2.“Affiliate” shall mean, as to a specified Person, a Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by or is under common control with, the Person specified. The term “control” (including the terms “controlled by” and “under common control with”) means the possession, directly or indirectly, of

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the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.

7.3.“Business” shall have the meaning set forth in the Recitals.

7.4.“Business Day” shall mean any day other than a Saturday, Sunday or holiday on which national banking associations in the State of Colorado are authorized or required to be closed.

7.5.“Business Financial Statements” shall have the meaning set forth in Section 3.1.3.

7.6.“Buyer” shall have the meaning set forth in the Preamble.

7.7.“Buyer Indemnified Parties” shall have the meaning set forth in Section 5.1.

7.8.“Closing” shall have the meaning set forth in Section 2.1.

7.9.“Closing Date” shall have the meaning set forth in Section 2.1.

7.10.“Company” shall have the meaning set forth in the Preamble.

7.11.“Company Stock” shall have the meaning set forth in the Recitals.

7.12.“Confidential Information” shall mean all non-public, confidential or proprietary information, whether in written, electronic or other form or media, and whether or not marked, designated or otherwise identified as “confidential,” including: (a) information concerning the past, present and future business affairs relating to the Business and/or the Purchased Assets, including finances, customer information, supplier information, products, services, organizational structure and internal practices, forecasts, sales and other financial results, records and budgets, and business, marketing, development, sales and other commercial strategies of Seller, the Company, Buyer, and/or or their respective Affiliates, and/or or their respective customers, suppliers, and other third parties having relationship with the Business; (b) unpatented inventions, ideas, methods and discoveries, trade secrets, know-how, unpublished patent applications and other confidential Intellectual Property Rights; (c) designs, specifications, documentation, components, source code, object code, images, icons, audiovisual components and objects, schematics, drawings, protocols, processes, and other visual depictions, in whole or in part, of any of the foregoing; (d) Confidential Information of any third party included with, or incorporated in, any information used by Seller, the Company, Buyer, and/or or their respective Affiliates in the Business or in connection with the Purchased Assets; (e) other information that would reasonably be considered non-public, confidential or proprietary given the nature of the information and the Business; and (f) notes, analyses, compilations, reports, forecasts, studies, samples, data, statistics, summaries, interpretations and other materials prepared by or for Seller, the Company,

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Buyer and/or their respective Affiliates that contain, are based on, or otherwise reflect or are derived, in whole or in part, from any of the foregoing.

7.13.“Confidentiality Agreement” shall have the meaning set forth in Section 6.11.

7.14.“Contracts” shall mean all contracts, leases, deeds, mortgages, licenses, instruments, notes, commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether written or oral relating to the Business.

7.15.“COVID-19 Tax Acts” shall mean the Families First Coronavirus Response Act (Pub. L. 116-127), the Coronavirus Aid, Relief, and Economic Security Act (Pub. L. 116-136), the Consolidated Appropriations Act, 2021 (Pub. L. 116-159), the American Rescue Plan Act of 2021 (Pub. L. 117-2), all as amended, the Presidential Memorandum on Deferring Payroll Tax Obligations in Light of the Ongoing COVID-19 Disaster, as issued on August 8, 2020, and including any Treasury Regulations or other administrative or other guidance published with respect thereto by any Governmental Authority (including IRS Notice 2020-65), and any similar provisions of state, local and non-U.S. law.

7.16.“Disclosure Schedules” shall have the meaning set forth in Section 3.1.

7.17.“Encumbrance” shall mean any lien (including mechanics, warehousemen, laborers and landlords liens), charge, claim, hypothecation, pledge, security interest, mortgage, preemptive right, right of first refusal, option, judgment, title defect right of first refusal, easement or conditional sale or other title retention agreement or other restriction or encumbrance of any kind.

7.18.“Environmental Claim” shall mean any Action, Governmental Order, Encumbrance, fine, penalty, or, as to each, any settlement or judgment arising therefrom (including costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, release of, or exposure to, any hazardous materials; or (b) non-compliance with any Environmental Law or term or condition of any environmental permit.

7.19.“Environmental Law” shall mean any applicable Law, and any Governmental Order or binding agreement with any Governmental Authority: (a) relating to pollution (or the cleanup thereof) or the protection of natural resources, endangered or threatened species, human health or safety, or the environment (including ambient air, soil, surface water or groundwater, or subsurface strata); or (b) concerning the presence of, exposure to, or the management, manufacture, use, containment, storage, recycling, reclamation,

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reuse, treatment, generation, discharge, transportation, processing, production, disposal or remediation of any hazardous materials.

7.20.“Fundamental Representations” means representations and warranties contained in Sections 3.1.1 (Execution and Effect of Agreement), 3.1.2 (Seller Organization and Good Standing; Binding Obligation), 3.1.4 (Ownership of Company Stock; Capitalization), 3.1.8 (Title to Purchased Assets), 3.1.14.1, 3.1.14.2, 3.1.14.3, and 3.1.14.7 (certain representations and warranties with respect to Intellectual Property), 3.1.15 (Inventory), 3.1.17 (No Conflicts; Consent), 3.1.20 (Employee Matters), 3.1.27 (Taxes), and 3.1.29 (Unwritten Contracts).

7.21.“Governmental Authority” shall mean any governmental, regulatory or administrative body, agency, subdivision or authority, any court or judicial authority, arbitrator (public or private) or any public, private or industry regulatory authority, whether national, federal, state, local, foreign or otherwise.

7.22.“Governmental Order” shall mean any order, writ, judgment, injunction, decree, stipulation, ruling, determination or award entered by or with any Governmental Authority.

7.23.“Indemnified Party” shall have the meaning set forth in Section 5.3.

7.24.“Indemnifying Party” shall have the meaning set forth in Section 5.3.

7.25.“Intellectual Property Assets” shall mean all Intellectual Property Rights owned or purported to be owned by the Company and used or held for use in the Business, as set forth on Schedule 3.1.14.1.

7.26.“Intellectual Property Rights” shall mean intellectual property rights, including (a) inventions, designs, algorithms, formulations, manufacturing processes, and other industrial property, and all enhancements and improvements thereto, whether patentable or unpatentable, and whether or not reduced to practice, and all patents therefor or in connection therewith (including all U.S. and foreign patents, patent applications, patent disclosures, mask works, and all divisions, continuations, continuations-in-part, reissues, re-examinations and extensions thereof); (b) trademarks, trade names and service marks, trade dress, logos, internet domain names, social media handles and accounts, and other commercial product or service designations, and all goodwill and similar value associated with any of the foregoing, and all applications, registrations, and renewals in connection therewith; (c) copyrights (whether or not registered), moral rights in relation to all works of authorship, and all registrations and applications for registration thereof, as well as rights to renew copyrights; (d) trade secrets (as such are determined under applicable Law), know-how and other confidential business information, including technical information; (e) domain names and website content; (f) any and all other rights to existing and future

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registrations and applications for any of the foregoing and all other proprietary rights in, or relating to, any of the foregoing, including remedies against and rights to sue for past infringements, and rights to damages and profits due or accrued in or relating to any of the foregoing; (g) any and all other intangible proprietary property, information and materials; and (h) any Contracts granting any right relating to or under the foregoing.

7.27.“Knowledge” shall mean, with respect to Seller, the actual or constructive knowledge of Rimmy Malhotra, Tisha Pedrazzini, and Daniel Roller and any executive officers of Seller that are not one of the aforementioned individuals, after reasonable due inquiry.

7.28.“Law” shall mean any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

7.29.“Liability” shall mean any direct or indirect indebtedness, liability, assessment, claim, loss, damage, deficiency, obligation or responsibility, expense (including reasonable attorneys’ fees, court costs, accountants’ fees, environmental consultants’ fees, laboratory costs and other professionals’ fees), order, settlement payments, Taxes, fines and penalties, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured, accrued, absolute, contingent or otherwise (including any liability under any guaranties, letters of credit, performance credits or with respect to insurance loss accruals).

7.30.“Non-Business Brands Liabilities” means all obligations, Liabilities and commitments to the extent accruing or arising out of the operation or conduct of any business with respect to any product, brand or business line of the Company that does not constitute a Product, including, but not limited to, all obligations, Liabilities and commitments with respect to the Prell and Alpha Skin Care brands, products and/or business lines, including under all agreements, contracts or understandings to which the Company is a party or by which its assets are bound with respect to the sale, transfer and/or divestiture of the Prell and Alpha Skin Care brands, products and/or business lines, including any transition or related service arrangements in connection therewith.

7.31.“Party” and “Parties” shall have the meaning set forth in the Preamble.

7.32.“Permitted Encumbrances” shall mean: written outbound licenses of the Intellectual Property Assets entered into in the ordinary course of business with manufacturers and service providers; liens arising under Seller’s credit facilities, which will be released with respect to the Purchased Assets upon the Closing; liens for Taxes, assessments and other charges of Governmental Authorities not yet due and payable or being contested in good faith by appropriate proceedings; and mechanics’, workmens’, repairmens’, warehousemens’, carriers’ or other like liens arising or incurred in the ordinary course of business or by operation of Law and which are not material to the

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Purchased Assets, are not delinquent, and none of such liens will individually or in the aggregate impair the continued use and operation of the property to which they relate in the Business as presently conducted.

7.33.“Person” shall mean, any natural person, corporation, partnership, proprietorship, other business organization, trust, union, association or Governmental Authority.

7.34.“Pre-Closing Tax Period” shall mean any taxable period or portion thereof ending on or before the Closing Date, including the portion of any Straddle Period that ends on the Closing Date.

7.35.“Pre-Closing Taxes” shall mean (a) any Taxes of the Company or any of its subsidiaries attributable to any Pre-Closing Tax Period; provided the amounts described in this definition shall be determined (1) as if the members of the Company and each of its subsidiaries used the accrual method of Tax accounting throughout all Pre-Closing Tax Periods, (2) treating any advance payments, deferred revenues or other prepaid amounts received or arising in any Pre-Closing Tax Period as subject to Tax in such period regardless of when actually recognized for income Tax purposes, and (3) by including in the Pre-Closing Tax Period any Taxes attributable to an adjustment in taxable income or similar amounts under Section 263A or 481(a) of the Code (or any similar provision of applicable Law) arising as a result of transactions, events or accounting methods employed prior to the Closing (including any change of such an accounting method required as a result of the transactions contemplated by this Agreement), regardless of when required to be taken into account under applicable Law; (b) any Taxes imposed on Buyer or its Affiliates (including, after the Closing, the Company and its subsidiaries) under Section 951 or Section 951A of the Code (or, in each case, any similar provision of state, local or other Tax Law) with respect to any Person in which the Company or any of its subsidiaries owns an interest to the extent such amount would be allocable to a Pre-Closing Tax Period if the taxable year of each of Buyer, the Company and its subsidiaries, and each other relevant Person ended on the Closing Date; (c) any Liability for the Taxes of another Person as a result of the Company or any of its subsidiaries (1) being (or having been) on or prior to the Closing Date a member of an affiliated, consolidated, combined, unitary, aggregate or similar group (including any arrangement for group or consortium relief or similar arrangement), including any Liability for Taxes pursuant to Treasury Regulation Section 1.1502-6; (2) being (or having been) a transferee or successor, or otherwise becoming liable for the Taxes of another Person, as a result of any transaction occurring or relationship in existence on or prior to the Closing Date; or (3) becoming obligated on or prior to the Closing Date to indemnify or otherwise assume or succeed to the Taxes of any other Person; and (d) any other Taxes attributable to the transaction contemplated by this Agreement, including Transfer Taxes and Taxes required to be deducted or withheld from any consideration payable or otherwise deliverable pursuant to this Agreement.

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7.36.“Products” shall mean products sold as of the Closing Date under the Denorex, Zincon or Neoteric Diabetic brands and listed on Schedule 7.36.

7.37.“Purchase Price” shall have the meaning set forth in Section 1.2.

7.38.“Purchased Assets” shall have the same meaning set forth in Section 3.1.8.

7.39.“Purchased Inventory” shall mean all of the Company’s inventory and rights therein (including all inventory, finished goods, components, raw materials, work in progress, packaging, supplies, parts and other inventories), wherever located, related to the Business.

7.40.“Registered Intellectual Property Asset” shall have the meaning set forth in Section 3.1.14.1.

7.41.“Representative” shall mean, as to a specified Person, any officer, director, agent, employee, attorney, accountant, consultant or other representative of the Person specified.

7.42.“Seller” shall have the meaning set forth in the Preamble.

7.43.“Straddle Period” shall mean any taxable period that includes, but does not end on, the Closing Date.

7.44.“Tax” or “Taxes” shall mean all federal, state, local, foreign and other income, gross receipts, sales, use, production, ad valorem, transfer, bulk sales or bulk transfer, documentary, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.

7.45.“Tax Return” shall mean any return, declaration, report, claim for refund, information return or statement or other document relating to Taxes, including any schedule or attachment thereto, and including any amendment thereof.

7.46.“Transaction Documents” shall mean this Agreement, the Transition Services Agreement, and all other agreements, instruments and documents required to be delivered at Closing or in connection with the transactions contemplated by this Agreement.

7.47.“Transition Services Agreement” shall have the meaning set forth in Section 2.2.3.

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[Remainder of page intentionally left blank; Signatures on following page]

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IN WITNESS WHEREOF, the Parties hereto have caused this Stock Purchase Agreement to be executed as of the Effective Date by their respective officers thereunto duly authorized.

“SELLER”

Scott’s Liquid Gold-Inc.

/s/ Tisha Pedrazzini

Printed Name: Tisha Pedrazzini

Title: President

“COMPANY”

Neoteric Cosmetics, Inc.

/s/ Tisha Pedrazzini

Printed Name: Tisha Pedrazzini

Title: President

“BUYER”

Neoteric Beauty Holdings, LLC

/s/ Peter LaFleche

Printed Name: Peter LaFleche

Title: Chief Executive Officer

[Signature Page to Stock Purchase Agreement]

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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 7, 2023	/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 7, 2023	/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, 2023

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 7, 2023.

/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, 2023	Nov. 06, 2023
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, 2023
Amendment Flag	false
Document Fiscal Year Focus	2023
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		12,999,790
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, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Net sales	$ 907	$ 733	$ 2,623	$ 2,315
Cost of sales	552	319	1,564	1,255
Gross profit	355	414	1,059	1,060
Operating expenses:
Advertising	89	166	363	492
Selling	382	606	1,276	2,326
General and administrative	811	655	2,069	2,164
Intangible asset amortization	45	65	135	313
Impairment of goodwill and intangible assets				3,589
Total operating expenses	1,327	1,492	3,843	8,884
Loss from operations	(972)	(1,078)	(2,784)	(7,824)
Interest expense	(32)	(27)	(145)	(83)
Interest income	16		16
Loss before income taxes and discontinued operations	(988)	(1,105)	(2,913)	(7,907)
Income tax expense	(4)	(2)	(6)	(55)
Loss from continuing operations	(992)	(1,107)	(2,919)	(7,962)
Income from discontinued operations, net of taxes	3,987	363	5,830	2,434
Net income (loss)	$ 2,995	$ (744)	$ 2,911	$ (5,528)
Basic net income (loss) per common shares:
Loss from continuing operations	$ (0.08)	$ (0.09)	$ (0.23)	$ (0.62)
Income from discontinued operations	0.31	0.03	0.45	0.19
Net income (loss) per common share	0.23	(0.06)	0.22	(0.43)
Diluted net income (loss) per common shares:
Loss from continuing operations	(0.08)	(0.09)	(0.23)	(0.62)
Income from discontinued operations	0.31	0.03	0.45	0.19
Net income (loss) per common share	$ 0.23	$ (0.06)	$ 0.22	$ (0.43)
Weighted average shares outstanding:
Basic	12,997	12,749	12,901	12,747
Diluted	12,997	12,749	12,901	12,747

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 4,415	$ 49
Restricted cash	250
Accounts receivable, net	1,083	1,833
Inventories	370	775
Income taxes receivable		239
Prepaid expenses	168	243
Assets of discontinued operations		4,261
Total current assets	6,286	7,400
Intangible assets, net	658	793
Operating lease right-of-use assets	2,299	2,491
Other assets	39	47
Total assets	9,282	10,731
Current liabilities:
Accounts payable	753	1,407
Accrued expenses	132	311
Current portion of long-term debt, net of debt issuance costs		3,384
Operating lease liabilities, current portion	285	270
Total current liabilities	1,170	5,372
Operating lease liabilities, net of current	2,296	2,512
Other liabilities	27	27
Total liabilities	3,493	7,911
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 12,997 shares (2023) and 12,797 shares (2022)	1,300	1,280
Capital in excess of par	7,950	7,912
Accumulated deficit	(3,461)	(6,372)
Total shareholders’ equity	5,789	2,820
Total liabilities and shareholders’ equity	$ 9,282	$ 10,731

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2023	Dec. 31, 2022
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	$ 0.1	$ 0.1
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	12,997,000	12,797,000
Common stock, shares outstanding	12,997,000	12,797,000

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, 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
Net income (loss)	(451)			(451)
Restricted stock unit vesting	28	$ 2	26
Restricted stock unit vesting, Shares		22
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 income (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
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 income (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 income (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
Beginning Balance, Value at Dec. 31, 2022	$ 2,820	$ 1,280	7,912	(6,372)
Beginning Balance, Shares at Dec. 31, 2022	12,797	12,797
Stock-based compensation, Value	$ 7		7
Net income (loss)	369			369
Ending Balance, Value at Mar. 31, 2023	3,196	$ 1,280	7,919	(6,003)
Ending Balance, Shares at Mar. 31, 2023		12,797
Beginning Balance, Value at Dec. 31, 2022	$ 2,820	$ 1,280	7,912	(6,372)
Beginning Balance, Shares at Dec. 31, 2022	12,797	12,797
Net income (loss)	$ 2,911
Ending Balance, Value at Sep. 30, 2023	$ 5,789	$ 1,300	7,950	(3,461)
Ending Balance, Shares at Sep. 30, 2023	12,997	12,997
Beginning Balance, Value at Mar. 31, 2023	$ 3,196	$ 1,280	7,919	(6,003)
Beginning Balance, Shares at Mar. 31, 2023		12,797
Stock-based compensation, Value	50	$ 20	30
Stock-based compensation, Shares		200
Net income (loss)	(453)			(453)
Ending Balance, Value at Jun. 30, 2023	$ 2,793	$ 1,300	7,949	(6,456)
Ending Balance, Shares at Jun. 30, 2023	12,997	12,997
Stock-based compensation, Value	$ 1		1
Net income (loss)	2,995			2,995
Ending Balance, Value at Sep. 30, 2023	$ 5,789	$ 1,300	$ 7,950	$ (3,461)
Ending Balance, Shares at Sep. 30, 2023	12,997	12,997

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Cash flows from operating activities:
Net income (loss)	$ 2,911	$ (5,528)
Adjustments to reconcile net income (loss) to net cash used by operating activities:
Depreciation and amortization	281	480
Gain on disposal of discontinued operations	(4,654)
Stock-based compensation	58	113
Impairment of goodwill and intangible assets		3,589
Change in operating assets and liabilities:
Accounts receivable	915	1,725
Inventories	961	(612)
Prepaid expenses and other assets	84	222
Income taxes receivable	239	73
Accounts payable, accrued expenses, and other liabilities	(842)	(1,251)
Total adjustments to net income (loss)	(2,958)	4,339
Net cash used in operating activities	(47)	(1,189)
Cash flows from investing activities:
Proceeds from sale of discontinued operations	8,167
Purchase of software		(142)
Net cash provided by (used in) investing activities	8,167	(142)
Cash flows from financing activities:
Proceeds from term loans	250
Repayments on term loans	(1,250)	(2,000)
Proceeds from revolving credit facility	2,795	20,763
Repayments of revolving credit facility	(5,299)	(18,563)
Net cash (used in) provided by financing activities	(3,504)	200
Net increase (decrease) in cash, cash equivalents, and restricted cash	4,616	(1,131)
Cash, cash equivalents, and restricted cash, beginning of period	49	1,270
Cash, cash equivalents, and restricted cash, end of period	4,665	139
Supplemental disclosures:
Cash paid during the period for interest	$ 132	$ 256

XML

Organization and Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2023

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. Our business is comprised of one segment, household 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 September 15, 2023, we entered into and consummated a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Neoteric Beauty Holdings, LLC, a Delaware limited liability company (the “Neoteric Buyer”), pursuant to which the Company agreed to sell 100% of the outstanding stock of Neoteric Cosmetics, Inc. (“Neoteric”) to the Neoteric Buyer. Neoteric owned and operated the Denorex®, Zincon®, and Neoteric Diabetic Skin Care® brands. We have reflected the operations of the Neoteric brands as discontinued operations for all periods presented. The Neoteric brands were previously classified under our health and beauty care products segment. See Note 3 for further information.

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 Alpha® Skin Care brand (the "Alpha Purchase Agreement"). We have reflected the operations of the Alpha® Skin Care brand as discontinued operations for all periods presented. The Alpha product line was previously classified under our health and beauty care products segment. See Note 3 for further information.

Effective July 2023 we entered into, and in July 2023 closed, a 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 BIZ® brand. We have reflected the operations of the BIZ® brand as discontinued operations for all periods presented. The BIZ® product line was previously classified under our household products segment. See Note 3 for further information.

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® brand, including the Wood Care and Floor Restore products. We have reflected the operations of the Scott's Liquid Gold® brand as discontinued operations for all periods presented, which was previously classified under our household products segment. See Note 3 for further information.

On December 15, 2022, 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 Prell® product line. We have reflected the operations of the Prell® product line as discontinued operations for all periods presented, which was previously classified under our health and beauty care 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, 2023 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, 2022. The results of operations for the period ended September 30, 2023 are not necessarily indicative of the operating results for the full year and are unaudited. Certain prior year amounts have been reclassified to conform to the current period presentation.

(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, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

(e) Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents.
 

	September 30, 2023		December 31, 2022
Cash	$	4,415	$	49
Restricted Cash		250		-
	$	4,665	$	49

(f) Inventories Valuation and Reserves

Inventories can 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. Raw materials balance are sold to contract manufacturing partners based on production demand.

(g) Discontinued Operations

Disposal groups that meet the discontinued operations criteria by the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 205-20-45 are classified as discontinued operations and are excluded from continuing operations and segment results for all periods presented.

(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.

(i) Intangible Assets

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by 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 and cash equivalents, restricted cash, and accounts receivable. We maintain our cash balances in the form of money market 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 and cash equivalents, 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 Operations 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, 2023 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, 2023 and 2022 was 0.2% and 0.7% 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, 2023 and December 31, 2022.

(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, 2023		December 31, 2022
Trade promotions	$	94	$	361
Allowance for doubtful accounts		14		59
	$	108	$	420

(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 manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs, as well as warehousing and distribution costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions, and promotional costs. Freight-out costs included in selling expenses totaled $75 and $64 for the three months ended September 30, 2023 and 2022, respectively, and totaled $157 and $443 for the nine months ended September 30, 2023 and 2022, 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.

(p) Supplier Finance Programs

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer that uses supplier finance programs to make annual disclosures about the programs’ key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated roll-forward information. The guidance was effective for the Company beginning on January 1, 2023, except for the roll-forward information, which is effective beginning on January 1, 2024. This guidance has not had and is not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

During 2022, we entered into an agreement with a third-party financial institution and an agreement with an insurance agency which allows us to obtain extended payment terms for our insurance policies. The insurance policies can be canceled by the Company at any time with 10 days’ notice. The financial institution may cancel this agreement after providing 10 days’ notice if the Company does not pay any installment payment according to the terms of the agreement. We do not provide any forms of guarantees under these agreements. Payments of our obligations are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Outstanding confirmed amounts are $0 and $218 as of September 30, 2023 and December 31, 2022, respectively, which will be recognized on the Condensed Consolidated Financial Statements as payments are due.

(q) Recently Issued Accounting Standards

In October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, “Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

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Liquidity

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Liquidity

Note 2. Liquidity

Primarily due to a decline in net sales, disruption of our international sales to China, and increases in costs associated with the manufacture and distribution of our products, the Company has sustained significant losses from operations in several reporting periods since 2019. Absent any other action, the Company previously believed it would require additional liquidity to continue its operations over the next 12 months.

Due to the sales of our various brands as disclosed in Note 3 to the Condensed Consolidated Financial Statements, which generated $6,396 of cash in the third quarter of 2023, we have fully repaid all long-term debt as of July 2023. While, absent any other actions, our operating activities are still expected to result in negative cash flows, we now expect to have enough liquidity to finance operations for the next 12 months. Management has recently implemented actions to reduce the Company’s operating expenses through asset sales, consolidation of vendors, and personnel reductions. To further reduce operating losses, the Company is considering additional various strategic actions including asset sales, obtaining additional debt or equity financing (potentially in conjunction with mergers or acquisitions), 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 long-term liquidity needs and pursue its business plan. The Company expects that these strategic actions will further reduce expenses and provide required liquidity for ongoing operations.

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Divestitures

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

Divestitures

Note 3. Divestitures

Neoteric Cosmetics, Inc.

On September 15, 2023, we entered into and consummated a Stock Purchase Agreement with Neoteric Beauty Holdings, LLC, a Delaware limited liability company, pursuant to which the Company agreed to sell 100% of the outstanding stock of Neoteric Cosmetics, Inc to the Neoteric Buyer. Neoteric owned and operated the Denorex®, Zincon®, and Neoteric Diabetic Skin Care® brands. The closing consideration paid to the Company was $1,750, with an initial deposit of $175 paid on September 5, 2023. The operations of the Neoteric brands have been classified as income from discontinued operations for all periods presented. As part of the Stock Purchase Agreement, we agreed to maintain at least $250 in accounts at our primary bank for a period of nine months following closing which is designated as restricted cash on the Condensed Consolidated Balance Sheets. Concurrent with the entry into the Stock Purchase Agreement, the Company entered into a transition services agreement with the Neoteric Buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the Stock Purchase Agreement. This transition services agreement has a term of 90 days which can be extended by the Neoteric Buyer for up to three additional 30 day periods or extended as consented by both parties.

Alpha® Skin Care

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 Alpha® Skin Care brand. The Company received payments of $2,500 and $200 in July 2023 and August 2023, respectively, representing total consideration for the sale of the Alpha Skin Care brand in the amount of $2,700. The operations of Alpha® have been classified as income from discontinued operations for all periods presented. Concurrent with the entry into the Alpha® Purchase Agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the Alpha® Purchase Agreement. This transition services agreement has a term of 90 days which can be extended by the buyer for up to three additional 30 day periods or extended as consented by both parties.

BIZ®

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 BIZ® brand. The transactions contemplated by the BIZ® Purchase Agreement were consummated on July 7, 2023. The total consideration paid to us was $1,000, plus an amount equal to the value of the BIZ® inventory, valued at $946 as of the effective date of the agreement, subject to post-close adjustment. The operations of BIZ® have been classified as income from discontinued operations for all periods presented. Concurrent with the entry into the BIZ® Purchase Agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the BIZ® Purchase Agreement. This transition services agreement has a term of 90 days which can be extended by the buyer for up to three additional 30 day periods or extended as consented by both parties.

Scott's Liquid Gold® Wood Care and Scott's Liquid Gold® Floor Restore

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. The Company may continue to use the name “Scott’s Liquid Gold” and “SLG” in a manner consistent with all past and current practices for a period of 1 year following the closing date of the asset purchase agreement, at which point the Company may only use the aforementioned names in connection with retaining records and other historical documentation. Concurrent with the entry into the asset purchase agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the asset purchase agreement. This transition services agreement concluded in accordance with the end of its term on July 22, 2023.

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 was initially fully constrained and no amount was included in the results from discontinued operations. During the three months ended September 30, 2023, we assessed the variable consideration and concluded that the volatility of external factors continue to exist and, as a result, consideration for the Scott's Liquid Gold® Royalty continues 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® product lines as discontinued operations.

Prell®

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. Because the Prell® 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 Prell® Royalty was initially fully constrained and no amount was included in the results from discontinued operations. During the three months ended September 30, 2023, we assessed the variable consideration and concluded that the volatility of external factors continue to exist and, as a result, consideration continues 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 Prell® product line as discontinued operations. Concurrent with the entry into the asset purchase agreement, the Company entered into a transition services agreement with the buyer where both parties would perform certain identified services related to the operations of the brands contemplated in the asset purchase agreement. This transition services agreement concluded in accordance with the end of its term on June 15, 2023.

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 and nine months ended September 30:

	Three Months Ended September 30, 2023
	Neoteric		Alpha®			BIZ®		Prell®		Scott's Liquid Gold®		Total
Net sales	$	592	$	-		$	-	$	-	$	-	$	592
Cost of sales		318		-			-		-		-		318
Gross profit		274		-			-		-		-		274
Operating expenses:
Selling		90		-			-		-		-		90
General and administrative		47		13			-		-		-		60
Intangible asset amortization		4		-			-		-		-		4
Operating income (loss) from discontinued operations		133		(13	)		-		-		-		120
Gain on sale of discontinued operations		1,501		1,585			781						3,867
Interest expense		-		-			-		-		-		-
Income from discontinued operations	$	1,634	$	1,572		$	781	$	-	$	-	$	3,987

	Three Months Ended September 30, 2022
	Neoteric		Alpha®			BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	494	$	131		$	1,179		$	903		$	837		$	3,544
Cost of sales		172		(18	)		958			540			387			2,039
Gross profit		322		149			221			363			450			1,505
Operating expenses:
Selling		108		63			384			261			192			1,008
Intangible asset amortization		4		-			6			12			-			22
Operating income (loss) from discontinued operations		210		86			(169	)		90			258			475
Interest expense		-		-			(44	)		(14	)		(54	)		(112	)
Income (loss) from discontinued operations	$	210	$	86		$	(213	)	$	76		$	204		$	363

	Nine Months Ended September 30, 2023
	Neoteric		Alpha®		BIZ®			Prell®		Scott's Liquid Gold®			Total
Net sales	$	2,144	$	879	$	2,164		$	-	$	187		$	5,374
Cost of sales		1,132		278		1,510			-		95			3,015
Gross profit		1,012		601		654			-		92			2,359
Operating expenses:
Selling		342		141		437			-		28			948
General and administrative		47		22		12			-		22			103
Intangible asset amortization		14		-		12			-		-			26
Operating income from discontinued operations		609		438		193			-		42			1,282
Interest expense		-		-		(88	)		-		(18	)		(106	)
Gain on sale of discontinued operations		1,501		1,585		781			-		787			4,654
Income from discontinued operations	$	2,110	$	2,023	$	886		$	-	$	811		$	5,830

	Nine Months Ended September 30, 2022
	Neoteric		Alpha®		BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	1,906	$	1,982	$	3,602		$	2,494		$	3,150		$	13,134
Cost of sales		843		659		2,665			1,506			1,409			7,082
Gross profit		1,063		1,323		937			988			1,741			6,052
Operating expenses:
Selling		374		344		1,061			753			681			3,213
Intangible asset amortization		15		-		18			36			-			69
Operating income (loss) from discontinued operations		674		979		(142	)		199			1,060			2,770
Interest expense		-		-		(132	)		(42	)		(162	)		(336	)
Income (loss) from discontinued operations	$	674	$	979	$	(274	)	$	157		$	898		$	2,434

There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the nine months ended September 30, 2023 and 2022, respectively.

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

	December 31, 2022
	Neoteric®		Alpha®		BIZ®		Scott's Liquid Gold®		Total
Assets
Current assets:
Inventories	$	322	$	1,268	$	1,092	$	1,235	$	3,917
Intangible assets, net		113		-		231		-	$	344
Assets of discontinued operations	$	435	$	1,268	$	1,323	$	1,235	$	4,261

There were no assets of discontinued operations related to Prell® in the above table. There were no assets of discontinued operations related to Prell®, Scott's Liquid Gold®, BIZ®, Alpha®, and Neoteric as of September 30, 2023.

The following summarizes the carrying values of assets and the resulting in the gain on sale of discontinued operations associated with Neoteric, Alpha®, BIZ®, and Scott's Liquid Gold® at the date of disposition:

	Neoteric		Alpha®		BIZ®		Scott's Liquid Gold®		Total
Inventories	$	150	$	1,115	$	946	$	1,149	$	3,360
Trade names		59		-		145		-		204
Formulas		40		-		71		-		111
Non-compete agreement		-		-		3		-		3
Intangible assets, net		99		-		219		-		318
Proceeds from sale		1,750		2,700		1,946		1,936		8,332
Gain on sale of discontinued operations	$	1,501	$	1,585	$	781	$	787	$	4,654

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Stock-Based Compensation

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Note 4. Stock-Based Compensation

On May 11, 2023, we granted 200,000 shares of restricted stock to two directors all of which vested on the grant date with a fair value of $40.

On March 2, 2022, we granted 15,000 shares of restricted stock to one executive all of which vested on the grant date with a fair value of $18.

On January 18, 2022, we granted 25,000 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.

Compensation cost related to stock options totaled $0 and $10 in the nine months ended September 30, 2023 and 2022, 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 $58 and $103 for the nine months ended September 30, 2023 and 2022, respectively. Approximately $38 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, 2023

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 is excluded for periods in which the impact is anti-dilutive and when the Company has a net loss because the impact is also anti-dilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Common shares outstanding, beginning of the period		12,997		12,749		12,797		12,727
Weighted average common shares issued		-		-		104		20
Weighted average number of common shares outstanding		12,997		12,749		12,901		12,747
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,997		12,749		12,901		12,747

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

	Three Months and Nine Months Ended September 30,
	2023		2022
Stock options		56		153
Restricted stock units		20		88

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Segment Information

9 Months Ended

Sep. 30, 2023

Segment Reporting [Abstract]

Segment Information

Note 6. Segment Information

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

In the third quarter of 2023, in conjunction with the divestitures brands, the Company determined it has one reportable segment. These divestitures are described in Note 3.

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Intangible Assets

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets

Note 7. Intangible Assets

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use, consisted of the following:

	As of September 30, 2023						As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Internal-use software		898		240		658		898		105		793

Amortization expense for the three months ended September 30, 2023 and 2022 was $45 and $65, respectively. Amortization expense for the nine months ended September 30, 2023 and 2022 was $135 and $313, respectively.

Estimated amortization expense for 2023 and subsequent years is as follows:
 

Remainder of 2023	$	45
2024		180
2025		180
2026		180
2027		73
Total	$	658

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Long-Term Debt

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Long-Term Debt

Note 8. Long-Term Debt

UMB Loan Agreement

On July 1, 2020, we entered into a Loan and Security Agreement (as amended, the “UMB Loan Agreement”) with UMB Bank, N.A. Under the UMB Loan Agreement we obtained a $3,000 term loan, with equal monthly payments fully amortized over three years which was repaid in full in the second quarter of 2022, and a revolving credit facility, with a maximum commitment of $4,000 bearing interest at the one-month term SOFR rate + 6.83% with a floor of 7.75%.

The UMB Loan Agreement was terminated on February 27, 2023 and the revolving credit facility was paid in full on February 28, 2023. The loans were secured by all of the assets of the Company and its subsidiaries. Unamortized loan costs were $0 and $100 as of September 30, 2023 and December 31, 2022, respectively. Amortization of loan costs for the nine months ended September 30, 2023 was $100, including $83 that were expensed as a result of the termination of the UMB Loan Agreement. Amortization of loan costs for the nine months ended September 30, 2022 was $99.

La Plata Loan Agreement

On November 9, 2021, we entered into a loan and security agreement (as amended, 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 $250 term loan that bears interest at 15%. We repaid $1,000 of principal against the La Plata Loan Agreement during the first quarter of 2022.

Unamortized loan costs were $0 and $20 as of September 30, 2023 and December 31, 2022, respectively. Amortization of loan costs for the nine months ended September 30, 2023 and 2022 were $20 and $26, respectively.

On July 7, 2023, the La Plata term loans were paid in full and the La Plata Loan Agreement was terminated.
 

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Leases

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Leases

Note 9. Leases

We have entered into a lease for our corporate headquarters with a remaining lease term of 7 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, 2023			Nine Months Ended September 30, 2023
Operating lease information:
Operating lease cost	$	101		$	304
Operating cash flows from operating leases		101			304
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		7.17			7.17
Weighted average discount rate		5.1	%		5.1	%

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Operating lease information:
Operating lease cost	$	100		$	200
Operating cash flows from operating leases		100			200
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 2023	$	102
2024		413
2025		420
2026		427
2027		434
Thereafter		1,305
Total minimum lease payments	$	3,101
Less imputed interest		(520	)
Total operating lease liability	$	2,581

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Subsequent Events

9 Months Ended

Sep. 30, 2023

Subsequent Events [Abstract]

Subsequent Events

Note 10. Subsequent Events

Related Party Transactions

In October 2023, the Company agreed to reimburse Maran Capital Management, LLC ("Maran") $200 for certain legal and other expenses incurred by Maran related to the Company between February 2021 and September 2023 and in consideration of the significant support received by the Company from Maran in sourcing, structuring, and negotiating the various asset divestitures aforementioned in Note 3 to the Condensed Consolidated Financial Statements.

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Organization and Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2023

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 September 15, 2023, we entered into and consummated a Stock Purchase Agreement (the “Stock Purchase Agreement”) with Neoteric Beauty Holdings, LLC, a Delaware limited liability company (the “Neoteric Buyer”), pursuant to which the Company agreed to sell 100% of the outstanding stock of Neoteric Cosmetics, Inc. (“Neoteric”) to the Neoteric Buyer. Neoteric owned and operated the Denorex®, Zincon®, and Neoteric Diabetic Skin Care® brands. We have reflected the operations of the Neoteric brands as discontinued operations for all periods presented. The Neoteric brands were previously classified under our health and beauty care products segment. See Note 3 for further information.

Effective June 30, 2023, we entered into, and in July 2023 we closed, a 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 Alpha® Skin Care brand (the "Alpha Purchase Agreement"). We have reflected the operations of the Alpha® Skin Care brand as discontinued operations for all periods presented. The Alpha product line was previously classified under our health and beauty care products segment. See Note 3 for further information.

Effective July 2023 we entered into, and in July 2023 closed, a 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 BIZ® brand. We have reflected the operations of the BIZ® brand as discontinued operations for all periods presented. The BIZ® product line was previously classified under our household products segment. See Note 3 for further information.

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® brand, including the Wood Care and Floor Restore products. We have reflected the operations of the Scott's Liquid Gold® brand as discontinued operations for all periods presented, which was previously classified under our household products segment. See Note 3 for further information.

On December 15, 2022, 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 Prell® product line. We have reflected the operations of the Prell® product line as discontinued operations for all periods presented, which was previously classified under our health and beauty care 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, 2023 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, 2022. The results of operations for the period ended September 30, 2023 are not necessarily indicative of the operating results for the full year and are unaudited. Certain prior year amounts have been reclassified to conform to the current period presentation.

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, operating lease right-of-use assets and operating lease liabilities, and stock-based compensation. Actual results could differ from our estimates.

Cash and Cash Equivalents

(e) Cash and Cash Equivalents

We consider all highly liquid investments purchased with an original maturity of three months or less at the date of acquisition to be cash equivalents.
 

	September 30, 2023		December 31, 2022
Cash	$	4,415	$	49
Restricted Cash		250		-
	$	4,665	$	49

Inventories Valuation and Reserves

(f) Inventories Valuation and Reserves

Inventories can 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. Raw materials balance are sold to contract manufacturing partners based on production demand.

Discontinued Operations

(g) Discontinued Operations

Disposal groups that meet the discontinued operations criteria by the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) 205-20-45 are classified as discontinued operations and are excluded from continuing operations and segment results for all periods presented.

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.

Intangible Assets

(i) Intangible Assets

Internal-use software costs recognized as an intangible asset relates to capitalizable costs of computer software obtained for internal-use as defined by 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 and cash equivalents, restricted cash, and accounts receivable. We maintain our cash balances in the form of money market 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 and cash equivalents, 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 Operations 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, 2023 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, 2023 and 2022 was 0.2% and 0.7% 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, 2023 and December 31, 2022.

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, 2023		December 31, 2022
Trade promotions	$	94	$	361
Allowance for doubtful accounts		14		59
	$	108	$	420

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 manufacturing and distribution including labor, materials, freight-in, purchasing and receiving, quality control, repairs, maintenance, and other indirect costs, as well as warehousing and distribution costs. We classify freight-out as selling expenses. Other selling expenses consist primarily of costs for sales and sales support personnel, brokerage commissions, and promotional costs. Freight-out costs included in selling expenses totaled $75 and $64 for the three months ended September 30, 2023 and 2022, respectively, and totaled $157 and $443 for the nine months ended September 30, 2023 and 2022, 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.

Supplier Finance Programs

(p) Supplier Finance Programs

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities-Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations.” This ASU requires a buyer that uses supplier finance programs to make annual disclosures about the programs’ key terms, the balance sheet presentation of related amounts, the confirmed amount outstanding at the end of the period and associated roll-forward information. The guidance was effective for the Company beginning on January 1, 2023, except for the roll-forward information, which is effective beginning on January 1, 2024. This guidance has not had and is not expected to have a material impact on the Company’s Condensed Consolidated Financial Statements.

During 2022, we entered into an agreement with a third-party financial institution and an agreement with an insurance agency which allows us to obtain extended payment terms for our insurance policies. The insurance policies can be canceled by the Company at any time with 10 days’ notice. The financial institution may cancel this agreement after providing 10 days’ notice if the Company does not pay any installment payment according to the terms of the agreement. We do not provide any forms of guarantees under these agreements. Payments of our obligations are included in cash flows from operating activities in the Condensed Consolidated Statements of Cash Flows. Outstanding confirmed amounts are $0 and $218 as of September 30, 2023 and December 31, 2022, respectively, which will be recognized on the Condensed Consolidated Financial Statements as payments are due.

(q) Recently Issued Accounting Standards

In October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, “Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

Recently Issued Accounting Standards

(q) Recently Issued Accounting Standards

In October 2023, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2023-06, “Disclosure Improvements-Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative.” This ASU modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. This guidance is effective for the Company no later than June 30, 2027 and is not expected to have a material impact on the Company’s Consolidated Financial Statements.

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Organization and Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

	September 30, 2023		December 31, 2022
Cash	$	4,415	$	49
Restricted Cash		250		-
	$	4,665	$	49

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, 2023		December 31, 2022
Trade promotions	$	94	$	361
Allowance for doubtful accounts		14		59
	$	108	$	420

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Divestitures (Tables)

9 Months Ended

Sep. 30, 2023

Discontinued Operations and Disposal Groups [Abstract]

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, 2023
	Neoteric		Alpha®			BIZ®		Prell®		Scott's Liquid Gold®		Total
Net sales	$	592	$	-		$	-	$	-	$	-	$	592
Cost of sales		318		-			-		-		-		318
Gross profit		274		-			-		-		-		274
Operating expenses:
Selling		90		-			-		-		-		90
General and administrative		47		13			-		-		-		60
Intangible asset amortization		4		-			-		-		-		4
Operating income (loss) from discontinued operations		133		(13	)		-		-		-		120
Gain on sale of discontinued operations		1,501		1,585			781						3,867
Interest expense		-		-			-		-		-		-
Income from discontinued operations	$	1,634	$	1,572		$	781	$	-	$	-	$	3,987

	Three Months Ended September 30, 2022
	Neoteric		Alpha®			BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	494	$	131		$	1,179		$	903		$	837		$	3,544
Cost of sales		172		(18	)		958			540			387			2,039
Gross profit		322		149			221			363			450			1,505
Operating expenses:
Selling		108		63			384			261			192			1,008
Intangible asset amortization		4		-			6			12			-			22
Operating income (loss) from discontinued operations		210		86			(169	)		90			258			475
Interest expense		-		-			(44	)		(14	)		(54	)		(112	)
Income (loss) from discontinued operations	$	210	$	86		$	(213	)	$	76		$	204		$	363

	Nine Months Ended September 30, 2023
	Neoteric		Alpha®		BIZ®			Prell®		Scott's Liquid Gold®			Total
Net sales	$	2,144	$	879	$	2,164		$	-	$	187		$	5,374
Cost of sales		1,132		278		1,510			-		95			3,015
Gross profit		1,012		601		654			-		92			2,359
Operating expenses:
Selling		342		141		437			-		28			948
General and administrative		47		22		12			-		22			103
Intangible asset amortization		14		-		12			-		-			26
Operating income from discontinued operations		609		438		193			-		42			1,282
Interest expense		-		-		(88	)		-		(18	)		(106	)
Gain on sale of discontinued operations		1,501		1,585		781			-		787			4,654
Income from discontinued operations	$	2,110	$	2,023	$	886		$	-	$	811		$	5,830

	Nine Months Ended September 30, 2022
	Neoteric		Alpha®		BIZ®			Prell®			Scott's Liquid Gold®			Total
Net sales	$	1,906	$	1,982	$	3,602		$	2,494		$	3,150		$	13,134
Cost of sales		843		659		2,665			1,506			1,409			7,082
Gross profit		1,063		1,323		937			988			1,741			6,052
Operating expenses:
Selling		374		344		1,061			753			681			3,213
Intangible asset amortization		15		-		18			36			-			69
Operating income (loss) from discontinued operations		674		979		(142	)		199			1,060			2,770
Interest expense		-		-		(132	)		(42	)		(162	)		(336	)
Income (loss) from discontinued operations	$	674	$	979	$	(274	)	$	157		$	898		$	2,434

There were no capital expenditures or significant operating and investing noncash items related to discontinued operations during the nine months ended September 30, 2023 and 2022, respectively.

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

	December 31, 2022
	Neoteric®		Alpha®		BIZ®		Scott's Liquid Gold®		Total
Assets
Current assets:
Inventories	$	322	$	1,268	$	1,092	$	1,235	$	3,917
Intangible assets, net		113		-		231		-	$	344
Assets of discontinued operations	$	435	$	1,268	$	1,323	$	1,235	$	4,261

There were no assets of discontinued operations related to Prell® in the above table. There were no assets of discontinued operations related to Prell®, Scott's Liquid Gold®, BIZ®, Alpha®, and Neoteric as of September 30, 2023.

The following summarizes the carrying values of assets and the resulting in the gain on sale of discontinued operations associated with Neoteric, Alpha®, BIZ®, and Scott's Liquid Gold® at the date of disposition:

	Neoteric		Alpha®		BIZ®		Scott's Liquid Gold®		Total
Inventories	$	150	$	1,115	$	946	$	1,149	$	3,360
Trade names		59		-		145		-		204
Formulas		40		-		71		-		111
Non-compete agreement		-		-		3		-		3
Intangible assets, net		99		-		219		-		318
Proceeds from sale		1,750		2,700		1,946		1,936		8,332
Gain on sale of discontinued operations	$	1,501	$	1,585	$	781	$	787	$	4,654

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2023

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 is excluded for periods in which the impact is anti-dilutive and when the Company has a net loss because the impact is also anti-dilutive.

	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Common shares outstanding, beginning of the period		12,997		12,749		12,797		12,727
Weighted average common shares issued		-		-		104		20
Weighted average number of common shares outstanding		12,997		12,749		12,901		12,747
Dilutive effect of common share equivalents		-		-		-		-
Diluted weighted average number of common shares outstanding		12,997		12,749		12,901		12,747

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 are as follows:

	Three Months and Nine Months Ended September 30,
	2023		2022
Stock options		56		153
Restricted stock units		20		88

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Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets, which are comprised of our capitalized costs of software obtained for internal-use, consisted of the following:

	As of September 30, 2023						As of December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value		Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
Internal-use software		898		240		658		898		105		793

Schedule of Estimated Amortization Expense

Estimated amortization expense for 2023 and subsequent years is as follows:
 

Remainder of 2023	$	45
2024		180
2025		180
2026		180
2027		73
Total	$	658

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Leases (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Schedule of Information Related to Leases

Information related to leases was as follows:

	Three Months Ended September 30, 2023			Nine Months Ended September 30, 2023
Operating lease information:
Operating lease cost	$	101		$	304
Operating cash flows from operating leases		101			304
Net assets obtained in exchange for new operating lease liabilities		-			-
Weighted average remaining lease term in years		7.17			7.17
Weighted average discount rate		5.1	%		5.1	%

	Three Months Ended September 30, 2022			Nine Months Ended September 30, 2022
Operating lease information:
Operating lease cost	$	100		$	200
Operating cash flows from operating leases		100			200
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 2023	$	102
2024		413
2025		420
2026		427
2027		434
Thereafter		1,305
Total minimum lease payments	$	3,101
Less imputed interest		(520	)
Total operating lease liability	$	2,581

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Organization and Summary of Significant Accounting Policies - Additional Information (Details) - Segment	9 Months Ended
	Sep. 30, 2023	Sep. 15, 2023
Subsidiary, Sale of Stock [Line Items]
Number of business segment	2
Neoteric Buyer
Subsidiary, Sale of Stock [Line Items]
Percentage of Subsidiary Outstanding Stock Sold		100.00%

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Organization and Summary of Significant Accounting Policies - Schedule of Cash and Cash Equivalents (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022	Sep. 30, 2022	Dec. 31, 2021
Accounting Policies [Abstract]
Cash	$ 4,415	$ 49
Restricted cash	250
Cash and restricted cash	$ 4,665	$ 49	$ 139	$ 1,270

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Organization and Summary of Significant Accounting Policies - Additional Information 1 (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
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		0.20%	0.70%
Internal-use Software Costs Member
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Useful lives of intangible assets	5 years	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, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Trade promotions	$ 94	$ 361
Allowance for doubtful accounts	14	59
Trade promotions and allowance for doubtful accounts	$ 108	$ 420

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Organization and Summary of Significant Accounting Policies - Additional Information 2 (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Payment for obligation outstanding amount	$ 0		$ 0		$ 218
Selling Expenses
Schedule Of Organization And Presentation Of Financial Statements [Line Items]
Freight-out costs	$ 75	$ 64	$ 157	$ 443

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Liquidity - Additional Information (Details) $ in Thousands	3 Months Ended
	Sep. 30, 2023 USD ($)
Disposal of Product Line | Neoteric, Alpha, BIZ, Prell and Scott's Liquid Gold
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Proceeds from sales of interest in certain assets	$ 6,396

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Divestitures - Additional Information (Details)				1 Months Ended		9 Months Ended
	Sep. 15, 2023 USD ($) Days	Jan. 23, 2023 USD ($)	Dec. 15, 2022 USD ($)	Aug. 31, 2023 USD ($)	Jul. 31, 2023 USD ($) Days	Sep. 30, 2023 USD ($)	Sep. 30, 2022 USD ($)	Dec. 31, 2022 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid						$ 8,332,000
Inventories						3,360,000
Capital expenditure discontinued operations						0	$ 0
Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Inventories								$ 3,917,000
Alpha
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid						2,700,000
Inventories						$ 1,115,000
Transition services agreement description						This transition services agreement has a term of 90 days which can be extended by the buyer for up to three additional 30 day periods or extended as consented by both parties.
Transition services agreement, term | Days					90
Transition services agreement, maximum extended term | Days					30
Alpha | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Proceeds from sales of interest in certain assets				$ 200,000	$ 2,500,000
Total consideration paid						$ 2,700,000
Inventories								1,268,000
BIZ
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid						1,946,000
Inventories						$ 946,000
Transition services agreement description						This transition services agreement has a term of 90 days which can be extended by the buyer for up to three additional 30 day periods or extended as consented by both parties.
Transition services agreement, term | Days					90
Transition services agreement, maximum extended term | Days					30
BIZ | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid						$ 1,000,000
Inventories						946,000		1,092,000
Scott's Liquid Gold
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid						1,936,000
Inventories						$ 1,149,000
Scott's Liquid Gold | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid		$ 800,000
Inventories		$ 1,136,000						$ 1,235,000
Royalty percentage		2.00%
Royalty fees payment period		2 years
Prell | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Total consideration paid			$ 150,000
Inventories			$ 330,000
Royalty percentage			3.00%
Neoteric Buyer
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Percentage of Subsidiary Outstanding Stock Sold	100.00%
Total consideration paid	$ 1,750,000
Initial deposit on consideration paid	175,000
Minimum balance amount under agreement	$ 250,000
Transition services agreement description						This transition services agreement has a term of 90 days which can be extended by the Neoteric Buyer for up to three additional 30 day periods or extended as consented by both parties.
Transition services agreement, term | Days	90
Transition services agreement, maximum extended term | Days	30

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Divestitures - Summary of Financial Information Constituting Pretax Loss to After-Tax Loss of Discontinued Operations (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating expenses:
Gain on sale of discontinued operations			$ 4,654
Income (loss) from discontinued operations	$ 3,987	$ 363	5,830	$ 2,434
Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales	592	3,544	5,374	13,134
Cost of sales	318	2,039	3,015	7,082
Gross profit	274	1,505	2,359	6,052
Operating expenses:
Selling	90	1,008	948	3,213
General and administrative	60		103
Intangible asset amortization	4	22	26	69
Operating income (loss) from discontinued operations	120	475	1,282	2,770
Interest expense		(112)	(106)	(336)
Gain on sale of discontinued operations	3,867		4,654
Income (loss) from discontinued operations	3,987	363	5,830	2,434
Neoteric
Operating expenses:
Gain on sale of discontinued operations			1,501
Neoteric | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales	592	494	2,144	1,906
Cost of sales	318	172	1,132	843
Gross profit	274	322	1,012	1,063
Operating expenses:
Selling	90	108	342	374
General and administrative	47		47
Intangible asset amortization	4	4	14	15
Operating income (loss) from discontinued operations	133	210	609	674
Gain on sale of discontinued operations	1,501		1,501
Income (loss) from discontinued operations	1,634	210	2,110	674
Alpha
Operating expenses:
Gain on sale of discontinued operations			1,585
Alpha | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales		131	879	1,982
Cost of sales		(18)	278	659
Gross profit		149	601	1,323
Operating expenses:
Selling		63	141	344
General and administrative	13		22
Operating income (loss) from discontinued operations	(13)	86	438	979
Gain on sale of discontinued operations	1,585		1,585
Income (loss) from discontinued operations	1,572	86	2,023	979
BIZ
Operating expenses:
Gain on sale of discontinued operations			781
BIZ | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales		1,179	2,164	3,602
Cost of sales		958	1,510	2,665
Gross profit		221	654	937
Operating expenses:
Selling		384	437	1,061
General and administrative			12
Intangible asset amortization		6	12	18
Operating income (loss) from discontinued operations		(169)	193	(142)
Interest expense		(44)	(88)	(132)
Gain on sale of discontinued operations	781		781
Income (loss) from discontinued operations	$ 781	(213)	886	(274)
Prell | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales		903		2,494
Cost of sales		540		1,506
Gross profit		363		988
Operating expenses:
Selling		261		753
Intangible asset amortization		12		36
Operating income (loss) from discontinued operations		90		199
Interest expense		(14)		(42)
Income (loss) from discontinued operations		76		157
Scott's Liquid Gold
Operating expenses:
Gain on sale of discontinued operations			787
Scott's Liquid Gold | Disposal of Product Line
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Net sales		837	187	3,150
Cost of sales		387	95	1,409
Gross profit		450	92	1,741
Operating expenses:
Selling		192	28	681
General and administrative			22
Operating income (loss) from discontinued operations		258	42	1,060
Interest expense		(54)	(18)	(162)
Gain on sale of discontinued operations			787
Income (loss) from discontinued operations		$ 204	$ 811	$ 898

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Divestitures - Summary of Financial Information Constituting Major Classes of Assets of Discontinued Operations (Details) - USD ($)	Sep. 30, 2023	Jan. 23, 2023	Dec. 31, 2022	Dec. 15, 2022
Assets
Inventories	$ 3,360,000
Intangible assets, net	318,000
Assets of discontinued operations			$ 4,261,000
Disposal of Product Line
Assets
Inventories			3,917,000
Intangible assets, net			344,000
Assets of discontinued operations			4,261,000
Neoteric
Assets
Inventories	150,000
Intangible assets, net	99,000
Neoteric | Disposal of Product Line
Assets
Inventories			322,000
Intangible assets, net			113,000
Assets of discontinued operations			435,000
Alpha
Assets
Inventories	1,115,000
Alpha | Disposal of Product Line
Assets
Inventories			1,268,000
Assets of discontinued operations	0		1,268,000
BIZ
Assets
Inventories	946,000
Intangible assets, net	219,000
BIZ | Disposal of Product Line
Assets
Inventories	946,000		1,092,000
Intangible assets, net			231,000
Assets of discontinued operations	0		1,323,000
Scott's Liquid Gold
Assets
Inventories	1,149,000
Scott's Liquid Gold | Disposal of Product Line
Assets
Inventories		$ 1,136,000	1,235,000
Assets of discontinued operations	0		1,235,000
Prell | Disposal of Product Line
Assets
Inventories				$ 330,000
Assets of discontinued operations	$ 0		$ 0

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Divestitures - Summary of Carrying Value of Assets and Resulting in Gain on Sale of Discontinued Operations (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2023 USD ($)
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Inventories	$ 3,360
Intangible assets, net	318
Proceeds from sale	8,332
Gain on sale of discontinued operations	4,654
Trade Names
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	204
Formulas
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	111
Non-compete
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	3
BIZ
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Inventories	946
Intangible assets, net	219
Proceeds from sale	1,946
Gain on sale of discontinued operations	781
BIZ | Trade Names
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	145
BIZ | Formulas
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	71
BIZ | Non-compete
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	3
Alpha
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Inventories	1,115
Proceeds from sale	2,700
Gain on sale of discontinued operations	1,585
Neoteric
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Inventories	150
Intangible assets, net	99
Proceeds from sale	1,750
Gain on sale of discontinued operations	1,501
Neoteric | Trade Names
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	59
Neoteric | Formulas
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Intangible assets, net	40
Scott's Liquid Gold
Income Statement Balance Sheet And Additional Disclosures By Disposal Groups Including Discontinued Operations [Line Items]
Inventories	1,149
Proceeds from sale	1,936
Gain on sale of discontinued operations	$ 787

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Stock-Based Compensation - Additional Information (Details) - USD ($)				9 Months Ended
	May 11, 2023	Mar. 02, 2022	Jan. 18, 2022	Sep. 30, 2023	Sep. 30, 2022
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation				$ 58,000	$ 113,000
Tax benefit from recording non-cash expense relates to options granted to employees				0
Restricted Stock Units (RSUs)
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation				58,000	103,000
Unrecognized compensation costs related to non-vested stock options				$ 38,000
Period over which compensation costs related to non-vested stock options recognize				3 years
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	200,000	15,000
Restricted stock shares granted in period granted date fair value	$ 40,000	$ 18,000
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			25,000
Restricted stock shares granted in period granted date fair value			$ 10,000
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.
Stock Options
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Stock-based compensation				$ 0	$ 10,000

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Earnings Per Share - Reconciliation of the Weighted Average Number of Common Shares Outstanding (Details) - shares shares in Thousands	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Beginning Balance, Shares	12,997	12,997	12,749	12,797	12,727
Weighted average common shares issued				104	20
Weighted average number of common shares outstanding	12,997	12,997	12,749	12,901	12,747
Diluted weighted average number of common shares outstanding		12,997	12,749	12,901	12,747

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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, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from calculation of earnings per share	56	153	56	153
Restricted Stock Units
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from calculation of earnings per share	20	88	20	88

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Segment Information - Additional Information (Details) - Segment	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023
Segment Reporting [Abstract]
Number of business segment		2
Number of reportable segment	1

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Intangible Assets - Schedule of Intangible Assets (Details) - Internal-use Software - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 898	$ 898
Accumulated Amortization	240	105
Net Carrying Value	$ 658	$ 793

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Intangible Assets - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense of intangible assets	$ 45	$ 65	$ 135	$ 313

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Intangible Assets - Schedule of Estimated Amortization Expense (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Goodwill and Intangible Assets Disclosure [Abstract]
Remainder of 2023	$ 45
2024	180
2025	180
2026	180
2027	73
Total	$ 658

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Long-Term Debt - Additional Information (Details) - USD ($) $ in Thousands				3 Months Ended	9 Months Ended
	Jan. 23, 2023	Aug. 10, 2022	Jul. 01, 2020	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022	Nov. 09, 2021
Debt Instrument [Line Items]
Repayments of term loan					$ 1,250	$ 2,000
La Plata Capital, LLC | Loan Agreement | Term Loan
Debt Instrument [Line Items]
Term loan amount								$ 2,000
Repayments of term loan				$ 1,000
Debt outstanding effective interest rate								14.00%
Unamortized loan costs					0		$ 20
Amortization of loan costs					$ 20	26
La Plata Capital, LLC | Loan Agreement | Term Loan Two
Debt Instrument [Line Items]
Term loan amount								$ 250
Debt outstanding effective interest rate								15.00%
UMB Bank, N.A | Loan Agreement | Revolving Credit Facility | Maximum
Debt Instrument [Line Items]
Available borrowing capacity amount		$ 4,000
UMB Bank, N.A | Loan Agreement | Revolving Credit Facility | SOFR Rate
Debt Instrument [Line Items]
Debt Instrument, maturity of variable interest rate					one-month term SOFR rate
Debt instrument, variable interest rate		6.83%
UMB Bank, N.A | Loan Agreement | Revolving Credit Facility | Floor Rate
Debt Instrument [Line Items]
Debt instrument, variable interest rate		7.75%
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 | Consent and Seventh Amendment to Loan and Security Agreement | Revolving Credit Facility
Debt Instrument [Line Items]
Unamortized loan costs					$ 0		$ 100
Amortization of loan costs					100	$ 99
Credit facility, terminate date	Feb. 27, 2023
Expense as a result of the termination of the UMB Loan Agreement					$ 83

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Leases - Additional Information (Details)	Sep. 30, 2023
Maximum
Lessee Lease Description [Line Items]
Remaining lease terms	7 years

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Leases - Schedule of Information Related to Leases (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Operating lease information:
Operating lease cost	$ 101	$ 100	$ 304	$ 200
Operating cash flows from operating leases	$ 101	$ 100	$ 304	$ 200
Weighted average remaining lease term in years	7 years 2 months 1 day	8 years 2 months 1 day	7 years 2 months 1 day	8 years 2 months 1 day
Weighted average discount rate	5.10%	5.10%	5.10%	5.10%

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Leases - Schedule of Future Minimum Annual Lease Payments (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Leases [Abstract]
Remainder of 2023	$ 102
2024	413
2025	420
2026	427
2027	434
Thereafter	1,305
Total minimum lease payments	3,101
Less imputed interest	(520)
Total operating lease liability	$ 2,581

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Subsequent Events - Additional Information (Details) $ in Thousands	1 Months Ended
	Oct. 31, 2023 USD ($)
Subsequent Event | Maran Capital Management, LLC
Subsequent Event [Line Items]
Legal and other expenses	$ 200