Note 14 - Distribution Agreements

3 Months Ended

Mar. 31, 2024

Notes to Financial Statements

License, Collaboration, and Distribution Agreements [Text Block]

NOTE 14. DISTRIBUTION AGREEMENTS

Transactions under the Company’s major distribution agreements are recognized upon transfer of control of products sold to its major distribution partners at the amount of consideration that the Company expects to be entitled to. The Company records contract liabilities for the amounts that are estimated to be subject to significant reversal, including allowances for services, discounts, rebate programs, and product returns.

Product Sales Discounts and Allowances

The following table presents activities and ending reserve balances for each significant category of discounts and allowance, which constitute variable consideration, for the three months ended March 31, 2024 (in thousands): 

	Chargebacks, Discounts for Prompt Payment			Other Customer Fees			Rebates			Total
Balance at December 31, 2023	$	913		$	12		$	21		$	946
Less discontinued operations		(218	)		—			—			(218	)
Continuing operations balance at December 31, 2023		695			12			21			728
Provision related to sales made in:
Current period		26			8			18			52
Payments and customer credits issued		(2	)		(7	)		(26	)		(35	)
Balance at March 31, 2024	$	719		$	13		$	13		$	745

Avenova Spray Pharmacy Distribution Agreements and Specialty Pharmacies

Avenova Spray is made available in local pharmacies and major pharmacy retail chains under nationwide distribution agreements with McKesson Corporation, Cardinal Health and AmerisourceBergen. The Company has also entered into direct agreements with preferred pharmacy networks as part of our Partner Pharmacy Program. During the three months ended March 31, 2024 and 2023, the Company earned $55 thousand and $92 thousand, respectively, in sales revenue for its Avenova Spray product from these distribution and partner pharmacy agreements.

Under these product distribution arrangements, the Company had a contract liability balance of $0.7 million as of March 31, 2024 and December 31, 2023. The contract liability is included in accrued liabilities in the condensed consolidated balance sheets.

Over-the-Counter Sales of Avenova Spray

Avenova Spray is offered for sale direct to U.S. customers primarily on Amazon.com, the Company’s website (Avenova.com) and Walmart.com. During the three months ended March 31, 2024 and 2023, the revenue generated from Avenova Spray in these channels was $1.7 million and $1.6 million, respectively.