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 required recognition of a gain upon derecognition of the sale of assets under FASB ASC 610-20. 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 has been fully constrained and no amount is included in the loss on the sale of discontinued operations. Consideration for the Prell® Royalty will be recognized as received from the buyer. The constraint on the variable consideration will be reassessed at each subsequent reporting period.

On December 23, 2021, we entered into an asset purchase agreement with a buyer, pursuant to which we agreed to sell to all of our right, title and interest in and to certain assets of the Dryel® product line. The total consideration paid to us was $4,850, plus an amount equal to the value of the Dryel® inventory of $440, subject to post-close adjustment. At closing, $500 of the total consideration is held in escrow for a twelve-month period following the closing date, and was released ratably in four installments in 2022. This consideration is reflected as Restricted Cash on the Consolidated Balance Sheets.

A long-lived asset group should be classified as held for sale if all of the established criteria are met. The sales of Prell® and Dryel® did not meet these criteria during the years ended December 31, 2022, and 2021, respectively, because we had not established active programs to locate a buyer and because the brands were not being marketed for sale. All efforts between the buyers and the Company occurred during the fourth quarter of 2022 and 2021, respectively. As a result, there were no adjustments to fair value related to held for sale assets, and the difference between the consideration paid to us and the carrying amount of all assets is reflected in the loss on sale of discontinued operations.

We have reflected the operations of the Prell® and Dryel® and product lines as discontinued operations. Our Consolidated Balance Sheets and Consolidated Statements of Operations report discontinued operations separate from continuing operations. Our 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 Consolidated Statements of Operations for the years ended December 31:


	2022
	Prell®			Dryel®		Total
Net sales	$	3,140		$	-	$	3,140
Cost of sales		2,006			-		2,006
Gross profit		1,134			-		1,134

Operating expenses:
Selling		831			-		831
General and administrative		14			-		14
Intangible asset amortization		18			-		18
Income from discontinued operations, before tax		271			-		271

Interest expense		(54	)		-		(54	)
Loss on sale of discontinued operations		(155	)		-		(155	)
Income from discontinued operations, net of tax	$	62		$	-	$	62


	2021
	Prell®			Dryel®			Total
Net sales	$	3,339		$	2,827		$	6,166
Cost of sales		2,277			1,482			3,759
Gross profit		1,062			1,345			2,407

Operating expenses:
Selling		841			625			1,466
General and administrative		-			34			34
Intangible asset amortization		309			492			801
Impairment of goodwill and intangible assets		2,244			-			2,244
Loss from discontinued operations, before tax		(2,332	)		194			(2,138	)

Interest expense		(32	)		(398	)		(430	)
Income tax benefit		71			185			256
Loss on sale of discontinued operations		-			(834	)		(834	)
Loss from discontinued operations, net of tax	$	(2,293	)	$	(853	)	$	(3,146	)

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

Reconciliation of Major Classes of Assets and Liabilities of the Discontinued Operations to Amounts Presented Separately in the Consolidated Balance Sheets as of December 31:


	2022		2021
Assets
Current assets:
Inventories	$	-	$	740

Intangible assets, net		-		351
Total assets	$	-	$	1,091

All assets and liabilities in the above table are related to the discontinued operations of Prell®. There were no assets or liabilities related to Dryel® as of December 31, 2022 or 2021, respectively.

The following summarizes the carrying values of intangible assets, and the resulting loss on sale of discontinued operations associated with Prell® at the date of disposition:


Trade names	$	152
Formulas and batching processes		153
	$	305

Proceeds from sale of Prell®		150
Loss on sale of discontinued operations	$	(155	)

The following summarizes the carrying values of goodwill, intangible assets, and the resulting loss on sale of discontinued operations associated with Dryel® at the date of disposition:


Customer relationships	$	2,663
Trade names		1,064
Formulas and batching processes		488
Non-compete		12
Goodwill		1,457
	$	5,684

Proceeds from sale of Dryel®		4,850
Loss on sale of discontinued operations	$	(834	)