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Note 15 - Restatement of Financial Statements | 3 Months Ended
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Mar. 31, 2019
Notes to Financial Statements |
Accounting Changes and Error Corrections [Text Block] | Note 15 – Restatement of Financial Statements As of January 3, 2020, the Audit Committee of the Board approved the engagement of RBSM, LLP (“RBSM”) as the Company’s independent registered public accounting firm for the Company’s fiscal year ended December 31, 2019. This Form 10 -Q/A is being prepared with the benefit of auditor review and will constitute our amended filing. This Form 10 -Q/A has also been updated to reflect disclosure of subsequent events that have occurred after the balance sheet date, but before the issuance of the associated financial statements. The subsequent events include the Company’s decision to exit its underperforming international subsidiaries, exit a significant product line, change its capital structure and focus its efforts on its US-based foil balloon and related product offerings. The Company determined that the deferred tax asset at March 31, 2019 should have been $135,094 and, therefore, the Company should have recorded a valuation allowance on the income tax benefit of $360,492 generated during the quarter. Finally, the Company determined that the goodwill associated with Clever Container and Flexo should be impaired and recorded an impairment charge of $1.2M. The change in the statement in equity was related to the increase in net loss of $1.6 million and the corresponding decrease in stockholders’ equity and period end.
Yunhong CTI, LTD (f/k/a CTI Industries Corporation)
Condensed Consolidated Balance Sheets
|  | March 31, 2019 |
|  | As Previously Reported |  |  | Adjustments |  |  | As Restated |
ASSETS |  |  |  |  |  |  |  |  |  |  |  |
Current assets: |  |  |  |  |  |  |  |  |  |  |  |
Cash and cash equivalents (VIE $3,000 and $57,000, respectively) |  | $ | 175,442 |  |  | $ | - |  |  | $ | 175,442 |
Accounts receivable, (less allowance for doubtful accounts of $524,000 and $85,000, respectively) |  |  | 10,602,710 |  |  |  | (432,454 | ) |  |  | 10,170,256 |
Inventories, net (VIE $315,000 and $340,000, respectively) |  |  | 20,837,907 |  |  |  |  |  |  |  | 20,837,907 |
Prepaid expenses (VIE $106,000 and $127,000, respectively) |  |  | 646,164 |  |  |  | 12,000 |  |  |  | 658,164 |
Other current assets |  |  | 1,419,371 |  |  |  | (12,000) |  |  |  | 1,407,371 |
Total current assets |  |  | 33,681,594 |  |  |  | (432,454 | ) |  |  | 33,249,140 |
Property, plant and equipment: |  |  |  |  |  |  |  |  |  |  |  |
Machinery and equipment |  |  | 23,842,559 |  |  |  |  |  |  |  | 23,842,559 |
Building |  |  | 3,374,334 |  |  |  |  |  |  |  | 3,374,334 |
Office furniture and equipment (VIE $303,000 and $303,000, respectively) |  |  | 2,656,519 |  |  |  |  |  |  |  | 2,656,519 |
Intellectual property |  |  | 783,179 |  |  |  |  |  |  |  | 783,179 |
Land |  |  | 250,000 |  |  |  |  |  |  |  | 250,000 |
Leasehold improvements |  |  | 411,426 |  |  |  |  |  |  |  | 411,426 |
Fixtures and equipment at customer locations |  |  | 518,450 |  |  |  |  |  |  |  | 518,450 |
Projects under construction |  |  | 188,181 |  |  |  |  |  |  |  | 188,181 |
|  |  | 32,024,648 |  |  |  |  |  |  |  | 32,024,648 |
Less : accumulated depreciation and amortization (VIE $106,000 and $104,000, respectively) |  |  | (28,427,729 | ) |  |  |  |  |  |  | (28,427,729 | )
|  |  |  |  |  |  | - |  |  |  |  |
Total property, plant and equipment, net |  |  | 3,596,919 |  |  |  |  |  |  |  | 3,596,919 |
Other assets: |  |  |  |  |  |  |  |  |  |  |  |
Goodwill (VIE $0 and $440,000, respectively) |  |  | 1,473,176 |  |  |  | (1,473,176 | ) |  |  | 0 |
Net deferred income tax asset |  |  | 495,586 |  |  |  | (360,492 | ) |  |  | 135,094 |
Operating lease right-of-use |  |  | 2,110,723 |  |  |  | 367,094 |  |  |  | 2,477,817 |
Other assets |  |  | 26,088 |  |  |  | 220,000 |  |  |  | 246,088 |
|  |  |  |  |  |  | - |  |  |  |  |
Total other assets |  |  | 4,105,573 |  |  |  | (1,246,574 | ) |  |  | 2,858,999 |
|  |  |  |  |  |  | - |  |  |  |  |
TOTAL ASSETS |  | $ | 41,384,086 |  |  | $ | (1,679,028 | ) |  | $ | 39,705,058 |
LIABILITIES AND EQUITY |  |  |  |  |  |  |  |  |  |  |  |
Current liabilities: |  |  |  |  |  |  |  |  |  |  |  |
Checks written in excess of bank balance (VIE $4,000 and $7,000, respectively) |  | $ | 654,646 |  |  |  |  |  |  | $ | 654,646 |
Trade payables (VIE $142,000 and $62,000, respectively) |  |  | 8,680,004 |  |  |  |  |  |  |  | 8,680,004 |
Line of credit (VIE $249,000 and $267,000, respectively) |  |  | 15,351,709 |  |  |  |  |  |  |  | 15,351,709 |
Notes payable - current portion |  |  | 4,414,581 |  |  |  |  |  |  |  | 4,414,581 |
Notes payable affiliates - current portion |  |  | 11,271 |  |  |  |  |  |  |  | 11,271 |
Operating Lease Liabilities |  |  | 1,016,687 |  |  |  | 284,140 |  |  |  | 1,300,827 |
Accrued liabilities (VIE $47,000 and $89,000, respectively) |  |  | 2,082,161 |  |  |  | (432,454 | ) |  |  | 1,649,707 |
|  |  |  |  |  |  | - |  |  |  |  |
Total current liabilities |  |  | 32,211,059 |  |  |  | (148,314 | ) |  |  | 32,062,745 |
|  |  |  |  |  |  | - |  |  |  |  |
Long-term liabilities: |  |  |  |  |  |  | - |  |  |  |  |
Notes payable - affiliates |  |  | 175,512 |  |  |  |  |  |  |  | 175,512 |
Notes payable, net of current portion (VIE $30,000 and $27,000, respectively) |  |  | 639,327 |  |  |  |  |  |  |  | 639,327 |
Operating Lease Liabilities |  |  | 1,094,036 |  |  |  | 82,954 |  |  |  | 1,176,990 |
Notes payable - officers, subordinated |  |  | 1,012,024 |  |  |  | - |  |  |  | 1,012,024 |
Deferred gain (non current) |  |  | 74,364 |  |  |  | - |  |  |  | 74,364 |
Total long-term debt, net of current portion |  |  | 2,995,263 |  |  |  | 82,954 |  |  |  | 3,078,217 |
|  |  |  |  |  |  | - |  |  |  |  |
Total liabilities |  |  | 35,206,322 |  |  |  | (65,360) |  |  |  | 35,140,962 |
|  |  |  |  |  |  | - |  |  |  |  |
Equity: |  |  |  |  |  |  | - |  |  |  |  |
Yunhong CTI, LTD stockholders' equity: |  |  |  |  |  |  | - |  |  |  |  |
Preferred Stock -- no par value, 3,000,000 shares authorized, 0 shares issued and outstanding |  |  | - |  |  |  | - |  |  |  | - |
Common stock - no par value, 15,000,000 shares authorized, 3,779,608 shares issued and 3,730,950 shares outstanding |  |  | 13,898,494 |  |  |  |  |  |  |  | 13,898,494 |
Paid-in-capital |  |  | 3,135,404 |  |  |  |  |  |  |  | 3,135,404 |
Accumulated earnings |  |  | (3,745,907 | ) |  |  | (1,613,668 | ) |  |  | (5,359,575 | )
Accumulated other comprehensive loss |  |  | (5,814,471 | ) |  |  |  |  |  |  | (5,814,471 | )
Less: Treasury stock, 43,658 shares |  |  | (160,784 | ) |  |  |  |  |  |  | (160,784 | )
Total Yunhong CTI, LTD stockholders' equity |  |  | 7,312,736 |  |  |  | (1,613,668 | ) |  |  | 5,699,068 |
Noncontrolling interest |  |  | (1,134,972 | ) |  |  |  |  |  |  | (1,134,972 | )
Total Equity |  |  | 6,177,764 |  |  |  | (1,613,668 | ) |  |  | 4,564,096 |
TOTAL LIABILITIES AND EQUITY |  | $ | 41,384,086 |  |  | $ | (1,679,028 | ) |  | $ | 39,705,058 |
Yunhong CTI, LTD (f/k/a CTI Industries Corporation)
Condensed Consolidated Statements of Comprehensive Income (Unaudited)
|  | For the Three Months Ended March 31, |
|  | 2019 |  |  |  |  |  |  | 2019 |
|  | As Previously Reported |  |  | Adjustments |  |  | As Restated |
Net Sales |  | $ | 12,536,389 |  |  | $ | - |  |  | $ | 12,536,389 |
|  |  |  |  |  |  | - |  |  |  |  |
Cost of Sales |  |  | 10,540,218 |  |  |  | - |  |  |  | 10,540,218 |
|  |  |  |  |  |  | - |  |  |  |  |
Gross profit |  |  | 1,996,171 |  |  |  | - |  |  |  | 1,996,171 |
|  |  |  |  |  |  | - |  |  |  |  |
Operating expenses: |  |  |  |  |  |  | - |  |  |  |  |
General and administrative |  |  | 2,056,073 |  |  |  | (214,175) |  |  |  | 1,841,898 |
Selling |  |  | 437,565 |  |  |  | - |  |  |  | 437,565 |
Advertising and marketing |  |  | 273,880 |  |  |  | (101,303) |  |  |  | 172,577 |
Impairment on long-lived assets |  |  |  |  |  |  | 1,253,176 |  |  |  | 1,253,176 |
Gain on sale of assets |  |  | (23,547 | ) |  |  | - |  |  |  | (23,547 | )
Total operating expenses |  |  | 2,743,971 |  |  |  | 937,698 |  |  |  | 3,681,669 |
|  |  |  |  |  |  | - |  |  |  |  |
Loss from operations |  |  | (747,800 | ) |  |  | (937,698 | ) |  |  | (1,685,498 | )
Other (expense) income: |  |  |  |  |  |  |  |  |  |  |  |
Interest expense |  |  | (546,906 | ) |  |  | - |  |  |  | (546,906 | )
Other income (expense) |  |  |  |  |  |  | (315,478) |  |  |  | (315,478) |
Foreign currency loss |  |  | (8,594 | ) |  |  | - |  |  |  | (8,594 | )
Total other expense, net |  |  | (555,500 | ) |  |  | (315,478) |  |  |  | (870,978 | )
Net loss before taxes |  |  | (1,303,300 | ) |  |  | (1,253,176 | ) |  |  | (2,556,476 | )
Income tax (benefit) expense |  |  | (360,491 | ) |  |  | 360,491 |  |  |  |  |
Net loss |  |  | (942,809 | ) |  |  | (1,613,667 | ) |  |  | (2,556,476 | )
Less: loss attributable to noncontrolling interest |  |  | (62,388 | ) |  |  | - |  |  |  | (62,388 | )
Net loss attributable to Yunhong CTI, LTD |  | $ | (880,421 | ) |  | $ | (1,613,667 | ) |  | $ | (2,494,088 | )
Other Comprehensive Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |
Foreign currency adjustment |  |  | 235,876 |  |  |  | - |  |  |  | 235,876 |
Comprehensive loss |  | $ | (644,545 | ) |  | $ | (1,613,667 | ) |  | $ | (2,258,212 | )
Basic loss per common share |  | $ | (0.24 | ) |  | $ | (0.43 | ) |  | $ | (0.67 | )
Diluted loss per common share |  | $ | (0.24 | ) |  | $ | (0.43 | ) |  | $ | (0.67 | )
Weighted average number of shares and equivalent shares of common stock outstanding: |  |  |  |  |  |  |  |  |  |  |  |
Basic |  |  | 3,735,950 |  |  |  |  |  |  |  | 3,735,950 |
Diluted |  |  | 3,735,950 |  |  |  |  |  |  |  | 3,735,950 |
Yunhong CTI, LTD (f/k/a CTI Industries Corporation)
Condensed Consolidated Statements of Cash Flows (Unaudited)
|  | For the Three Months Ended March 31, |
|  | 2019 |  |  |  |  |  |  | 2019 |
|  | As Previously Reported |  |  | Adjustments |  |  | As Restated |
Cash flows from operating activities: |  |  |  |  |  |  |  |  |  |  |  |
Net loss |  | $ | (942,809 | ) |  | $ | (1,613,667 | ) |  | $ | (2,556,476 | )
Depreciation and amortization |  |  | 308,084 |  |  |  | - |  |  |  | 308,084 |
Operating cash flows from operating leases |  |  | 248,757 |  |  |  | (248,757) |  |  |  |  |
Amortization of deferred gain on sale/leaseback |  |  | (27,474) |  |  |  |  |  |  |  | (27,474 | )
Provision for losses on accounts receivable |  |  | 6,085 |  |  |  |  |  |  |  | 6,085 |
Provision for losses on inventories |  |  | (10,656) |  |  |  |  |  |  |  | (10,656 | )
Impairment of long-lived assets |  |  |  |  |  |  | 1,253,176 |  |  |  | 1,253,176 |
Deferred income taxes |  |  | (360,491 | ) |  |  | 360,491 |  |  |  |  |
Stock based compensation |  |  |  |  |  |  | 28,967 |  |  |  | 28,967 |
Change in assets and liabilities: |  |  |  |  |  |  | - |  |  |  |  |
Accounts receivable |  |  | 249,950 |  |  |  | 410,349 |  |  |  | 660,299 |
Inventories |  |  | (827,084 | ) |  |  | - |  |  |  | (827,084 | )
Prepaid expenses and other assets |  |  | (235,701 | ) |  |  | 215,468 |  |  |  | (20,233 | )
Trade payables |  |  | 1,971,593 |  |  |  | 28,741 |  |  |  | 2,000,334 |
Accrued liabilities |  |  | (149,957 | ) |  |  |  |  |  |  | (149,957 | )
Net cash provided by operating activities |  |  | 230,297 |  |  |  | 434,768 |  |  |  | 665,065 |
Cash flows from investing activities: |  |  |  |  |  |  |  |  |  |  |  |
Purchases of property, plant and equipment |  |  | (52,243 | ) |  |  |  |  |  |  | (52,243 | )
Net cash (used in) investing activities |  |  | (52,243 | ) |  |  |  |  |  |  | (52,243 | )
Cash flows from financing activities: |  |  |  |  |  |  |  |  |  |  |  |
Change in checks written in excess of bank balance |  |  | 18,504 |  |  |  |  |  |  |  | 18,504 |
Net change in revolving line of credit |  |  | (1,235,126 | ) |  |  |  |  |  |  | (1,235,126 | )
Repayment of long-term debt |  |  | 771,113 |  |  |  | (984,634) |  |  |  | (213,521) |
Proceeds from issuance of stock |  |  | 28,967 |  |  |  | (28,967) |  |  |  | - |
Cash paid for deferred financing fees |  |  | 3,800 |  |  |  | (31,385) |  |  |  | (27,585) |
Proceeds from issuance of long-term note payable |  |  |  |  |  |  | 650,000 |  |  |  | 650,000 |
Net cash (used in) financing activities |  |  | (412,742 | ) |  |  | (394,986) |  |  |  | (807,728 | )
Effect of exchange rate changes on cash |  |  | (18,020) |  |  |  | (39,782) |  |  |  | (57,802) |
Net increase/(decrease) in cash and cash equivalents |  |  | (252,708 | ) |  |  |  |  |  |  | (252,708 | )
Cash and cash equivalents at beginning of period |  |  | 428,150 |  |  |  |  |  |  |  | 428,150 |
Cash and cash equivalents at end of period |  | $ | 175,442 |  |  | $ |  |  |  | $ | 175,442 |
Supplemental disclosure of cash flow information: |  |  |  |  |  |  |  |  |  |  |  |
Cash payments for interest |  | $ | 366,688 |  |  |  |  |  |  | $ | 366,688 |
Common stock issued for notes payable |  |  |  |  |  |  |  |  |  | $ | 600,000 |

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- Definition The entire disclosure for reporting accounting changes and error corrections. It includes the conveyance of information necessary for a user of the Company's financial information to understand all aspects and required disclosure information concerning all changes and error corrections reported in the Company's financial statements for the period. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -SubTopic 10 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=109234566&loc=d3e22644-107794 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 250 -URI http://asc.fasb.org/topic&trid=2122394 + Details
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