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Note 2 - Discontinued Operations | 9 Months Ended
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Sep. 30, 2020
Notes to Financial Statements |
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block] | Note 2 – Discontinued Operations In July 2019 management and the Board engaged in a review of CTI Balloons and CTI Europe and determined that they are not accretive to the Company overall, add complexity to the Company's structure and utilize resources. Therefore, as of July 19, 2019, the board authorized management to divest of CTI Balloons and CTI Europe. These actions are being taken to focus our resources and efforts on our core business activities, particularly foil balloons and ancillary products based in North America. The Company determined that these entities met the held-for-sale and discontinued operations accounting criteria. Accordingly, the Company has reported the results of these operations as discontinued operations in the Consolidated Statements of Comprehensive Income and presented the related assets and liabilities as held-for-sale in the Consolidated Balance Sheets. These changes have been applied for all periods presented. The Company divested its CTI Balloons (United Kingdom) subsidiary in the fourth quarter 2019. In October 2019, we determined that we would not renew our Trademark License Agreement with SC Johnson when it expired on December 31, 2019. Under this Agreement, we were licensed to manufacture and sell a line of vacuum sealing machines and pouches under the Ziploc® Brand Vacuum Sealer System. The terms of the Agreement included a run-off provision which allowed us to sell products under the Ziploc® trademark for 90 days after the end of the Agreement. Our exit of the Ziploc® product line is considered a strategic shift and will have a major effect on our operations and financial results on a go forward basis therefore, this product line has been presented as discontinued operations. CTI Balloons recorded losses from discontinued operations, net of taxes of ( $433,000 ) and ( $996,000 ) for the three and nine months ended September 30, 2019. CTI Europe recorded a loss from discontinued operations, net of taxes of $( 76,000 ) for the three months ended September 30, 2020, compared to a gain from discontinued operations, net of taxes of $313,000 for the nine months ended September 30, 2020. The net losses, net of taxes, were ( $566,000 ) and ( $1,735,000 ) for the three and nine month periods ended September 30, 2019, respectively. Our Ziploc product line recorded a loss from discontinued operations, net of taxes of ( $37,000 ) for the three months ended September 30, 2020, compared to a loss from discontinued operations, net of taxes of ( $1,513,000 ) for the nine months ended September 30, 2020. The net gain, net of taxes, was $340,000 for the three months ended September 30, 2019 compared to a gain from discontinued operations, net of taxes of $625,000 for the nine -month period ended September 30, 2019, respectively. Summarized Discontinued Operations Financial Information The following table summarizes the major line items for the operations that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Income for the three months ended:
|  | September 30, 2020 |  |  | September 30, 2019 |
Income Statement |  |  |  |  |  |  |  |
Net Sales |  | $ | 655,896 |  |  | $ | 3,130,382 |
Cost of Sales |  |  | 412,663 |  |  |  | 2,588,927 |
Gross profit (Loss) |  |  | 243,233 |  |  |  | 541,454 |
SG&A |  |  | 194,300 |  |  |  | 627,452 |
Operating income (loss) |  |  | 48,933 |  |  |  | (85,998 | )
Other Expense |  |  | (10,848 | ) |  |  | (31,962 | )
Total pretax income (loss) from discontinued operations |  |  | 38,085 |  |  |  | (54,035 | )
Loss from classification to held for sale |  |  | (151,140 | ) |  |  | (604,483 | )
Income Tax Expense |  |  | - |  |  |  | - |
Net loss prior to non-controlling interest |  |  | (113,055 | ) |  |  | (658,518 | )
Non-controlling Interest share of profit/loss |  |  | (72,211 | ) |  |  | (760,813 | )
Net loss |  | $ | (40,844 | ) |  | $ | 102,295 |
The following table summarizes the major line items for the operations that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Income for the nine months ended:
|  | September 30, 2020 |  |  | September 30, 2019 |
Income Statement |  | $ |  |  |  | $ |  |
Net Sales |  |  | 2,328,341 |  |  |  | 10,191,188 |
Cost of Sales |  |  | 2,527,937 |  |  |  | 9,607,692 |
Gross Margin |  |  | (199,597 | ) |  |  | 583,496 |
Impairment of Long-Lived Assets |  |  | - |  |  |  |  |
SG&A |  |  | 1,049,295 |  |  |  | 2,025,778 |
Operating Loss |  |  | (1,248,892 | ) |  |  | (1,442,283 | )
Other Expense |  |  | (33,301 | ) |  |  | (58,990 | )
Total pretax loss from discontinued operations |  |  | (1,282,193 | ) |  |  | (1,501,273 | )
Gain (loss) from classification to held for sale |  |  | 82,545 |  |  |  | (604,483 | )
Net Income prior to non-controlling interest |  |  | (1,199,648 | ) |  |  | (2,105,756 | )
Non-controlling Interest share of profit/loss |  |  | 150,458 |  |  |  | (837,136 | )
Net Loss |  | $ | (1,350,106 | ) |  | $ | (1,268,620 | )
The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:
Yunhong CTI Ltd.
Consolidated Balance Sheet
|  | September 30, 2020 |  |  | December 31, 2019 |
Balance Sheet |  |  |  |  |  |  |  |
Assets |  |  |  |  |  |  |  |
Current Assets |  |  |  |  |  |  |  |
Cash on hand and Banks |  | $ | 222,707 |  |  | $ | 4,307 |
Accounts Receivable |  |  | 481,732 |  |  |  | 539,910 |
Inventory |  |  | - |  |  |  | 74,383 |
Prepaid & Other |  |  | 90,308 |  |  |  | 135,912 |
TOTAL Current Assets |  |  | 794,747 |  |  |  | 754,512 |
NET Property, Plant, and Equipment |  |  | 7,633 |  |  |  | 53,919 |
Other Assets |  |  |  |  |  |  |  |
Operating lease right-of-use |  |  | 151,817 |  |  |  | 220,541 |
Other |  |  | 32,543 |  |  |  | 47,958 |
TOTAL Other Assets |  |  | 184,360 |  |  |  | 268,499 |
TOTAL Non-Current Assets |  |  | 191,993 |  |  |  | 322,418 |
Valuation Allowance on Assets Held for Sale |  |  | (238,354 | ) |  |  | (320,899 | )
TOTAL Assets |  | $ | 748,386 |  |  | $ | 756,031 |
Liabilities |  |  |  |  |  |  |  |
Current Liabilities |  |  |  |  |  |  |  |
Trade Accounts Payable |  |  | 68,013 |  |  |  | 384,333 |
Operating Lease Liabilities - Current |  |  | 89,119 |  |  |  | 203,291 |
Other/Accrued Liabilities |  |  | 19,276 |  |  |  | 19,562 |
TOTAL Current Liabilities |  |  | 176,408 |  |  |  | 607,187 |
Non-Current Liabilities |  |  |  |  |  |  |  |
Operating Lease Liabilities - Non Current |  |  | 62,698 |  |  |  | 17,250 |
Other Non-Current |  |  | 34,676 |  |  |  | 32,317 |
TOTAL Non-Current Liabilities |  |  | 97,374 |  |  |  | 49,567 |
TOTAL Liabilities |  | $ | 273,782 |  |  | $ | 656,753 |
The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows. The following table summarizes depreciation from discontinued operations for each of the periods presented:
|  | Nine Months Ended |
|  | September 30, |
|  | 2020 |  |  | 2019 |
Depreciation |  | $ | 320,731 |  |  | $ | 266,784 |

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- Definition The entire disclosure related to a disposal group. Includes, but is not limited to, a discontinued operation, disposal classified as held-for-sale or disposed of by means other than sale or disposal of an individually significant component. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 360 -URI http://asc.fasb.org/topic&trid=2155823 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 + Details
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