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Note 18 - Stockholders' Equity | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Stockholders' Equity Note Disclosure [Text Block] | 18. Stockholders ' Equity Series A Preferred Stock As discussed in Note 3, in the Series A Offering, the Company sold 500,000 shares of Series A Preferred and 400,000 shares of common stock for aggregate gross proceeds of $5,000,000. In connection with the Series A Offering, we changed our name from CTI Industries Corporation to Yunhong CTI Ltd. and LF International named three directors to serve on our Board. They are Mr. Yubao Li, our Chairman of the Board, Ms. Wan Zhang and Ms. Yaping Zhang. Additionally, in 2020 the Company sold 42,660 shares of Series A Preferred for an aggregate purchase price of $426,600. On April 1, 2020, an investor exchanged accounts receivable of $478,000 into 48,200 shares of Series A Preferred. Each share of Series A Preferred is convertible into ten shares of the Company's common stock. Holders of the Series A Preferred are entitled to receive quarterly dividends at the annual rate of 8% of the stated value ( $10 per share). Such dividends may be paid in cash or in shares of common stock at the Company's discretion. In 2020 the Company accrued $379,655 of these dividends. The issuances of the Company's Series A Preferred generated a beneficial conversion feature. The fair value of the common stock into which the Series A Preferred was convertible exceeded the allocated purchase price fair value of the Series A Preferred Stock at the closing dates by approximately $2.5 million as of the closing dates. We recognized this BCF by allocating the intrinsic value of the conversion option ( $2.5 million) to Additional Paid-in Capital, resulting in a discount on the Series A Preferred Stock. As the Series A Preferred Stock is immediately convertible, the Company accreted the discount on the dates of issuance. The accretion was recognized as dividend equivalents. In 2020, 90,860 shares of Series A Preferred were converted into 941,388 shares of the Company's common stock, including shares issued for accrued dividends. Common Stock On November 20, 2020, the Company filed Articles of Amendment to its Articles of Incorporation with the Secretary of State of Illinois pursuant to which the Company increased its authorized shares of common stock from 15,000,000 to 50,000,000. During January 2019, and as further described in Note 21, the settlement of an arbitration proceeding resulted in the issuance of 20,000 shares of the Company's common stock. The expense for the fair value of these shares was recorded as of December 31, 2018. During 2019, Mr. Schwan converted $600,000 of notes payable into 180,723 shares of our common stock, using the market price at the time of conversion. Additionally, 100,000 shares of our common stock were issued to a vendor in exchange for $300,000 in amounts due to the vendor, also at market value at the time of the conversion. During 2020, 400,000 shares of our common stock were issued to LF related to the acceleration of closings in our Series A Offering, and an additional 200,000 shares were issued to Garden State Securities in its representation of the Company in the Series A Offering. Restricted Stock In 2020, 15,000 shares of restricted stock vested to Mr. Hyland, former Chief Executive Officer, pursuant to the terms of the grant related to his employment with the Company. Stock Options The Compensation Committee (“Committee”) administers the Company's stock-based plans. The exercise price of the stock options shall be fixed by the Committee at whatever price the Committee may determine in good faith. Unless the Committee determines otherwise, options generally had a 4 -year term with a 3 -year vesting schedule. Unless the Committee provides otherwise, options terminate upon the termination of a participant's employment, except that the participant may exercise an option to the extent it was exercisable on the date of termination and for a period of time after termination. In 2009, the shareholders of the Corporation approved, a 2009 Stock Incentive Plan ( “2009 Plan”). The 2009 Plan and subsequent awards categorized as inducement of employment authorized the issuance of up to 510,000 shares of stock or options to purchase stock of the Company (including cancelled shares reissued under the plan.) On June 8, 2018, our shareholders approved the 2018 Stock Incentive Plan ( “2018 Plan”). The 2018 Plan authorized the issuance of up to 300,000 shares of our common stock in the form of equity-based awards. Because no registration on Form S- 8 was filed for these additional shares within 12 months of approval by our shareholders, those additional shares are not available for issuance in the normal course. The Company, at the discretion of the board, may issue options in excess of the total available, if options related to that stock plan are cancelled. In some cases, not all shares that are available to a stock plan are issued, as the Company is unable to issue options to a previous plan when a new plan is in place. The Company recognized share based compensation expense of approximately $0 and $178,000 in 2020 and 2019, respectively. As of December 31, 2020, there was no unrecognized compensation expense related to non-vested stock option grants. Warrants In connection with the Series A Offering, the Company issued 792,660 warrants to purchase 792,660 shares of the Company's common stock for $1 per share. During 2020, 597,500 warrants were exercised in cash-less exchange for 391,308 shares of the Company's common stock. The Company has applied the Black-Scholes model to value stock-based awards. That model incorporates various assumptions in the valuation of stock-based awards relating to the risk-free rate of interest to be applied, the estimated dividend yield and expected volatility of the Company's Common Stock. The risk-free rate of interest is the U.S. Treasury yield curve for periods within the expected term of the option at the time of grant. The expected volatility is based on historical volatility of the Company's Common Stock. The valuation assumptions we have applied to determine the value of warrants granted in 2020 were as follows: Historical stock price volatility: The Company used the weekly closing price to calculate historical annual volatility. Risk-free interest rate: The Company bases the risk-free interest rate on the rate payable on US treasury securities with a similar maturity in effect at the time of the grant, which was a range from .42% - 1.65%. Expected life: The expected life of the warrants represents the period of time warrants were expected to be outstanding. The Company used an expected life of 5 years. Dividend yield: The estimate for dividend yield is 0%, as the Company did not issue dividends during 2020 or 2019 and does not expect to do so in the foreseeable future. Estimated forfeitures: When estimating forfeitures, the Company considers historical terminations as well as anticipated retirements. A summary of the Company's stock options, warrants and related information, is as follows:
|  | Options |  |  | Weighted Average Exercise Price |  |  | Warrants |  |  | Weighted Average Exercise Price |
Balance at January 1, 2019 |  |  | 471,144 |  |  | $ | 3.95 |  |  |  | - |  |  |  | - |
Granted |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Cancelled/Expired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Exercised/Issued |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Balance at December 31, 2019 |  |  | 471,144 |  |  | $ | 3.95 |  |  |  | - |  |  |  | - |
Granted |  |  | - |  |  |  | - |  |  |  | 792,660 |  |  |  | 1.00 |
Cancelled/Expired |  |  | (471,144 | ) |  |  | 3.95 |  |  |  | - |  |  |  |  |
Exercised/Issued |  |  |  |  |  |  |  |  |  |  | (597,500 | ) |  |  | 1.00 |
Balance at December 31, 2020 |  |  | - |  |  |  | - |  |  |  | 195,160 |  |  | $ | 1.00 |
Exercisable at December 31, 2020 |  |  |  |  |  |  |  | 195,160 |  |  | $ | 1.00 |
The stock options above have no aggregate intrinsic value (the difference between the closing price of the Company's common stock as of December 31, 2020 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all the holders exercised their options on December 31, 2020. The warrants have an intrinsic value of $140,615 as of December 31, 2020. As of December 31, 2020, the Company reserved the following shares of its common stock for the exercise of warrants, and preferred stock:
Warrants |  |  | 195,160 |
Series A Preferred Stock |  |  | 5,482,000 |
Series B Preferred Stock |  |  | 1,700,000 |
|  |  | 7,377,160 |

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- Definition The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-08(e)(1)) -URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.3-04) -URI http://asc.fasb.org/extlink&oid=120397183&loc=d3e187085-122770 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 505 -URI http://asc.fasb.org/topic&trid=2208762 + Details
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