23.

Discontinued Operations

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

and expects to divest CTI Europe (Germany) subsidiary in the

first

half of

2021.

In connection with management's intentions to simplify these operations and organizational structure, we identified write-offs of

$1.75

million for the year ended

December 31, 2019,

respectively, related to CTI Europe, and CTI Balloons. The charges for the year ended

December 31, 2019

were comprised of the following:

$1.0M

inventory,

$67,000

allowance for doubtful accounts; and

$8,000

for other assets. Depreciation for discontinued operations was

$7,000

for the years ended

December 31, 2020

and

2019,

respectively.

CTI Balloons recorded losses from discontinued operations, net of taxes, of (

$1,006,000

) for

2019,

including an estimated loss on sale of

$321,000.

CTI Europe recorded losses from discontinued operations, net of taxes of (

$1,005,000

) for the year ended

December 31, 2019

respectively (including an estimated loss on sale of

$683,000

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

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 and was abandoned as of

March 31, 2020.

The Ziploc® product line recorded losses from discontinued operations, net of taxes of (

$2,024,851

) for the year ended

December 31, 2020.

The Ziploc® product line recorded income from discontinued operations, net of taxes of

$1,111,452

for the year ended

December 31, 2019.

Summarized Discontinued Operations Financial Information

The following table summarizes the major line items for the International operations that are included in the income from discontinued operations, net of tax line item in the Consolidated Statements of Income for the year ended

	December 31, 2020			December 31, 2019
Income Statement
Net Sales	$	2,180,412		$	13,218,279
Cost of Sales		2,795,474			12,199,387

Gross Margin		(615,062	)		1,018,892

SG&A		1,165,462			2,448,641

Operating Income		(1,780,524	)		(1,429,749	)

Other Expense		45,203			67,852

Loss from discontinued operations		(1,825,727	)		(1,497,601	)

Loss from classification to held for sale		82,545			604,483

Net Loss prior to non-controlling interest		(1,743,182	)		(2,102,084	)

Non-controlling Interest share of income/loss		135,202			(1,239,609	)

Net Loss	$	(1,878,384	)	$	(862,475	)

The following table summarizes the carrying amounts of major classes of assets and liabilities of discontinued operations for each of the periods presented:

	December 31, 2020			December 31, 2019
Balance Sheet
Assets
Current Assets

Cash on hand and Banks	$	195,496		$	4,307

Accounts Receivable		117,687			2,757,947

Inventory		-			497,175

Prepaid & Other		62,275			135,912


TOTAL Current Assets		375,457			3,395,341


NET Property, Plant, and Equipment		7,471			53,919

Other Assets

Operating lease right-of-use		129,411			220,541

Other		32,543			47,958

TOTAL Other Assets		161,954			268,499

TOTAL Non-Current Assets		169,426			322,418

Valuation Allowance on Assets Held for Sale		(250,664	)		(320,899	)

TOTAL Assets	$	294,219		$	3,396,860

Liabilities
Current Liabilities

Trade Accounts Payable		21,256			384,333

Operating Lease Liabilities - Current		93,514			203,291

Other/Accrued Liabilities		(2,796	)		19,562

TOTAL Current Liabilities		111,974			607,187

Non-Current Liabilities

Operating Lease Liabilities - Non Current		35,897			17,250

Other Non-Current		36,705			32,317

TOTAL Non-Current Liabilities		72,603			49,567

TOTAL Liabilities	$	184,577		$	656,753