Note 2 - Discontinued Operations

6 Months Ended

Jun. 30, 2021

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 were 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 divested its CTI Europe subsidiary in the second quarter of 2021.

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 had a major effect on our operations and financial results. Therefore, this product line has been presented as discontinued operations.

CTI Europe recorded a gain from discontinued operations, net of taxes of $45,000 and $146,000 for the three and six month periods ended June 30, 2021, respectively. The net gains, net of taxes, were $92,000 and $241,000 for the three and six month periods ended June 30, 2020, respectively.

Our Ziploc product line recorded a loss from discontinued operations, net of taxes of nil for the three and six months ended June 30, 2021. The loss, net of taxes, was ($746,000) and ($1,550,000) for the three and six month periods ended June 30, 2020, 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 Unaudited Consolidated Statements of Comprehensive Income for the three months ended:

	June 30, 2021			June 30, 2020
Income Statement
Net Sales	$	7		$	615,388
Cost of Sales		75,496			941,230
Gross Loss		(75,489	)		(325,842	)
SG&A		34,884			330,446
Operating Income		(110,373	)		(656,288	)
Other Expense		(87,204	)		9,233
Pretax loss from discontinued operations		(23,169	)		(665,521	)
Gain from classification to held for sale		68,059			65,565
Net Income (loss) from discontinued operations		44,890			(599,956	)
Non-controlling Interest share of profit/loss		21,547			70,576
Net Loss	$	23,343		$	(670,532	)

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 Unaudited Consolidated Statements of Income for the six months ended:

	June 30, 2021			June 30, 2020
Income Statement
Net Sales	$	79,840		$	1,672,445
Cost of Sales		202,402			2,115,275
Gross Loss		(122,562	)		(442,830	)
SG&A		127,150			854,995
Operating Income		(249,712	)		(1,297,825	)
Other Expense (Income)		(77,242	)		22,453
Pretax loss from discontinued operations		(172,470	)		(1,320,278	)
Gain from classification to held for sale		318,722			233,685
Income (Loss) from discontinued operations		146,252			(1,086,593	)
Non-controlling Interest share of profit/loss		70,201			222,670
Net Income (Loss)	$	76,051		$	(1,309,263	)