Note 23 - Discontinued Operations

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]

23.   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 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 were applied for all periods presented. The Company divested its CTI Balloons (United Kingdom) subsidiary in the fourth quarter 2019 and 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 none and $7,000 for the years ended December 31, 2021 and2020, respectively.

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 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.

In October 2021, the Company sold its interest in Flexo Universal (its subsidiary in Mexico that manufactured latex balloons). This transaction was recorded during the fourth quarter of 2021. The Company recorded an expense of approximately $10 million associated with this transaction, as well as the reversal of previously recognized Other Comprehensive Income charges of approximately $6 million, for the year ended December 31, 2021. The Company received an aggregate of $245,000 from the sale date until December 31, 2021, part of the $500,000 it received in consideration of the sale  As of December 31, 2021, the Company had a note receivable associated with the transaction of $255,000, which is expected to be collected over the course of 2022.

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, 2021			December 31, 2020
Income Statement
Net Sales		3,120,308			7,593,627
Cost of Sales		3,539,732			7,746,582
Gross Margin		(419,424	)		(152,955	)
SG&A		808,456			2,039,612
Operating Income		(1,227,880	)		(2,192,567	)
Other Income / (Expense)		1,082,883			(410,594	)
Loss from discontinued operations		(144,996	)		(2,603,161	)
Gain from classification to held for sale		318,723			82,545
Net Loss prior to non-controlling interest		173,727			(2,520,616	)
Non-controlling Interest share of income/loss		70,476			135,202
Net Income / (Loss)		103,251			(2,655,818	)

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, 2021		December 31, 2020
Balance Sheet
Assets
Current Assets
Cash on hand and Banks		-		301,517
Accounts Receivable		-		3,361,236
Inventory		-		3,697,734
Prepaid & Other		-		1,541,037
TOTAL Current Assets		-		8,901,525
NET Property, Plant, and Equipment		-		151,639
Other Assets
Operating lease right-of-use		-		448,642
Other		-		120,095
TOTAL Other Assets		-		568,737
TOTAL Non-Current Assets		-		568,737
Valuation Allowance on Assets Held for Sale		-		(250,664	)
TOTAL Assets		-		9,219,598
Liabilities
Current Liabilities
Trade Accounts Payable		-		2,220,771
Operating Lease Liabilities - Current		-		372,630
Other/Accrued Liabilities		-		2,000,552
TOTAL Current Liabilities		-		4,593,953
Non-Current Liabilities
Operating Lease Liabilities - Non Current		-		76,013
Other Non-Current		-		36,705
TOTAL Non-Current Liabilities		-		112,718
TOTAL Liabilities		-		4,706,671