DISCONTINUED OPERATIONS

12 Months Ended

Jan. 01, 2022

DISCONTINUED OPERATIONS

DISCONTINUED OPERATIONS

3. DISCONTINUED OPERATIONS

We determined that the companies previously included in our former Diversified Products segment no longer fit with our long-term strategy and have initiated the process of selling the companies within the former Diversified Products segment.  Selling these companies will allow management to focus on our core capabilities and offerings.

The former Diversified Products segment met the criteria to be held for sale and furthermore, we determined that the assets held for sale qualified for discontinued operations.  As such, the financial results of the former Diversified Products segment are reflected in our condensed consolidated statements of operations as discontinued operations for all periods presented.  Additionally, current and non-current assets and liabilities of discontinued operations are reflected in the condensed consolidated balance sheets for both periods presented.

On November 3, 2021, the Company sold its Greenwald Industries, Inc. division (“Greenwald”) for a sales price of $8.0 million, subject to a final working capital adjustment.  Greenwald, located in Chester, CT, is an OEM manufacturer offering a range of payment solutions from coin-vending products to smart card systems and payment applications.

On November 22, 2021, the Company sold its Frazer & Jones Company division (“Frazer & Jones”). Frazer & Jones is a ductile and malleable iron foundry located in Syracuse, NY.  Eastern has exited the mining business to focus on our three core businesses.

Summarized Financial Information of Discontinued Operations

The following table represents income from discontinued operations, net of tax:

	Year Ended
	January 1, 2022			January 2, 2021
Net sales	$	44,289,411		$	42,788,524
Cost of products sold		(24,873,717	)		(40,701,607	)
Gross margin		19,415,694			2,086,917
Selling and administrative expenses		(15,962,532	)		(8,591,915	)
Restructuring costs		(11,807,512	)		-
Operating loss		(8,354,350	)		(6,504,998	)
Interest expense		(582,574	)		(686,200	)
Loss from discontinued operations before income taxes		(8,936,924	)		(7,191,198	)
Income tax benefit		2,103,752			1,561,801
Loss from discontinued operations	$	(6,833,172	)	$	(5,629,397	)

The following table represents the assets and liabilities from discontinued operations:

	January 1, 2022		January 2, 2021
Cash	$	434,126	$	809,809
Accounts receivable		1,153,274		5,944,923
Inventory		1,258,032		9,990,656
Prepaid expenses		59,850		1,192,530
Property, plant and equipment, net		591,920		10,927,791
Patents and other intangibles net of accumulated amortization		-		6,935
Goodwill		-		4,675,611
Right of use assets		24,697		173,364
Total assets of discontinued operations	$	3,521,899	$	33,721,619
Current assets of discontinued operations¹	$	3,521,899	$	17,937,918
Non-current assets of discontinued operations		-		15,783,701
Total assets of discontinued operations	$	3,521,899	$	33,721,619
Accounts payable	$	167,794	$	2,196,101
Accrued compensation and other accrued expenses		388,499		937,911
Note payable, current		-		22,164
Current portion of lease liability		24,697		96,369
Other long-term liabilities		-		76,995
Total liabilities of discontinued operations	$	580,990	$	3,329,540
Current liabilities of discontinued operations¹	$	580,990	$	3,252,545
Non-current liabilities of discontinued operations		-		76,995
Total liabilities of discontinued operations	$	580,990	$	3,329,540
¹ The total assets and liabilities of discontinued operations are presented as current in the January 1, 2022 balance sheet as we expect to sell the discontinued operations and collect proceeds within one year.