Discontinued Operations

12 Months Ended

Dec. 31, 2022

Discontinued Operations

2. Discontinued Operations

2. 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, both current and non-current assets and liabilities of discontinued operations are reflected in the condensed consolidated balance sheets for both periods presented.

On October 19, 2022, the Company sold its Argo EMS business (“Argo”). Argo supplies printed circuit boards and other electronic assemblies to original equipment manufacturers in various industries, including measurement systems, semiconductor equipment manufacturing, and industrial control, medical, and military products.

On November 3, 2021, the Company sold its Greenwald Industries, Inc. division (“Greenwald”). 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
	December 31, 2022			January 1, 2022
Net sales	$	7,574,181		$	44,289,411
Cost of products sold		(5,137,380	)		(24,873,717	)
Gross margin		2,436,801			19,415,694
Selling and administrative expenses		(891,519	)		(15,962,532	)
Restructuring benefit (costs)		305,539			(11,807,512	)
Operating income (loss)		1,850,821			(8,354,350	)
Interest expense		(184,509	)		(582,574	)
Income (loss) from discontinued operations before income taxes		1,666,312			(8,936,924	)
Income tax (expense) benefit		(414,855	)		2,103,752
Gain (loss) from discontinued operations, net of tax	$	1,251,457		$	(6,833,172	)

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

	December 31, 2022		January 1, 2022
Cash	$	-	$	434,126
Accounts receivable		-		1,153,274
Inventory		-		1,258,032
Prepaid expenses		-		59,850
Property, plant and equipment, net		-		591,920
Right of use assets		-		24,697
Total assets of discontinued operations	$	-	$	3,521,899
Current assets of discontinued operations	$	-	$	3,521,899
Non-current assets of discontinued operations		-		-
Total assets of discontinued operations	$	-	$	3,521,899
Accounts payable	$	-	$	167,794
Accrued compensation and other accrued expenses		-		388,499
Current portion of lease liability		-		24,697
Total liabilities of discontinued operations	$	-	$	580,990
Current liabilities of discontinued operations	$	-	$	580,990
Non-current liabilities of discontinued operations		-		-
Total liabilities of discontinued operations	$	-	$	580,990