Note 2 - Discontinued Operations

3 Months Ended

Mar. 31, 2022

Notes to Financial Statements

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

Note 2 – Discontinued Operations

During October 2021, the Company sold its interest in Flexo Universal, S. de R.L. de C.V. (“Flexo”), a manufacturer of latex balloons based in Guadalajara, Mexico. The Company received $100,000 cash, a note originally worth $400,000, and title to certain manufacturing equipment. The balance of the note receivable was $240,000 and $255,000 as of March 31, 2022 and December 31, 2021, respectively. The Company recorded a loss from discontinued operations, net of taxes, of $473,000 for the three months ended March 31, 2021 and none for the three months ended March 31, 2022.

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 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 disposal of CTI Europe was delayed due to COVID issues but is expected to be completed in the next three months. The Company divested its CTI Balloons (United Kingdom) subsidiary in the fourth quarter 2019.

CTI Europe recorded a gain from discontinued operations, net of taxes of none and $53,000 for the three months ended March 31, 2022 and March 31, 2021, respectively, which is included in the above.

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 Income for the three months ended:

	March 31, 2022	March 31, 2021
Income Statement
Net Sales			897,000
Cost of Sales			1,135,000
Gross Loss	$	$	(238,000	)
SG&A			328,000
Operating Loss	$	$	(566,000	)
Other Expense			118,000
Total pretax loss from discontinued operations	$	$	(684,000	)
Gain from classification to held for sale			251,000
Net Income (Loss) prior to non-controlling interest	$	$	(433,000	)
Non-controlling Interest share of profit/loss			40,000
Net Income (Loss)	$	$	(473,000	)

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

Yunhong CTI Ltd.

Unaudited Consolidated Balance Sheet

	March 31, 2022	December 31, 2021
Balance Sheet
Assets
Current Assets
Cash on hand and Banks	$	$	-
Accounts Receivable
Inventory
Prepaid & Other
TOTAL Current Assets
NET Property, Plant, and Equipment
Other Assets
Operating lease right-of-use
Other
TOTAL Other Assets
TOTAL Non-Current Assets
Valuation Allowance on Assets Held for Sale
TOTAL Assets	$	$
Liabilities
Current Liabilities
Trade Accounts Payable
Operating Lease Liabilities - Current
Other/Accrued Liabilities
TOTAL Current Liabilities
Non-Current Liabilities
Operating Lease Liabilities - Non Current
Other Non-Current
TOTAL Non-Current Liabilities
TOTAL Liabilities	$	$

The cash flows related to discontinued operations have not been segregated and are included in the Consolidated Statements of Cash Flows. The following table summarizes depreciation from discontinued operations for each of the periods presented:

	Three Months Ended
	March 31,
	2022		2021
Depreciation	$	-	$	13,000