Discontinued Operations

6 Months Ended

Jun. 30, 2022

Discontinued Operations and Disposal Groups [Abstract]

DISCONTINUED OPERATIONS

NOTE 3 DISCONTINUED OPERATIONS

Sovereign Plastics LLC

Sovereign Plastics LLC (“Sovereign Plastics”) is a manufacturer of plastic and metal components to third-party manufacturers based out of Colorado Springs, Colorado. The Company’s Board of Directors, in consultation with management as well as its financial and legal advisors, considered a number of factors, including the risks and challenges facing Sovereign Plastics in the future as compared to the opportunities available to Sovereign Plastics in the future, and the availability of strategic alternatives. On June 13, 2022, after careful consideration, the Board of Directors unanimously approved the sale.

On June 21, 2022, the Company completed the sale of its Sovereign Plastics business unit to TheLandersCompanies LLC for total consideration of $2.0 million in a secured note with interest of 5% and a maturity date of May 31, 2025.

Results of Discontinued Operations

The results and net loss of Sovereign Plastics’ discontinued operations were as follows:

	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
(Amounts in thousands, except share and per share data)	2022			2021			2022			2021
Revenue	$	542		$	1,210		$	1,718		$	2,196
Cost of goods sold		352			543			1,065			1,014
Gross profit		190			667			653			1,182
Operating expenses
General and administrative		314			352			691			700
Depreciation and amortization		134			162			283			323
Gain on sale of Sovereign Plastics		(1,074	)		-			(1,074	)		-
Total operating expenses, net		(626	)		514			(100	)		1,023
Income from operations		816			153			753			159
Other income (expense)
Interest expense		(5	)		(1	)		(6	)		(34	)
Other income		-			8			-			-
Loss on extinguishment of debt		-			-			-			(246	)
Total other income (expense)		(5	)		7			(6	)		(280	)
Income (loss) from discontinued operations, net of tax	$	811		$	160		$	747		$	(121	)

Assets and liabilities of discontinued operations as of December 31, 2021 were classified as current because the sale transaction closed during the following twelve months during the period ended June 30, 2022. The details are as follows:

	Sovereign Plastics
	December 31,
(Amounts in thousands, except share and per share data)	2021
Assets
Cash	$	26
Accounts receivable, net		222
Inventory, net		295
Prepaid and deferred expenses		266
Assets of discontinued operations - current		809
Property and equipment, net		736
Operating lease right-of-use assets		717
Goodwill		48
Other assets – long term		73
Assets of discontinued operations - long-term		1,574
Total assets of discontinued operations	$	2,383
Liabilities
Accounts payable	$	129
Accrued liabilities		50
Accrued payroll		52
Contract liabilities, current		475
Operating lease liabilities, current		194
Current portion of long-term debt, net of unamortized discounts and debt issuance costs		11
Liabilities of discontinued operations - current		911
Contract liabilities – long term		34
Operating lease liabilities – long term		553
Liabilities of discontinued operations - long-term		587
Total liabilities of discontinued operations	$	1,498