Financial Performance - Net sales for the three months ended June 30, 2024, were $4,354,000, a 7.3% increase compared to $4,059,000 for the same period in 2023[6] - Gross profit for the six months ended June 30, 2024, was $1,588,000, compared to $1,641,000 for the same period in 2023, indicating a decrease of about 3.2%[6] - The company reported a net loss of $414,000 for the three months ended June 30, 2024, compared to a net loss of $149,000 for the same period in 2023[6] - For the six months ended June 30, 2024, the company reported a net loss of $989,000 compared to a net income of $247,000 for the same period in 2023[7] - The cost of sales for the six months ended June 30, 2024, was $7,660,000, representing 83% of sales, compared to 82% in the same period of 2023[54] Assets and Liabilities - Total assets increased to $21,625,000 as of June 30, 2024, up from $17,247,000 at December 31, 2023, representing a growth of approximately 25.5%[5] - Total current liabilities decreased to $7,450,000 as of June 30, 2024, down from $10,140,000 at December 31, 2023, a reduction of approximately 26.5%[5] - Cash and cash equivalents significantly decreased to $22,000 as of June 30, 2024, from $921,000 at December 31, 2023[5] - The company’s accumulated deficit increased to $(25,346,000) as of June 30, 2024, compared to $(24,357,000) at December 31, 2023[5] - The total stockholders' equity rose to $11,120,000 as of June 30, 2024, compared to $3,732,000 at December 31, 2023, reflecting a substantial increase of approximately 197.5%[5] Cash Flow and Financing - Cash flows from operating activities provided $108,000 in the first half of 2024, a significant improvement from a cash outflow of $1,361,000 in the prior year[7] - Financing activities resulted in a net cash outflow of $733,000 in the first half of 2024, compared to a net cash inflow of $1,409,000 in the same period of 2023[7] - The company reported cash payments for interest totaling $454,000 for the six months ended June 30, 2024, compared to $259,000 in the same period last year[7] - The balance of the Revolving Line of Credit as of June 30, 2024, was $4,788,000, compared to $4,991,000 as of December 31, 2023[27] - The Company has substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements due to insufficient cash resources[22] Stock and Equity - The company issued 5 million shares of common stock valued at $6.25 million in exchange for certain production assets acquired through its wholly-owned subsidiary in China[13] - The Company issued 130,000 shares of Series E Convertible Preferred Stock, resulting in gross proceeds of $1.3 million, and 70,000 shares of Series F Convertible Preferred Stock, resulting in gross proceeds of $0.7 million[28][29] - Holders of Series E and F Preferred Stocks are entitled to quarterly dividends at an annual rate of 8.5% of the stated value ($10 per share)[28][29] - The Company converted approximately $0.9 million of liabilities into approximately 1.8 million shares of common stock during 2023[30] - The company has not issued dividends from 2020 through 2024 and does not expect to do so in the foreseeable future[33] Operational Highlights - The company formed a new subsidiary, Yunhong Technology (Hubei) Co. Ltd., in Hubei Province, China, during the reporting period[13] - The company is in the process of creating a new subsidiary to supply biodegradable and compostable materials[40] - The company has satisfied performance conditions for 225,000 shares of restricted stock granted to the CEO, including achieving an EBITDA of $1 million and operating cash flow of $1.5 million[33] - Customer A accounted for 60% of net sales for the three months ended June 30, 2024, with sales of $2,655,000, while Customer B represented 24% with sales of $1,040,000[37] - The company reported that sales to the top three customers represented 87% of net sales in Q2 2024, up from 85% in Q2 2023[52] Expenses - Operating expenses for the three months ended June 30, 2024, totaled $863,000, an increase of 7.3% from $804,000 in the same period last year[6] - The company incurred interest expenses of $236,000 for the three months ended June 30, 2024, compared to $155,000 for the same period in 2023, marking an increase of about 52.3%[6] - General and administrative expenses increased to $1,698,000 for the six months ended June 30, 2024, from $1,617,000 in 2023[54] - The company’s depreciation and amortization expenses were $120,000 for the six months ended June 30, 2024, down from $151,000 in the same period of 2023[7] Revenue Breakdown - Foil balloons accounted for 75% of net sales in Q2 2024, with revenues increasing by 11% to $3,252,000 compared to $2,938,000 in Q2 2023[48] - Revenues from film products decreased by 71% to $171,000 in Q2 2024 from $589,000 in Q2 2023[48] - Other revenues increased by 75% to $931,000 in Q2 2024 from $532,000 in Q2 2023[50]

Financial Performance - Total net sales for the three months ended March 31, 2024, were $4,894,000, a decrease of 3.1% compared to $5,051,000 for the same period in 2023[5] - Gross profit for the first quarter of 2024 was $895,000, down 20.6% from $1,127,000 in the first quarter of 2023[5] - The company reported a net loss of $576,000 for the three months ended March 31, 2024, compared to a net income of $396,000 for the same period in 2023[5] - For the three months ended March 31, 2024, the net loss was $576,000 compared to a net income of $396,000 for the same period in 2023, representing a significant decline[6] - Revenues from foil balloons decreased by 16% to $2,919,000 in Q1 2024 from $3,474,000 in Q1 2023, attributed to timing of orders and shipments[51] - Revenues from film products increased by 243% to $305,000 in Q1 2024 from $89,000 in Q1 2023, indicating growth in this category[52] - Gross margin decreased to 18% in Q1 2024 from 22% in Q1 2023, impacted by lower sales volume and mix inefficiencies[55] Operating Expenses - Operating expenses increased to $1,248,000 in Q1 2024, compared to $1,115,000 in Q1 2023, representing an increase of 11.9%[5] - General and administrative expenses rose to $1,040,000 in Q1 2024 from $961,000 in Q1 2023, primarily due to increased professional service costs[56] - The company incurred cash payments for interest totaling $218,000, up from $118,000 in the previous year[6] - The depreciation and amortization expense decreased to $62,000 from $80,000 year-over-year, reflecting reduced asset usage[6] - The company reported a significant increase in equity compensation expense to $122,000 from $7,000 in the prior year, indicating higher employee-related costs[6] Assets and Liabilities - Total current assets decreased to $12,551,000 as of March 31, 2024, from $13,019,000 as of December 31, 2023, a decline of 3.6%[3] - Total liabilities decreased to $11,468,000 as of March 31, 2024, down from $13,515,000 as of December 31, 2023, a reduction of 15.2%[4] - Shareholders' equity increased to $5,278,000 as of March 31, 2024, compared to $3,732,000 as of December 31, 2023, an increase of 41.4%[4] - The company had cash and cash equivalents of $49,000 as of March 31, 2024, a significant decrease from $921,000 as of December 31, 2023[3] - Accounts receivable increased to $4,398,000 as of March 31, 2024, compared to $3,975,000 as of December 31, 2023, an increase of 10.6%[3] - As of March 31, 2024, total inventories amounted to $7,710,000, a decrease from $7,791,000 as of December 31, 2023[36] - The Company has a term loan balance of $0.7 million and a revolving line of credit balance of $5,556,000 as of March 31, 2024[48] Cash Flow - Cash flows used in operating activities were $767,000, an improvement from $1,369,000 in the prior year, indicating better cash management[6] - Cash used by operations was $767,000 in Q1 2024, an improvement from $1,369,000 in Q1 2023[57] - As of March 31, 2024, the company had cash balances of $49,000, down from $130,000 in the same period of 2023[59] Equity and Stock Issuance - Total preferred stock issuance amounted to $1,300,000, with $771,000 from Series E and $700,000 from Series F[7] - The Company amended its Articles of Incorporation in March 2024 to authorize the issuance of 130,000 shares of Series E Convertible Preferred Stock, resulting in gross proceeds of $1.3 million[27] - The issuance of Series E Preferred Stock allocated $0.8 million to convertible preferred stock and $0.5 million to warrants classified as Additional Paid-In Capital[27] - The Company issued 70,000 shares of Series F Preferred in March 2024, resulting in gross proceeds of $0.7 million[28] Compliance and Concerns - The Company has substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements[20] - The Company has been in compliance with the terms of its Senior Facilities since their inception in September 2021[22] - The Company has been in compliance with the Minimum Tangible Net Worth requirement of $4,000,000 as of March 31, 2024[47] - The company reported a material weakness in internal control over financial reporting as of March 31, 2024, due to insufficient accounting professionals[66] Customer Concentration - Customer A accounted for 46% of net sales for the three months ended March 31, 2024, generating $2,226,000 in sales, while Customer B contributed 35% with $1,710,000 in sales[37] - Sales to the top three customers represented 86% of consolidated net sales in Q1 2024, consistent with the same period in 2023[53] Future Plans and Initiatives - The Company plans to create a new subsidiary to supply biodegradable and compostable materials, reflecting its commitment to sustainability[44] - The Company acquired assets from Yunhong Environmental Protection Technology Co., Ltd. for $6,250,000, using 5 million shares of common stock[40] Miscellaneous - The weighted average number of shares outstanding for the first quarter of 2024 was 20,771,937, compared to 17,689,552 for the same period in 2023[5] - The balance of accumulated deficit earnings increased to $(24,933,000) as of March 31, 2024, compared to $(24,357,000) at the end of 2023[7] - The Company recorded raw materials inventory of $1,225,000 as of March 31, 2024, compared to $1,156,000 as of December 31, 2023[36] - The Company converted approximately $0.9 million of liabilities into approximately 1.8 million shares of common stock in February 2023[29] - The Company did not issue dividends from 2020 through 2024 and does not expect to do so in the foreseeable future, resulting in an estimated dividend yield of 0%[33] - The report includes interactive data files for the quarterly report on Form 10-Q for the quarter ended March 31, 2024, detailing consolidated financial statements[101] - The report was signed on September 25, 2024, by the Chief Executive Officer and Acting Chief Financial Officer[71][72]

Revenue and Sales Performance - In 2023, revenues from product lines were as follows: Novelty Products accounted for 66% of total revenues, Flexible Film Products for 5%, and Balloon-inspired gifts and Other Products for 29%[22]. - Consolidated net sales for the fiscal year ended December 31, 2023, were $17.8 million, a decrease of 1% from $18.0 million in 2022[118]. - Sales of foil balloons increased by 8% to $11.8 million in 2023, compared to $10.9 million in 2022[119]. - Sales of film products decreased by 54% to $928,000 in 2023, down from $2.0 million in 2022[120]. - The company has seen an enhanced impact of seasonality in sales, with increased order flow related to events and lower order flow for everyday items since 2022[142]. Product Development and Innovation - The company expanded its product offerings to include compostable materials aimed at replacing single-use plastics, leading to a name change to include "Green" and a new trading symbol "YHGJ" approved by shareholders in August 2023[14]. - The company aims to develop new products and improve existing ones through research and innovation within its core product categories[24]. - The company spent approximately $200,000 on research and development activities in both fiscal years ended December 31, 2023 and 2022[57]. - The company has been engaged in developing flexible film products for over 40 years and holds several patents related to these products, including specific films and zipper closures[15]. Financial Performance and Position - The company has a cumulative net loss of approximately $24 million from inception to December 31, 2023, and may require additional financing to fund future operations[130]. - Cash used in operating activities amounted to $1.1 million in 2023, compared to cash generated of $2.4 million in 2022[127]. - Cash provided by financing activities was $2.1 million in 2023, compared to cash used of $2.1 million in 2022[129]. - The company converted approximately $0.9 million of liabilities into approximately 1.8 million shares of common stock in February 2023[102]. - As of December 31, 2023, the term loan balance was $0.7 million, and the balance of the Revolving Line of Credit was $4,991,000, an increase from $2,878,000 in 2022[137]. Cost and Expense Management - Cost of sales decreased to $14.5 million in 2023 from $14.9 million in 2022, a reduction of 2%[122]. - General and administrative expenses decreased by 19% to $3.0 million in 2023 from $3.7 million in 2022[123]. - Marketing and advertising expenses increased by 32% to $531,000 in 2023, up from $402,000 in 2022[124]. - The company experienced significant fluctuations in the cost of raw materials, which materially affected profitability, particularly in the case of petroleum or natural gas-based films and resins[47]. Compliance and Regulatory Matters - The company is subject to various federal, state, and local laws regarding waste generation and believes it is in material compliance with applicable environmental regulations[60]. - The company has been in compliance with the covenant requiring a Minimum Tangible Net Worth of at least $4,000,000 since inception[135]. - Management concluded that the disclosure controls and procedures were not effective as of December 31, 2023, due to identified material weaknesses[163]. - The company has not maintained effective internal control over financial reporting as of December 31, 2023, due to identified deficiencies[167]. Corporate Governance and Management - The Board of Directors met three times during 2023, with no director absent for more than one meeting[187]. - The Audit Committee met once during 2023 to discuss the Company's financial statements and oversee financial risks[194]. - The Compensation Committee met twice in 2023 to review executive compensation and employee benefit plans[195]. - The Company adopted an Executive Compensation Recovery ("Clawback") Policy in 2023, allowing recovery of performance-based compensation under certain conditions[204]. Employee and Personnel Matters - As of December 31, 2023, the company had 57 full-time employees, with 29 in manufacturing or warehouse functions[58]. - The Company reported a total compensation of $289,400 for CEO Frank Cesario in 2023, a decrease from $338,077 in 2022[206]. - COO Jana Schwan received total compensation of $248,666 in 2023, compared to $254,410 in 2022[206]. - The company is dependent on key personnel for its future success, and any loss of these individuals could adversely affect its business plan[184]. Cybersecurity and Risk Management - The Company has implemented measures to manage cybersecurity risks, with oversight from the Board of Directors and the Audit and Compliance Committee[78]. - Management is responsible for identifying and managing exposure to cybersecurity threats, with a notification process in place for potentially material incidents[80]. Market and Competitive Landscape - The company has developed new distribution channels and sales relationships in the United States, Europe, Mexico, Latin America, and Australia over the past several years[24]. - Foil balloons remain buoyant when filled with helium for extended periods and are marketed as novelty items with printed designs and messages, appealing to the social expression industry[30].

Financial Data and Key Metrics Changes - The company reported a fourth quarter revenue increase of $1.2 million compared to the prior year, driven by improvements in foil balloons, commercial films, and balloon-inspired gifts [6] - Year-to-date sales for 2023 were $17.8 million, slightly down from $18 million in 2022, indicating a recovery from a third quarter deficit [7] - Gross margins improved to 18% in 2023 from 17% the previous year, with a notable increase to 24% in the fourth quarter of 2023 compared to 19% in the prior year [8] - Net income improved by $1.2 million for the full year 2023, and adjusted EBITDA increased by $1 million, with earnings per share moving from a loss of $0.22 to a loss of $0.01 [9] Business Line Data and Key Metrics Changes - The company identified a shift from everyday business to seasonal business, which is expected to enhance revenue streams [7] - Automation has been implemented with two manufacturing lines featuring robotic arms, leading to improved efficiency and reduced labor costs [10] Market Data and Key Metrics Changes - Helium pricing continues to negatively impact the marketplace, although the effect has diminished compared to the previous 18 months [8] Company Strategy and Development Direction - The company is focusing on expanding its manufacturing capabilities by acquiring a facility in Hubei, China, which will enhance its compostable material business [12] - The strategic initiative aims to strengthen connections within the Yunhong family of companies and support growth in both traditional and new material spaces [12] - The company is building inventory to support upcoming seasonal demand for Mother's Day, Father's Day, and graduation [13] Management's Comments on Operating Environment and Future Outlook - Management expressed satisfaction with the financial performance improvements in 2023 but acknowledged that there is still significant work to be done [9] - The company is committed to pushing operational efficiency and exploring new revenue streams [9] Other Important Information - The company has rebranded to reflect its new strategic direction towards sustainability and compostable materials [13] Q&A Session Summary - No questions were recorded during the Q&A session, and the management expressed anticipation for future discussions in 2024 [15][16]

Financial Performance - Net sales for Q3 2023 were $1,923,000, a decrease of 15.1% compared to $2,263,000 in Q3 2022[7] - Gross profit for the nine months ended September 30, 2023, was $1,661,000, down 20.4% from $2,084,000 in the same period of 2022[7] - The net loss for Q3 2023 was $967,000, slightly improved from a net loss of $969,000 in Q3 2022[7] - The company reported a basic loss per common share of $0.05 for Q3 2023, compared to a loss of $0.12 in Q3 2022[7] - For the nine months ended September 30, 2023, total net sales were $11,330,000, down 12% from $12,478,000 in the same period of 2022[71] - Cash used in operations during the nine months ended September 30, 2023, was $442,000, a decline from net cash provided by operations of $1,187,000 in the same period of 2022[81] Assets and Liabilities - Total current assets decreased to $9,936,000 as of September 30, 2023, from $10,478,000 at the end of 2022, reflecting a decline of 5.2%[6] - Total liabilities decreased to $11,345,000 as of September 30, 2023, down 9.5% from $12,536,000 at the end of 2022[6] - Total stockholders' equity increased to $2,926,000 as of September 30, 2023, from $2,746,000 at the end of 2022, reflecting a growth of 6.6%[6] - The company has a note payable to John H. Schwan amounting to $1.3 million as of September 30, 2023, with no payments made during 2023 or 2022[35] - The company has a minimum tangible net worth requirement of at least $4 million, which it believes it has complied with as of September 30, 2023[32] Operating Expenses - Operating expenses for the nine months ended September 30, 2023, totaled $2,768,000, a decrease of 12.6% compared to $3,166,000 in the same period of 2022[7] - General and administrative expenses decreased to $677,000 in Q3 2023 from $896,000 in Q3 2022, reflecting better cost control measures[78] Revenue Recognition and Sales - The company recognizes revenue at the point when products are transferred to customers, including shipping and handling charges[23] - Foil balloons accounted for 88% of net sales in Q3 2023, with revenues increasing by 6% to $1,701,000 compared to $1,612,000 in Q3 2022[70] - Film products saw a significant decline in sales, dropping 87% to $68,000 in Q3 2023 from $537,000 in Q3 2022[71] - Customer A accounted for 56% of net sales for the three months ended September 30, 2023, generating $1,097,000 in sales, compared to 49% and $1,104,000 for the same period in 2022[56] - The company’s top three customers accounted for 75% of sales in Q3 2023, down from 79% in Q3 2022[75] Capital and Financing - The company has extended its credit facility until September 30, 2025, maintaining a revolving credit facility of up to $6 million[30] - The company is focusing on raising additional capital through equity sales and borrowing to fund operating losses[27] - The company has a related party subordinated note of $1.3 million due on December 31, 2023, which it expects to resolve using cash and/or equity[27] - The company extended its senior facilities with the lender until September 30, 2025, with modified terms including an increased interest rate to Prime plus 7.82% per annum[66] Compliance and Legal Matters - The company incurred compliance failures with covenants until September 2021 but believes it has been in compliance with its new credit facility since then[28] - The company recorded a legal proceeding but does not expect it to have a material adverse effect on its financial condition or future results[54] Market Strategy and Product Development - The company is beginning to offer purchased compostable material solutions as part of its product line[13] - The company has begun to offer compostable material solutions intended for the North American market, indicating a strategy for market expansion[62] Going Concern - The company faces substantial doubt about its ability to continue as a going concern due to ongoing operational challenges and the need for adequate capital[85]

Financial Data and Key Metrics Changes - Year-to-date sales for 2023 were $11 million, down from $12.4 million in 2022, indicating a decline in revenue [9] - Gross margin decreased by 1.6% from 16.7% last year to 15.1% this year, attributed to reduced revenue volume [13] - The company reported a loss of $0.04 per share this year, an improvement from a loss of $0.28 per share last year [13] Business Line Data and Key Metrics Changes - Film products saw a significant drop in orders during Q3, lagging behind 2022 levels, while balloon-inspired gift items showed strong order growth [11][12] - The timing of shipments for Valentine's Day affected the comparison of year-to-date results, leading to a drop in the category despite increased overall order flow [12] Market Data and Key Metrics Changes - The helium supply issue that impacted the company in 2022 has been resolved, and helium pricing is slowly improving [10][19] - The company noted that two of its largest competitors filed for Chapter 11 bankruptcy in 2023, indicating a challenging competitive landscape [11] Company Strategy and Development Direction - The company has rebranded to Yunhong Green CTI Ltd. to emphasize its focus on biodegradable and compostable products [7] - Plans to enter the U.S. marketplace are underway, with product samples being shared and performance testing conducted [8] - The company is exploring automation in manufacturing to improve efficiency and reduce operating costs in the long term [14] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for Q4, traditionally the strongest quarter due to Valentine's Day shipments, despite challenges faced in Q3 [6][11] - The company is focused on maintaining spending discipline and finding ways to address cost challenges that have arisen in recent years [13][14] - Management highlighted the importance of celebrating special occasions and the role of their products in enhancing customer experiences [19] Other Important Information - The company has extended its credit line for two years until September 30, 2025, under similar terms [17] - Participation in the China International Import Expo 2023 is planned, showcasing both traditional products and new sustainable materials [18] Q&A Session Summary Question: Will anyone from the company attend the Yunhong conference in China? - Management confirmed that only Yunhong personnel would attend, with the company providing support materials for the conference [21] Question: Who was the second company mentioned in bankruptcy? - The second company is Pioneer, based in Wichita, Kansas, known for brands like Qualatex [22][23] Question: Is the company now the third largest producer in the U.S.? - Management confirmed that they are likely the third largest producer of foil balloons in the U.S. [24] Question: How will the company capitalize on competitors' weaknesses? - Management noted that while competitors are reorganizing, they see opportunities to enhance their product offerings and maintain continuous operations [26][27] Question: Are there plans for acquisitions using the newly authorized shares? - Management indicated that while more shares have been authorized, they have not been issued yet, and they are looking for strategic opportunities to leverage these shares for business development [28][30]

Financial Performance - Net sales for Q2 2023 were $4.059 million, a decrease of 8.1% compared to $4.418 million in Q2 2022[7] - Gross profit for the first half of 2023 was $1.641 million, down 10.9% from $1.842 million in the same period of 2022[7] - The company reported a net loss of $149,000 for Q2 2023, an improvement from a net loss of $399,000 in Q2 2022[7] - The company had a basic loss per common share of $0.01 for Q2 2023, compared to a loss of $0.10 in Q2 2022[7] - The company had a net income of $247,000 for the six months ended June 30, 2023[11] - For the three months ended June 30, 2023, net sales decreased by 8% to $4,059,000 compared to $4,418,000 for the same period in 2022[71] Assets and Liabilities - Total current assets increased to $11.134 million as of June 30, 2023, compared to $10.478 million at the end of 2022, reflecting a growth of 6.2%[5] - Total liabilities decreased to $11.738 million from $12.536 million at the end of 2022, a reduction of 6.4%[5] - The total stockholders' equity increased to $3.889 million as of June 30, 2023, from $2.746 million at the end of 2022, an increase of 41.5%[5] - Cash and cash equivalents at the end of Q2 2023 were $100,000, down from $146,000 at the end of 2022, representing a decrease of 31.5%[9] - The Company reported total inventories of $7,639,000 as of June 30, 2023, down from $8,325,000 as of December 31, 2022[56] Operating Expenses - Operating expenses for the first half of 2023 totaled $1.919 million, a decrease of 11.5% compared to $2.167 million in the same period of 2022[7] - General and administrative expenses decreased to $656,000 for Q2 2023 from $998,000 in Q2 2022, attributed to higher audit fees in early 2023[79] - Interest expense increased to $155,000 for Q2 2023 from $109,000 in Q2 2022 due to market rate increases[81] Cash Flow - The company reported a net cash used in operating activities of $1.361 million for the first half of 2023, compared to net cash provided of $303,000 in the same period of 2022[9] - Net cash used in operations for the six months ended June 30, 2023, was $1,361,000, compared to net cash provided by operations of $303,000 in the same period of 2022[82] - The Company had cash balances of $100,000 as of June 30, 2023, compared to $54,000 for the same period in 2022[85] Debt and Financing - As of June 30, 2023, the term loan balance was $0.5 million, with the Revolving Line of Credit balance at $4.288 million, an increase from $2.878 million as of December 31, 2022[34] - The Company entered into a loan agreement providing for a revolving credit facility of up to $6 million and a term loan facility of $0.7 million, secured by substantially all assets[29] - The Company is currently working on securing a replacement credit facility before the current facility expires on September 30, 2023[27] - The Company faces substantial doubt about its ability to continue as a going concern due to potential capital access issues and ongoing operational impacts from inflation and supply chain constraints[87] Revenue Recognition - The company recognizes revenue at the point when products are transferred to customers, with shipping and handling charges included in net sales[22] Stock and Equity - The total shares of common stock outstanding as of June 30, 2023, were 16,102,749[11] - The Company issued 884,000 shares of common stock for notes payable and investor deposits during the reporting period[11] - The Company issued 400,000 shares of common stock to LF International, generating approximately $1 million in proceeds to reduce bank debt[38] - The Series A Preferred Stock generated a beneficial conversion feature valued at approximately $2.5 million, recognized as a discount on the Series A Preferred[39] - The Series B Preferred Stock was converted into approximately 1.9 million shares of common stock on February 1, 2023, with a carrying value of $1.851 million as of December 31, 2022[40] - The Company converted approximately $0.9 million of liabilities into approximately 1.8 million shares of common stock in February 2023[44] Customer Concentration - Customer A accounted for 56% of net sales for the three months ended June 30, 2023, compared to 41% for the same period in 2022[57] - Sales to the top three customers represented 85% of total sales in Q2 2023, up from 83% in Q2 2022[76] Compliance and Governance - The Company has faced compliance failures with covenants until September 2021 but believes it has been in compliance with the new credit facility since then[27] - The Company is facing substantial doubt about its ability to continue as a going concern for one year from the issuance of the consolidated financial statements due to operating losses and challenges in obtaining adequate capital[26]

Financial Data and Key Metrics Changes - Year-to-date sales were $9.1 million in 2023 compared to $10.2 million in 2022, indicating a decline in revenue [7] - The gross margin remained identical during the first six months of both years despite a 10% drop in reported revenue in 2023, suggesting potential for future profitability [11] Business Line Data and Key Metrics Changes - Film products showed a recovery from a non-existent first quarter in 2023, narrowly beating last year's second quarter [9] - The balloon-inspired gift items category reported an increase of $1.7 million from the full year 2021 to 2022, although the first six months of 2023 showed a drop in that category despite an increase in overall order flow [9][10] Market Data and Key Metrics Changes - The helium market faced challenges in 2022 due to skyrocketing costs following the loss of Russian supply and a short-term supply issue in the U.S., which has since been resolved [8] - Helium pricing continues to moderate but remains elevated, requiring careful management [17] Company Strategy and Development Direction - The company is rebranding to YunHong GreenCTI Limited to reflect its focus on compostable and biodegradable solutions, moving beyond its traditional container products [4][5] - Plans for increased automation in manufacturing are underway, with the installation of a second robotic line expected to enhance cost reduction and throughput [14][15] - The company aims to explore new business lines, including potential mergers and acquisitions, and is preparing to authorize additional shares to facilitate this growth [24][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of global instability on resources and efficiencies, emphasizing the importance of adaptability [22] - The investor group has provided financial support, allowing the company to manage debt and navigate challenges posed by rising interest rates [23] - There is optimism regarding upcoming holiday orders, indicating potential for increased sales [17] Other Important Information - The company is currently seeking shareholder approval for a name change and an increase in authorized shares, which is intended to prepare for future business opportunities [24][26] - Audit fees are expected to remain high due to personnel shortages in the auditing profession [12] Q&A Session Summary Question: Concerns about the name change and share increase - An analyst expressed skepticism about the name change and the increase in authorized shares, questioning the alignment of management's interests with those of shareholders [21] Response: Management's reassurance on shareholder interests - Management clarified that the increase in authorized shares is not an immediate plan for issuance but a preparatory measure for future opportunities [24][26] Question: Market conditions and stock performance - An analyst raised concerns about the stock's stagnant performance and low trading volume, questioning how future developments would drive revenue [27] Response: Management's perspective on market challenges - Management acknowledged the difficulties faced in the helium market and expressed confidence in the team's ability to navigate these challenges while aiming for improved sales volume [28]

Financial Performance - Net sales for the three months ended March 31, 2023, were $5,051,000, a decrease of 12.9% compared to $5,797,000 for the same period in 2022[7] - Gross profit increased to $1,127,000 for Q1 2023, compared to $1,039,000 in Q1 2022, reflecting a gross margin improvement[7] - The company reported a net income of $396,000 for Q1 2023, a significant turnaround from a net loss of $21,000 in Q1 2022[7] - Basic income per common share for Q1 2023 was $0.02, compared to a loss of $0.04 per share in Q1 2022, indicating improved profitability[7] - Revenues from foil balloons decreased to $3,474,000 (69% of net sales) in Q1 2023 from $3,832,000 (66% of net sales) in Q1 2022, reflecting a 9% decline[73] - Revenues from film products dropped significantly to $89,000 (2% of net sales) in Q1 2023 from $828,000 (14% of net sales) in Q1 2022, a decrease of 89%[74] - Revenues from other products increased to $1,488,000 (29% of net sales) in Q1 2023 from $1,112,000 (19% of net sales) in Q1 2022, a growth of 34%[75] Expenses and Cost Management - Operating expenses totaled $1,115,000 in Q1 2023, slightly down from $1,058,000 in Q1 2022, indicating cost management efforts[7] - General and administrative expenses increased to $961,000 in Q1 2023 from $837,000 in Q1 2022, reflecting startup expenses with a new audit firm[80] - Selling, advertising, and marketing expenses decreased to $154,000 in Q1 2023 from $221,000 in Q1 2022, due to reduced investments[81] - Interest expense rose to $142,000 in Q1 2023 compared to $96,000 in Q1 2022, driven by increased interest rates[82] - The cost of sales for Q1 2023 was $3,924,000, down from $4,758,000 in Q1 2022, attributed to lower sales volume and improved cost efficiencies[79] Cash Flow and Liquidity - Cash and cash equivalents decreased to $130,000 as of March 31, 2023, from $146,000 at the end of 2022[6] - The company generated $1,409,000 in net cash from financing activities during Q1 2023, compared to $155,000 in Q1 2022, highlighting stronger financing efforts[8] - Net cash used by operations was $1,369,000 in Q1 2023, a significant decline from net cash provided of $2,000 in Q1 2022[83] - Cash used in investing activities increased to $56,000 in Q1 2023 from $15,000 in Q1 2022[84] - Cash balances decreased to $130,000 at March 31, 2023, compared to $208,000 at the same date in 2022[86] - The company’s cash resources from operations may be insufficient to meet anticipated needs over the next twelve months, indicating potential liquidity challenges[25] Assets and Liabilities - Accounts receivable increased to $3,344,000 as of March 31, 2023, compared to $1,618,000 at December 31, 2022, indicating potential revenue growth[6] - Total current liabilities rose to $9,288,000 as of March 31, 2023, up from $7,478,000 at the end of 2022, reflecting increased short-term financial obligations[6] - The company’s total assets increased to $16,562,000 as of March 31, 2023, compared to $15,282,000 at December 31, 2022, showing overall growth in asset base[6] - The company’s total stockholders' equity as of March 31, 2023, was $4.035 million[11] - The balance of the Revolving Line of Credit as of March 31, 2023, was $4.3 million, an increase from $2.9 million as of December 31, 2022[70] Financing and Debt - The company had a term loan balance of $0.5 million and a revolving line of credit balance of $4.284 million as of March 31, 2023[34] - The company has a loan agreement with Line Financial, with a revolving credit facility of up to $6 million and a term loan facility of $731,250, maturing on September 30, 2023[64] - The company faces substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements[88] - The Credit Agreement, a primary source of liquidity, is set to expire on September 30, 2023, unless extended or replaced[89] Stock and Equity Transactions - The company issued common stock for notes payable and investor deposits amounting to $884,000 during the reporting period[11] - The Company converted a note payable of $0.2 million to Alex Feng into common stock in February 2023[36] - The Series A Preferred Stock generated a beneficial conversion feature valued at approximately $2.5 million, with no dividends accrued in Q1 2023[39] - The Series B Preferred Stock was converted into approximately 1.9 million shares of common stock on February 1, 2023[40] - The Series C Preferred Stock was converted into approximately 2 million shares of common stock on September 1, 2022[41] - The Series D Preferred Stock generated a beneficial conversion feature of approximately $0.3 million, with 1.8 million shares converted on September 1, 2022[43] - The Company converted approximately $0.9 million of liabilities into approximately 1.8 million shares of common stock in February 2023[44] - The Company issued 792,660 warrants in connection with the Series A Offering, with an exercise price of $1 per share[45] - The Company has a total of 128,000 warrants outstanding as of March 31, 2023, with an exercise price of $1.75[48] - The CEO's restricted stock grant includes performance conditions tied to EBITDA, stock price, and operating cash flow, with 250,000 shares awarded[49] Operational Challenges - The company has faced impacts from the COVID-19 pandemic, supply chain challenges, and inflationary pressures, which may affect future operations[26] - The company maintains a Tangible Net Worth of at least $4,000,000, and believes it was in compliance with this covenant as of March 31, 2023[68] - The company had two customers whose purchases represented over 10% of consolidated net sales, contributing $2,563,000 (50%) and $1,652,000 (32%) in Q1 2023, compared to $2,502,000 (43%) and $1,347,000 (23%) in Q1 2022[78] - As of March 31, 2023, the total amounts owed by these two customers were approximately $962,000 (29%) and $2,245,000 (67%) of the company's consolidated net accounts receivable[56]

Financial Data and Key Metrics Changes - Revenue decreased from $5.8 million in the previous year to $5.1 million this year, a decline of $0.7 million [7] - Adjusted EBITDA improved from $0.3 million in Q1 last year to $0.7 million this year, indicating a positive trend in operational performance [14] Business Line Data and Key Metrics Changes - Elevated helium prices previously reduced balloon volumes, but the company has taken steps to eliminate costly overtime and inefficient processes, leading to improved operational efficiency [10][11] Market Data and Key Metrics Changes - Helium prices have shown improvement and are approaching normalized levels, which is expected to positively impact the company's revenue in the future [6] Company Strategy and Development Direction - The company is focusing on transitioning to biodegradable and compostable solutions, with ongoing prototyping efforts and partnerships in Asia to develop viable commercial solutions [16] - There is a commitment to continuous improvement in manufacturing processes and operational efficiencies to enhance profitability [10][12] Management's Comments on Operating Environment and Future Outlook - Management acknowledges the challenges posed by inflation and supply chain issues but expresses confidence in their ability to navigate these challenges effectively [15] - The company views the balloon and party supplies market as countercyclical, suggesting potential resilience during recessionary periods [15] Other Important Information - The company has a strong focus on maintaining good vendor relationships and managing working capital effectively [11][12] Q&A Session Summary Question: Plans for visiting mainland China - The CEO confirmed a trip to mainland China in early May with a small team to connect with counterparts and discuss new materials [19][20] Question: Goals for the trip to China - The primary goal is to push for compostable solutions and align on commercial success in developing new materials [21][22] Question: Expectations for revenue generation in 2023 - The CEO stated it is difficult to predict revenue generation for 2023, although there are ongoing prototyping efforts that may yield results [23]