Financial Performance - Total net sales for the three months ended March 31, 2022, were $5.797 million, a decrease of 12.2% compared to $6.599 million for the same period in 2021[9]. - Gross profit for the first quarter of 2022 was $1.039 million, down from $1.286 million in Q1 2021, reflecting a gross margin of 17.9%[9]. - Operating expenses increased to $1.058 million in Q1 2022, compared to $988,000 in Q1 2021, primarily due to higher advertising and marketing costs[9]. - The company reported a net loss of $21,000 for Q1 2022, an improvement from a net loss of $381,000 in Q1 2021[9]. - For the three months ended March 31, 2022, the net loss was $21,000, compared to a net loss of $473,000 for the same period in 2021, indicating a significant improvement[27]. - The company had a basic loss per common share of $0.04 for Q1 2022, compared to a loss of $0.36 per share for the same period in 2021[9]. - The company has a cumulative net loss of approximately $23 million from inception to March 31, 2022, raising concerns about its ability to continue as a going concern[33]. Cash and Assets - Cash and cash equivalents at the end of Q1 2022 were $208,000, significantly up from $66,000 at the end of Q1 2021[11]. - Total current assets increased to $12.908 million as of March 31, 2022, compared to $12.474 million as of December 31, 2021[7]. - The right of use (ROU) asset increased to $4,277,000 as of March 31, 2022, from $3,530,000 at December 31, 2021[71]. - As of March 31, 2022, total inventories increased to $8,496,000 from $7,876,000 as of December 31, 2021, representing a growth of approximately 7.9%[7]. Liabilities and Equity - Total liabilities rose to $14.200 million as of March 31, 2022, compared to $13.231 million at the end of 2021[7]. - The company’s accumulated deficit increased slightly to $22.676 million as of March 31, 2022, from $22.655 million at the end of 2021[8]. - The total equity as of March 31, 2022, was $4,061,000, a decrease from $4,146,000 as of December 31, 2021[14]. Revenue Sources - The company recognized revenue from product sales and shipping, with revenue being measured at the amount expected to be received upon transfer of products to customers[24]. - Revenue from foil balloons decreased by 22% to $3,832,000 in Q1 2022 from $4,935,000 in Q1 2021, attributed to the timing of shipments and price increases[88]. - Revenue from commercial films increased by 171% to $828,000 in Q1 2022 from $306,000 in Q1 2021, driven by increased demand from the largest customer[90]. Shareholder Information - The weighted average number of shares outstanding for Q1 2022 was 5,900,639, compared to 5,854,861 for Q1 2021[10]. - The company reported a total of 5,955,408 shares of common stock outstanding as of March 31, 2022[14]. - The Company issued 500,000 shares of Series A Preferred Stock at a price of $10.00 per share, generating gross proceeds of $5 million, with approximately $1 million sold by March 31, 2022[46]. - The Series A Preferred has a beneficial conversion feature valued at approximately $2.5 million, leading to a discount on the Series A Preferred recognized as dividend equivalents[47]. Operational Changes - The company divested CTI Balloons and CTI Europe to focus on core business activities, particularly foil balloons and ancillary products in North America[28]. - The company sold its Mexican subsidiary, Flexo Universal, in October 2021, receiving $100,000 in cash and a note receivable, which had a balance of $240,000 as of March 31, 2022[27]. - The company’s operations classified as discontinued include those of CTI Europe and Flexo Universal, which were exited in 2019 and 2021, respectively[15]. Financing and Capital - 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[38]. - The company plans to raise additional capital through equity sales and borrowing to fund operating losses[34]. - The Company is required to maintain a minimum tangible net worth of at least $4,000,000 starting December 31, 2021[82]. Legal and Compliance - The Company is currently involved in legal proceedings, including a claim seeking $94,000 related to utilities, which has been settled for $75,000[63]. - The company has been in compliance with its new credit facility since September 2021, following a refinancing[35]. - The Company must deliver a binding term sheet or evidence of available funds to the Lender by August 15, 2021[107]. Market and Customer Information - Customer A accounted for 43% of net sales in Q1 2022, down from 60% in Q1 2021, while Customer B represented 23% of net sales in Q1 2022, up from 19% in Q1 2021[66]. - The amounts owed by Customer A and Customer B as of March 31, 2022, were approximately $696,000 and $1,669,000, representing 20% and 48% of the Company's consolidated net accounts receivable, respectively[67].
Yunhong Green CTI(YHGJ) - 2022 Q1 - Quarterly Report