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]
Yunhong Green CTI(YHGJ) - 2023 Q2 - Quarterly Report