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]
Yunhong Green CTI(YHGJ) - 2023 Q3 - Quarterly Report