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]
Yunhong Green CTI(YHGJ) - 2024 Q1 - Quarterly Report