Financial Performance - Total net sales for the three months ended September 30, 2024, were $2,540,000, an increase from $1,923,000 for the same period in 2023, representing a growth of 32.2%[6] - For the nine months ended September 30, 2024, net sales reached $11,788,000, compared to $11,033,000 in the prior year, indicating a year-over-year increase of 6.8%[6] - The company reported a gross profit of $(20,000) for the three months ended September 30, 2024, down from a gross profit of $20,000 in the same period of 2023[6] - The net loss for the three months ended September 30, 2024, was $(1,193,000), compared to a net loss of $(967,000) for the same period in 2023, representing a decline of 23.4%[6] - For the nine months ended September 30, 2024, Yunhong Green CTI reported a net loss of $2,182,000, compared to a net loss of $720,000 for the same period in 2023, indicating a significant increase in losses[8] Cash Flow and Liquidity - The company generated net cash provided by operating activities of $862,000 for the nine months ended September 30, 2024, contrasting with net cash used in operating activities of $442,000 in the prior year[8] - Cash and cash equivalents at the end of the period were $5,000, down from $64,000 at the end of September 2023, indicating a decrease in liquidity[8] - The company issued preferred stock, generating $500,000, while it repaid $1,000,000 in notes payable related to a party, leading to a net cash used in financing activities of $1,476,000[8] - Cash used in financing activities was $1,476,000 for the nine months ended September 30, 2024, compared to cash provided of $496,000 in 2023, primarily due to revolving debt changes[86] - As of September 30, 2024, the company had cash balances of $5,000, down from $64,000 as of September 30, 2023[87] Assets and Liabilities - Total current assets decreased to $10,408,000 as of September 30, 2024, from $13,019,000 as of December 31, 2023, a decline of 20.1%[4] - Total assets increased to $20,619,000 as of September 30, 2024, compared to $17,247,000 as of December 31, 2023, an increase of 19.3%[4] - Total liabilities decreased to $10,686,000 as of September 30, 2024, from $13,515,000 as of December 31, 2023, a reduction of 21.3%[4] - Stockholders' equity increased to $9,933,000 as of September 30, 2024, compared to $3,732,000 as of December 31, 2023, an increase of 166.5%[5] Expenses - Operating expenses for the three months ended September 30, 2024, totaled $971,000, compared to $849,000 for the same period in 2023, reflecting an increase of 14.4%[6] - General and administrative expenses increased to $751,000 for the three months ended September 30, 2024, from $677,000 in 2023, largely due to higher audit fees[80] - Selling, advertising, and marketing expenses rose to $220,000 for the three months ended September 30, 2024, compared to $172,000 in 2023, reflecting increased sales commissions and payroll costs[81] - Depreciation and amortization expenses were $181,000 for the nine months ended September 30, 2024, compared to $211,000 in the same period last year[8] - Equity compensation expense rose to $133,000 from $16,000, reflecting increased compensation costs[8] Customer Concentration - Customer A accounted for 68% of net sales for the three months ended September 30, 2024, with sales of $1.731 million, compared to 56% and $1.097 million for the same period in 2023[57] - The company’s top three customers represented 79% of sales in Q3 2024, up from 75% in Q3 2023[76] - For the nine months ended September 30, 2024, Customer B's net sales were $2,823,000, accounting for 24% of net sales, up from $2,559,000 or 23% in 2023[78] Financing and Debt - The company’s senior secured financing includes a revolving credit facility of up to $6 million and a term loan facility of $731,250[35] - The interest rate on the senior facilities is set at the prime rate plus 1.95% per annum, with the prime rate being 8.0% as of September 30, 2024[36] - The company has extended the maturity date of its senior facilities to September 30, 2025[37] - The company must maintain a minimum tangible net worth of at least $4 million under the terms of its senior facilities[39] - The term loan balance was $0.6 million, down from $0.7 million as of December 31, 2023, with a revolving line of credit balance of $4.062 million compared to $4.991 million[41] Operational Challenges - The company faces substantial doubt about its ability to continue as a going concern for one year from the issuance of the financial statements due to various operational challenges[89] - The company has not commenced operations within its newly acquired subsidiary in China as of the reporting date[23] Inventory and Sales Composition - Total inventories as of September 30, 2024, amounted to $7.852 million, an increase from $7.791 million as of December 31, 2023, with raw materials at $1.197 million, work in process at $2.563 million, and finished goods at $4.092 million[56] - Foil balloons accounted for 91% of net sales in Q3 2024, generating $2,322,000, up 37% from $1,701,000 in Q3 2023[72] - Revenues from commercial films were $129,000 for Q3 2024, compared to $68,000 in Q3 2023, reflecting a 90% increase[74] - Other revenues increased to $2,690,000 for the nine months ended September 30, 2024, up 24% from $2,174,000 in the same period of 2023[75] Shareholder Actions - The Company issued 130,000 shares of Series E Convertible Preferred Stock in March 2024, raising gross proceeds of $1.3 million, and 70,000 shares of Series F Preferred for $0.7 million, both with an annual dividend rate of 8.5%[43][44] - The Company converted approximately $0.9 million of liabilities into approximately 1.8 million shares of common stock during 2023, eliminating both the note and deposit liabilities[45] - The Company recorded accrued dividends of $18,000 and $63,000 for the Series E Preferred for the three and nine months ended September 30, 2024, respectively[43]
Yunhong Green CTI(YHGJ) - 2024 Q3 - Quarterly Report