UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________to_________

Commission File Number

000-23115

YUNHONG GREEN CTI LTD.

(Exact name of registrant as specified in its charter)

Illinois		36-2848943
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

22160 N. Pepper Road
Barrington, Illinois		60010
(Address of principal executive offices)		(Zip Code)

(847)382-1000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock, no par value per share

YHGJ

The Nasdaq Stock Market LLC

(The Nasdaq Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the registrant’s common stock, no par value per share, as of September 17, 2024 was 25,848,187 (excluding treasury shares).

INDEX

PART I – FINANCIAL INFORMATION

Item No. 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets at June 30, 2024 and December 31, 2023	1
	Unaudited Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2024 and June 30, 2023	2
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2024 and June 30, 2023	3
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2024 and June 30, 2023	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item No. 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item No. 3	Quantitative and Qualitative Disclosures Regarding Market Risk	16
Item No. 4	Controls and Procedures	16

PART II – OTHER INFORMATION

Item No. 1	Legal Proceedings	17
Item No. 1A	Risk Factors	17
Item No. 2	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item No. 3	Defaults Upon Senior Securities	18
Item No. 4	Mine Safety Disclosures	18
Item No. 5	Other Information	18
Item No. 6	Exhibits	18
	Signatures	19
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32

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Yunhong Green CTI, LTD

Unaudited Condensed Consolidated Balance Sheets

Dollars (not share data) rounded to nearest thousand $000 for presentation

	June 30, 2024			December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	22,000		$	921,000
Accounts receivable, net		3,430,000			3,975,000
Inventories, net		7,444,000			7,791,000
Prepaid expenses		353,000			332,000

Total current assets		11,249,000			13,019,000

Property, plant and equipment:
Machinery and equipment		22,066,000			17,940,000
Office furniture and equipment		2,084,000			2,084,000
Intellectual property		783,000			783,000
Leasehold improvements		39,000			39,000
Fixtures and equipment at customer locations		519,000			519,000
Projects under construction		318,000			112,000
Property, plant and equipment gross		25,809,000			21,477,000
Less: accumulated depreciation and amortization		(20,733,000	)		(20,613,000	)

Total property, plant and equipment, net		5,076,000			864,000

Other assets:
Operating lease right-of-use asset		3,108,000			3,364,000
Prepaid expenses, non-current		2,192,000			-

Total other assets		5,300,000			3,364,000

TOTAL ASSETS	$	21,625,000		$	17,247,000

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade payables	$	847,000		$	917,000
Line of credit		4,788,000			4,991,000
Notes payable - current portion		153,000			140,000
Notes payable – related party		344,000			1,344,000
Notes payable		344,000			1,344,000
Operating lease liabilities		543,000			522,000
Advances from investors		-			2,000,000
Accrued liabilities		775,000			226,000

Total current liabilities		7,450,000			10,140,000
Long-term liabilities:
Notes payable – net of current portion		490,000			533,000
Operating lease liabilities – noncurrent		2,565,000			2,842,000
Total long-term liabilities		3,055,000			3,375,000

TOTAL LIABILITIES		10,505,000			13,515,000

Stockholders’ Equity:

Series E Preferred Stock — no par value, 130,000 shares authorized, 130,000 and none issued and outstanding at June 30, 2024 and December 31, 2023, respectively (liquidation preference of $1,300,000)		816,000			-
Series F Preferred Stock — no par value, 70,000 shares authorized, 70,000 and none issued and outstanding at June 30, 2024 and December 31, 2023, respectively (liquidation preference of $700,000)		440,000			-
Preferred stock, value		440,000			-
Common Stock – no par value, 2,000,000,000 shares authorized, 25,891,845 and 20,815,595 shares issued and 25,848,187 and 20,771,937 shares outstanding at June 30, 2024 and December 31, 2023, respectively		27,533,000			21,283,000
Paid-in-capital		7,838,000			6,967,000
Accumulated deficit		(25,346,000	)		(24,357,000	)
Less: Treasury stock, 43,658 shares, at cost		(161,000	)		(161,000	)

Total Stockholders’ Equity		11,120,000			3,732,000

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	21,625,000		$	17,247,000

See accompanying notes to condensed consolidated unaudited financial statements

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Yunhong Green CTI, LTD

Unaudited Condensed Consolidated Statements of Income (Loss)

Dollars (not share and per share data) rounded to nearest thousand $000 for presentation

	2024			2023			2024			2023
	For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2024			2023			2024			2023

Net sales	$	4,354,000		$	4,059,000		$	9,248,000		$	9,110,000

Cost of sales		3,662,000			3,545,000			7,660,000			7,469,000

Gross profit		692,000			514,000			1,588,000			1,641,000

Operating expenses:
General and administrative		640,000			656,000			1,698,000			1,617,000
Selling		35,000			33,000			69,000			65,000
Advertising and marketing		188,000			115,000			344,000			237,000

Total operating expenses		863,000			804,000			2,111,000			1,919,000

Loss from operations		(171,000	)		(290,000	)		(523,000	)		(278,000	)

Other (expense) income:
Interest expense		(236,000	)		(155,000	)		(454,000	)		(297,000	)
Other income/(expense)		(7,000	)		296,000			(12,000	)		822,000

Total other (expense)/income, net		(243,000	)		141,000			(466,000	)		525,000

Net (loss) / income	$	(414,000	)	$	(149,000	)	$	(989,000	)	$	247,000

Deemed dividends on preferred stock	$	(56,000	)	$	-		$	(70,000	)	$	(11,000	)

Net (loss) / income attributable to Yunhong Green CTI, Ltd. common stockholders	$	(470,000	)	$	(149,000	)	$	(1,059,000	)	$	236,000

Basic (loss) / income per common share	$	(0.02	)	$	(0.01	)	$	(0.05	)	$	0.01

Diluted (loss) / income per common share	$	(0.02	)	$	(0.01	)	$	(0.05	)	$	0.01

Weighted average number of shares and equivalent shares of common stock outstanding:
Basic		20,895,082			20,034,941			20,833,509			18,822,352

Diluted		20,895,082			20,034,941			20,833,509			18,822,352

See accompanying notes to condensed consolidated unaudited financial statements

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Yunhong Green CTI, LTD

Unaudited Condensed Consolidated Statements of Cash Flows

Dollars rounded to nearest thousand $000 for presentation

	2024			2023
	For the Six Months Ended June 30,
	2024			2023

Cash flows from operating activities:
Net income/(loss)	$	(989,000	)	$	247,000
Adjustments to reconcile net income/(loss) to net cash (used in) provided by operating activities:
Depreciation and amortization		120,000			151,000
Equity compensation expense		127,000			11,000
Change in assets and liabilities:
Accounts receivable		545,000			(1,341,000	)
Inventories		347,000			686,000
Prepaid expenses and other assets		(21,000	)		(47,000	)
Trade payables		(70,000	)		(331,000	)
Accrued liabilities		49,000			(737,000	)

Net cash provided by (used in) operating activities		108,000			(1,361,000	)

Cash flows from investing activities:
Purchases of property, plant and equipment		(274,000	)		(94,000	)

Net cash used in investing activities		(274,000	)		(94,000	)

Cash flows from financing activities:
Receipt for preferred stock issuance		500,000			-
Repayment of note payable, related party		(1,000,000	)		-
Net advances (repayments) of term loan		(30,000	)		(90,000	)
Net advances (repayments) on revolving line of credit		(203,000	)		1,499,000

Net cash (used in) provided by financing activities		(733,000	)		1,409,000

Net (decrease) / increase in cash and cash equivalents		(899,000	)		(46,000	)

Cash and cash equivalents at beginning of period		921,000			146,000

Cash and cash equivalents at end of period	$	22,000		$	100,000

Supplemental disclosure of cash flow information and noncash investing and financing activities:
Cash payments for interest	$	454,000		$	259,000
Accretion of dividends on preferred stock	$	70,000		$	11,000
Common stock issued in exchange for assets acquired	$	6,250,000		$	-
Allocation of proceeds from preferred stock financing to the issuance of warrants for preferred stock	$	814,000			-
Reclassification of advances upon issuances of preferred stock	$	1,500,000		$	-
Conversion of notes and deposits into common stock	$	-		$	885,000
Conversion of Series B preferred stock into common stock	$	-		$	1,500,000

See accompanying notes to condensed consolidated unaudited financial statementsd

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Yunhong Green CTI, Ltd

Unaudited Consolidated Statements of Stockholders’ Equity

Dollars (not share data) rounded to nearest thousand $000 for presentation


																				Less
		Series E Preferred Stock				Series F Preferred Stock				Common Stock				Paid-in			Accumulated			Treasury Stock
		Shares		Amount		Shares		Amount		Shares		Amount		Capital			(Deficit) Earnings			Shares			Amount			TOTAL

Balance December 31, 2023	-		-				-				20,815,595	$	21,283,000	$	6,967,000		$	(24,357,000	)		(43,658	)	$	(161,000	)	$	3,732,000

Series E Preferred Stock Issuance			130,000		771,000										529,000											$	1,300,000
Series F Preferred Stock Issuance							70,000		415,000						285,000											$	700,000
Series E Accrued Deemed Dividend					9,000										(9,000	)										$	-
Series F Accrued Deemed Dividend									5,000						(5,000	)										$	-
Stock Issuance											-															$	-
Equity Compensation Charge									-						122,000											$	122,000
Net Income (Loss)	-		-		-		-		-		-		-		-			(576,000	)		-			-		$	(576,000	)
Balance March 31, 2024	-		130,000	$	780,000		70,000	$	420,000		20,815,595	$	21,283,000	$	7,889,000		$	(24,933,000	)		(43,658	)	$	(161,000	)	$	5,278,000

Series E Accrued Deemed Dividend					36,000										(36,000	)										$	-
Series F Accrued Deemed Dividend									20,000						(20,000	)										$	-
Common Stock Issued for Assets Acquired											5,000,000		6,250,000													$	6,250,000
Stock Issuance - Vesting Milestone											76,250															$	-
Equity Compensation Charge									-						5,000			1,000								$	6,000
Net Income (Loss)	-		-		-		-		-		-		-		-			(414,000	)		-			-		$	(414,000	)
Balance June 30, 2024	-		130,000	$	816,000		70,000	$	440,000		25,891,845	$	27,533,000	$	7,838,000		$	(25,346,000	)		(43,658	)	$	(161,000	)	$	11,120,000

Yunhong Green CTI, Ltd

Unaudited Consolidated Statements of Stockholders’ Equity

Dollars (not share data) rounded to nearest thousand $000 for presentation


																	Less
	Series B Preferred Stock						Common Stock				Paid-in			Accumulated			Treasury Stock
	Shares			Amount			Shares		Amount		Capital			(Deficit) Earnings			Shares			Amount			TOTAL

Balance December 31, 2022		170,000		$	1,851,000			16,102,749	$	21,283,000	$	3,895,000		$	(24,122,000	)		(43,658	)	$	(161,000	)	$	2,746,000

Series B Convertible Preferred Stock Conversion into Common Stock		(170,000	)		(1,862,000	)		1,888,078		-		1,862,000											$	-
Common Stock issued for notes payable and investor deposit					-			1,908,336				884,000											$	884,000
Accrued Deemed Dividend - Series B Preferred Stock					11,000							(11,000	)										$	-
Equity Compensation Charge								116,250				7,000			2,000								$	9,000
Net Income (Loss)		-			-			-		-		-			396,000			-			-		$	396,000
Balance March 31, 2023		-		$	-			20,015,413	$	21,283,000	$	6,637,000		$	(23,724,000	)		(43,658	)	$	(161,000	)	$	4,035,000
Balance		-		$	-			20,015,413	$	21,283,000	$	6,637,000		$	(23,724,000	)		(43,658	)	$	(161,000	)	$	4,035,000

Equity Compensation Charge											$	5,000			(2,000	)								3,000
Broker issuance								125,000
Net Income (Loss)		-			-			-		-		-			(149,000	)		-			-		$	(149,000	)
Balance June 30, 2023		-		$	-			20,140,413	$	21,283,000	$	6,642,000		$	(23,875,000	)		(43,658	)	$	(161,000	)	$	3,889,000
Balance		-		$	-			20,140,413	$	21,283,000	$	6,642,000		$	(23,875,000	)		(43,658	)	$	(161,000	)	$	3,889,000

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Yunhong Green CTI Ltd.

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements have been prepared and, in the opinion of management, contain all material adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the consolidated financial position and the consolidated statements of income (loss), changes in stockholders’ equity and cash flows for the periods presented in conformity with generally accepted accounting principles in the United States (“U.S. GAAP”) for interim consolidated financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X.

Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America. Operating results for the three and six months ended June 30, 2024 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2024. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2023, filed on March 29, 2024, which can be found on the Company’s website (www.ctiindustries.com) or www.sec.gov.

The financial information presented in these interim financial statements has been rounded to the nearest thousand dollars ($000), which is in accordance with our policy to simplify the presentation. The financial information is not presented in thousand-dollar increments.

Principles of consolidation and nature of operations:

Yunhong Green CTI Ltd., its wholly owned subsidiary Yunhong Technology Industry (Hubei) Co,. Ltd., and its inactive subsidiary CTI Supply, Inc. (collectively, the “Company”) (i) design, manufacture and distribute metalized balloon products throughout the world, (ii) distribute purchased latex balloons products, and (iii) operate systems for the production, lamination, coating and printing of films used for food packaging and other commercial uses and for conversion of films to flexible packaging containers and other products.

The condensed consolidated financial statements include the accounts of Yunhong Green CTI Ltd., CTI Supply, Inc., and Yunhong Technology Industry (Hubei) Co., Ltd.

During the six months ended June 30, 2024, the Company formed a wholly-owned subsidiary, Yunhong Technology (Hubei) Co. Ltd., in the Hubei Province of China. As further described in Note 4, on June 30, 2024, the Company, through the China subsidiary, acquired certain production assets pursuant to an Asset Purchase Agreement and in exchange for 5 million shares of the Company’s common stock, which was valued at $6.25 million.

Reclassification:

Certain amounts in the Company’s condensed consolidated financial statements for prior periods have been reclassified to conform to the current period presentation. These reclassifications have not changed the results of operations of prior periods.

Use of estimates:

In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the amounts reported of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period in the financial statements and accompanying notes. Actual results may differ from those estimates. The Company’s significant estimates include valuation allowances for credit losses and inventory valuation, and the valuation of warrants to purchase preferred stock.

Segments:

The Company views its operations and manages its business as one segment, both in terms of geography and operations. All manufacturing occurs in the United States. On June 30, 2024, the Company acquired production assets in China (see Note 4) but has not yet commenced any operations within this subsidiary.

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Earnings per share:

Basic income (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during each period.

Diluted (loss) per share is computed by dividing the net loss by the weighted average number of shares of common stock and equivalents (stock options and warrants), unless anti-dilutive, during each period. In periods for which there is a net loss, diluted loss per common share is equal to basic loss per common share, since the effect of including any common stock equivalents would be antidilutive.

As of June 30, 2024 and 2023, shares to be issued upon the exercise of warrants aggregated 556,000 and

SEC Form 10-Q filed by Yunhong Green CTI Ltd.