[10-Q] Yunhong Green CTI Ltd. Quarterly Earnings Report

Q: How much availability remained on Yunhong Green CTI's revolver at June 30, 2025?

Approximately $1.3 million was available for borrowing under the Revolving Credit Facility as of June 30, 2025.

Q: What are the key terms of the company's term loan?

The Term Loan Facility principal aggregate is $731,250 , repaid in 48 equal monthly installments of $15,000 , with a maturity of September 30, 2025 , and secured by substantially all assets.

Q: What preferred financings did YHGJ complete?

The company issued 130,000 Series E preferred shares for $1.3 million and 70,000 Series F preferred shares for $0.7 million; both carry an 8.5% annual dividend and liquidation preference over common stock.

Q: How many shares and warrants are outstanding that could affect dilution?

As of June 30, 2025, common shares issued were 27,767,884 (27,723,626 outstanding) and 556,000 warrants were outstanding exercisable at $1.52 or a VWAP-based measure.

Filing Impact

(Moderate)

Filing Sentiment

(Neutral)

Form Type

10-Q

Rhea-AI Filing Summary

Yunhong Green CTI Ltd. presents interim financial disclosures showing an ongoing liquidity strain but active financing and equity transactions. The company reports 27,767,884 shares issued and 27,723,626 shares outstanding as of June 30, 2025. It acquired production assets in China on June 30, 2024 but the subsidiary has not commenced operations. Cash from operations may be insufficient to meet needs over the next 12 months and the financial statements are prepared on a going concern basis. The company has Senior Facilities including a revolving credit facility and a $731,250 term loan secured by substantially all assets; approximately $1.3 million remained available under the revolver as of June 30, 2025. Series E and F preferred issuances raised $1.3 million and $0.7 million respectively, with warrants totaling 556,000 exercisable at $1.52 or a VWAP-based floor. Significant customer concentration exists (e.g., Customer B represented 44% of consolidated net sales in a referenced period).

Positive

Raised equity-like financing: Series E and Series F preferred issuances provided aggregate gross proceeds of $2.0 million, improving available capital.
Access to secured credit: Maintains Senior Facilities including a revolving credit facility and a $731,250 term loan, and reports covenant compliance.
Warrants issued: 556,000 warrants are outstanding, potentially converting to equity if exercised and providing an additional financing channel.

Negative

Going concern disclosed: Management states cash from operations may be insufficient for the next twelve months and the financial statements were prepared assuming continuation as a going concern.
Limited revolver availability: Approximately $1.3 million available under the Revolving Credit Facility as of June 30, 2025.
Customer concentration: One customer (Customer B) accounted for ~44% of consolidated net sales in a referenced period, increasing revenue risk.
Near-term term loan maturity: The Term Loan Facility includes monthly installments and a maturity date of September 30, 2025, creating refinancing risk.

Insights

TL;DR: Liquidity constrained but supported by secured senior facilities and recent preferred financings; customer concentration remains a revenue risk.

The filing shows the company is operating with limited available liquidity and explicit going concern language, indicating potential need for additional financing within twelve months absent operational improvement. The Senior Facilities include a revolving line and a $731,250 term loan with secured collateral; covenant compliance is stated. Preferred stock financings (Series E and F) provided $2.0 million gross proceeds and warrants that could dilute common equity if exercised. High customer concentration (Customer B at ~44% in one period) elevates revenue risk. Overall, results are mixed: financing provides runway but concentrated sales and going concern language limit positive outlook.

TL;DR: Going concern and tight covenant-backed borrowings create material near-term downside risk without clear operational cash generation.

The company explicitly warns cash from operations may be insufficient for the next 12 months and prepared the financials on a going concern basis, which is a significant red flag for creditors and equity holders. Senior Facilities are secured and include monitoring fees and borrowing base provisions, restricting flexibility. Although covenant compliance is asserted, limited revolver availability (~$1.3 million) and a term loan maturing September 30, 2025 present refinancing or repayment pressure. The issuance of convertible preferred stock and detachable warrants partially alleviated cash needs but introduces future dilution and dividend obligations (8.5% annual rate). This combination of tight liquidity, secured debt, near-term maturities, and concentrated customer exposure supports a negative risk assessment.

08/14/2025 - 03:50 PM

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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, 2025

☐	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 August 14, 2025 was 27,738,626 (excluding treasury shares).

INDEX

PART I – FINANCIAL INFORMATION

Item No. 1.	Financial Statements
	Unaudited Condensed Consolidated Balance Sheets at June 30, 2025 and December 31, 2024	1
	Unaudited Condensed Consolidated Statements of Income (Loss) for the three and six months ended June 30, 2025 and June 30, 2024	2
	Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2025 and June 30, 2024	3
	Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2025 and June 30, 2024	4
	Notes to Unaudited Condensed Consolidated Financial Statements	5
Item No. 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item No. 3	Quantitative and Qualitative Disclosures Regarding Market Risk	15
Item No. 4	Controls and Procedures	15

PART II – OTHER INFORMATION

Item No. 1	Legal Proceedings	16
Item No. 1A	Risk Factors	16
Item No. 2	Unregistered Sales of Equity Securities and Use of Proceeds	16
Item No. 3	Defaults Upon Senior Securities	16
Item No. 4	Mine Safety Disclosures	16
Item No. 5	Other Information	16
Item No. 6	Exhibits	17
	Signatures	18
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32

Table of Contents

Yunhong Green CTI, Ltd

Unaudited Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2025			2024
ASSETS
Current assets:
Cash and cash equivalents	$	18,000		$	220,000
Accounts receivable, net		3,795,000			5,403,000
Inventories		8,180,000			8,493,000
Prepaid expenses		243,000			412,000

Total current assets		12,236,000			14,528,000

Property, plant and equipment:
Machinery and equipment		22,246,000			22,246,000
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		518,000			518,000
Projects under construction		238,000			196,000
Property, plant and equipment gross		25,908,000			25,866,000
Less: accumulated depreciation and amortization		(21,280,000	)		(20,958,000	)

Total property, plant and equipment, net		4,628,000			4,908,000

Other assets:
Operating lease right-of-use		3,680,000			3,950,000
Prepaid expenses, noncurrent		2,192,000			2,192,000

Total other assets		5,872,000			6,142,000

TOTAL ASSETS	$	22,736,000		$	25,578,000

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Trade payables	$	1,433,000		$	1,537,000
Line of credit		4,746,000			6,578,000
Notes payable		564,000			606,000
Notes payable related party		344,000			344,000
Notes payable		344,000			344,000
Operating lease liabilities – current portion		534,000			480,000
Advance investor deposit		-			1,050,000
Accrued liabilities		578,000			810,000

Total current liabilities		8,199,000			11,405,000

Long-term liabilities:
Operating lease liabilities – noncurrent		3,186,000			3,470,000

Total long-term liabilities		3,186,000			3,470,000

TOTAL LIABILITIES	$	11,385,000		$	14,875,000

SHAREHOLDERS’ EQUITY
Series E Preferred Stock — no par value, 130,000 shares authorized, issued and outstanding at June 30, 2025 and December 31, 2024 (liquidation preference of $1,300,000)		920,000			864,000
Series F Preferred Stock — no par value, 70,000 shares authorized, issued and outstanding at June 30, 2025 and December 31, 2024 (liquidation preference of $700,000)		495,000			465,000
Preferred stock value		495,000			465,000
Common stock - no par value, 2,000,000,000 shares authorized, 27,767,884 and 25,991,845 shares issued and 27,723,626 and 25,947,587 shares outstanding at June 30, 2025 and December 31, 2024, respectively		28,765,000			27,533,000
Additional paid-in-capital		7,789,000			7,858,000
Accumulated deficit		(26,457,000	)		(25,856,000	)
Less: Treasury stock, 44,258 shares, at cost		(161,000	)		(161,000	)

TOTAL SHAREHOLDERS’ EQUITY		11,351,000			10,703,000

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	22,736,000		$	25,578,000

See accompanying notes to condensed consolidated unaudited financial statements.

Table of Contents

Yunhong Green CTI, LTD

Unaudited Condensed Consolidated Statements of Income (Loss)

	2025			2024			2025			2024
	For the Three Months Ended						For the Six Months Ended
	June 30,						June 30,
	2025			2024			2025			2024
Net sales	$	5,457,000		$	4,354,000		$	10,259,000		$	9,248,000

Cost of sales		4,479,000			3,662,000			8,415,000			7,660,000

Gross profit		978,000			692,000			1,844,000			1,588,000

Operating expenses:
General and administrative		754,000			640,000			1,593,000			1,698,000
Selling		37,000			35,000			72,000			69,000
Advertising and marketing		168,000			188,000			338,000			344,000

Total operating expenses		959,000			863,000			2,003,000			2,111,000

Income (loss) from operations		19,000			(171,000	)		(159,000	)		(523,000	)

Other (expense) income:
Interest expense		(227,000	)		(236,000	)		(465,000	)		(454,000	)
Other income/(expense)		23,000			(7,000	)		23,000			(12,000	)

Total other expense, nets		(204,000	)		(243,000	)		(442,000	)		(466,000	)

Net loss		(185,000	)		(414,000	)		(601,000	)		(989,000	)

Deemed dividends on preferred stock	$	(43,000	)	$	(56,000	)	$	(86,000	)	$	(70,000	)

Net loss attributable to Yunhong CTI Ltd common shareholders	$	(228,000	)	$	(470,000	)	$	(687,000	)	$	(1,059,000	)

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

Weighted average number of shares and equivalent shares of common stock outstanding:
Basic		26,080,821			20,895,082			26,080,821			20,833,509

Diluted		26,080,821			20,895,082			26,080,821			20,833,509

See accompanying notes to condensed consolidated unaudited financial statements.

Table of Contents

Yunhong Green CTI, Ltd

Unaudited Condensed Consolidated Statements of Cash Flows

	2025			2024
	For the Six Months Ended June 30,
	2025			2024

Cash flows from operating activities:
Net loss	$	(601,000	)	$	(989,000	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		322,000			120,000
Equity compensation expense		17,000			127,000

Change in assets and liabilities:
Accounts receivable		1,608,000			545,000
Inventories		313,000			347,000
Prepaid expenses and other assets		169,000			(21,000	)
Trade payables		(104,000	)		(70,000	)
Operating leases		40,000			-
Accrued liabilities		(50,000	)		49,000

Net cash (used in) provided by operating activities		1,714,000			108,000

Cash flows from investing activities:
Purchases of property, plant and equipment		(42,000	)		(274,000	)

Net cash (used in) provided by investing activities		(42,000	)		(274,000	)

Cash flows from financing activities:
Receipt for preferred stock issuance		-			500,000
Repayment of note payable, related party		-			(1,000,000	)
Repayment of note payable		(42,000	)		(30,000	)
Net advances (repayments) on revolving line of credit		(1,832,000	)		(203,000	)

Net cash provided by (used in) financing activities		(1,874,000	)		(733,000	)

Net increase (decrease) in cash and cash equivalents		(202,000	)		(899,000	)

Cash and cash equivalents at beginning of period		220,000			921,000

Cash and cash equivalents at end of period	$	18,000		$	22,000

Supplemental disclosure of cash flow information and noncash investing and financing activities:
Cash payments for interest	$	227,000		$	454,000
Accretion of dividends on preferred stock		86,000			70,000
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 advance received from investors into common stock		1,050,000			-
Common stock issued in exchange for rent due to Icy Melon		182,000			-

See accompanying notes to condensed consolidated unaudited financial statements.

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Yunhong Green CTI, Ltd

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

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

Balance December 31, 2024		130,000	$	864,000		70,000	$	465,000		25,991,845	$	27,533,000	$	7,858,000		$	(25,856,000	)		(44,258	)	$	(161,000	)	$	10,703,000

Series E Preferred Accrued Deemed Dividend		-		28,000				-		-		-		(28,000	)		-			-			-			-
Series F Preferred Accrued Deemed Dividend		-		-		-		15,000		-		-		(15,000	)		-			-			-			-
Common Stock Issuance for Rent				-		-		-		276,039		182,000		-			-			-			-			182,000
Equity Compensation Charge		-		-		-		-		-		-		9,000			-			-			-			9,000
Net Loss		-		-		-		-		-		-		-			(416,000	)		-			-			(416,000	)

Balance March 31, 2025		130,000	$	892,000		70,000	$	480,000		26,267,884	$	27,715,000	$	7,824,000		$	(26,272,000	)		(44,258	)	$	(161,000	)	$	10,478,000

Series E Preferred Accrued Deemed Dividend		-		28,000				-		-		-		(28,000	)		-			-			-			-
Series F Preferred Accrued Deemed Dividend		-		-		-		15,000		-		-		(15,000	)		-			-			-			-
Common Stock Issuance for Advance Investor Deposit				-		-		-		1,500,000		1,050,000		-			-			-			-			1,050,000
Equity Compensation Charge		-		-		-		-		-		-		8,000			-			-			-			8,000
Net Loss		-		-		-		-		-		-		-			(185,000	)		-			-			(185,000	)

Balance June 30, 2025		130,000	$	920,000		70,000	$	495,000		27,767,884	$	28,765,000	$	7,789,000		$	(26,457,000	)		(44,258	)	$	(161,000	)	$	11,351,000

Yunhong Green CTI, Ltd

Unaudited Condensed Consolidated Statements of Shareholders’ Equity

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

Balance December 31, 2023		-	$	-		-	$	-		20,815,595	$	21,283,000	$	6,967,000		$	(24,357,000	)		(44,258	)	$	(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 Preffered Accrued Deemed Dividend		-		9,000				-		-		-		(9,000	)		-			-			-			-
Series F Preferred Accrued Deemed Dividend		-		-		-		5,000		-		-		(5,000	)		-			-			-			-
Stock Issuance		-		-		-		-		-		-		-			-			-			-			-
Common Stock Issued for Assets Acquired		-		-		-		-		-		-		-			-			-			-			-
Stock Issuance - Vesting Milestone		-		-		-		-		-		-		-			-			-			-			-
Equity Compensation Charge		-		-		-		-		-		-		122,000			-			-			-			122,000
Net 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	)		(44,258	)	$	(161,000	)	$	5,278,000
Balance		130,000	$	780,000		70,000	$	420,000		20,815,595	$	21,283,000	$	7,889,000		$	(24,933,000	)		(44,258	)	$	(161,000	)	$	5,278,000

Series E Preferred Accrued Deemed Dividend		-		36,000				-		-		-		(36,000	)		-			-			-			-
Series F Preferred 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 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	)	$	(44,258	)	$	(161,000	)	$	11,120,000
Balance		130,000	$	816,000	$	70,000	$	440,000	$	25,891,845	$	27,533,000	$	7,838,000		$	(25,346,000	)	$	(44,258	)	$	(161,000	)	$	11,120,000

See accompanying notes to unaudited condensed consolidated financial statements.

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Yunhong Green CTI Ltd. and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation and Significant Accounting Policies

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) and consolidated cash flows for the periods presented in conformity with generally accepted accounting principles 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, 2025 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2025. 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, 2024, filed on April 15, 2025, which can be found on the Company’s website (www.ctiindustries.com) or www.sec.gov.

The accounting policies used in preparing the condensed consolidated financial statements in this Form 10-Q are the same as those used in preparing our consolidated financial statements included in our annual report on Form 10-K for the fiscal year ended December 31, 2024. See Note 2 on Form 10-K for the fiscal year ended December 31, 2024 for significant accounting policies.

The financial information presented in these 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. All intercompany accounts and transactions have been eliminated in consolidation.

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. Due to the single reportable segment, this financial information is presented on the Consolidated Statements of Income (Loss). There are no significant segment expenses reported to the chief operating decision maker (CODM). On June 30, 2024, the Company acquired production assets in China but has not yet commenced operations within this subsidiary.

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Earnings per share:

Basic (loss) per share is computed by dividing net 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.

For both June 30, 2025 and 2024, shares to be issued upon the exercise of warrants aggregated 556,000. No options were outstanding for the six months ended June 30, 2025 and 2024. The number of shares included in the determination of earnings on a diluted basis for the three months ended June 30, 2025 and 2024 were none, as doing so would have been anti-dilutive.

Revenue recognition:

Net sales include revenues from sales of products and shipping and handling charges, net of estimates for product returns. Revenue is measured at the amount of consideration the Company expects to receive in exchange for the transferred products. Revenue is recognized at the point in time when we transfer the promised products to the customer and the customer obtains control over the products. The Company recognizes revenue for shipping and handling charges at the time the goods are shipped to the customer, and the costs of outbound freight are included in cost of sales, as we have elected the practical expedient included in ASC 606.

The Company provides for product returns based on historical return rates. While we incur costs for sales commissions to our sales employees and outside agents, we recognize commission costs concurrent with the related revenue, as the amortization period is less than one year and we have elected the practical expedient included in ASC 606. We do not incur incremental costs to obtain contracts with our customers. Our product warranties are assurance-type warranties, which promise the customer that the products are as specified in the contract. Therefore, the product warranties are not a separate performance obligation and are accounted for as described herein. Sales taxes assessed by governmental authorities are accounted for on a net basis and are excluded from net sales.

Note 2 – Liquidity and Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States (“U.S. GAAP”) applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has a cumulative net loss from inception to June 30, 2025 of approximately $26 million. The accompanying financial statements for the six months ended June 30, 2025 have been prepared assuming the Company will continue as a going concern. The Company’s cash resources from operations may be insufficient to meet its anticipated needs during the next twelve months. If the Company does not execute its plan, it may require additional financing to fund its future planned operations.

The ability of the Company to continue as a going concern is dependent on the Company having adequate capital to fund its operating plan and performance. Management’s plans to continue as a going concern may include raising additional capital through sales of equity securities and borrowing, continuing to focus our Company on the most profitable elements, and exploring alternative funding sources on an as needed basis. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The supply chain challenges, inflationary pressures and tariffs have impacted on the Company’s business operations to some extent and is expected to continue to do so and these impacts may include reduced access to capital. The ability of the Company to continue as a going concern may be dependent upon its ability to successfully secure other sources of financing and attain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s primary sources of liquidity have traditionally been comprised of cash and cash equivalents as well as availability under the Credit Agreement in place at the time (see Note 3). This credit facility, as amended, concludes on September 30, 2025. While we expect to have sufficient financial resources available on acceptable terms, there can be no assurance this will occur, particularly in light of increasingly conservative financial markets.

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Note 3 - Debt

On September 30, 2021 (the “Closing Date”), the Company entered into a loan and security agreement (the “Agreement”) with Line Financial (the “Lender”), which provides for a senior secured financing consisting of a revolving credit facility (the “Revolving Credit Facility) in an aggregate principal amount of up to $6 million (the “Maximum Revolver Amount”), subject to borrowing base provisions, and term loan facility (the “Term Loan Facility”) in an aggregate principal amount of $731,250 (“Term Loan Amount” and, together with the Revolving Credit Facility, the “Senior Facilities”). The Senior Facilities are secured by substantially all assets of the Company. The Company believes it has been in compliance with the terms of these Senior Facilities since their inception in September 2021.

Interest on the Senior Facilities was set at the prime rate published from time to time published in the Wall Street Journal (7.5% as of June 30, 2025), plus 1.45% per annum, accruing daily and payable monthly. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. The Term Loan Facility shall be repaid by the Company to Lender in 48 equal monthly installments of principal and interest, each in the amount of $15,000, commencing on November 1, 2021, and continuing on the first day of each month thereafter until the Term Loan Maturity Date (September 30, 2025). Also, the Company paid the Lender collateral monitoring fees of 4.62% of the eligible accounts receivable, inventory, and equipment supporting the Revolving Credit Facility and the Term Loan.

The Senior Facilities matured on September 30, 2023 and were extended with a maturity date of September 30, 2025. The facility automatically extends for successive periods of one year each, unless the Company or the Lender gives the other party notice of termination not less than 90 days prior to the end of such term or renewal term, as applicable. If the Senior Facilities are renewed, the Company shall pay the Lender a renewal fee of 1.25% of the Maximum Revolver Amount and the Term Loan Amount upon each renewal on the anniversary of the Closing Date. The Company has the option to prepay the Term Loan Facility (together with all accrued but unpaid interest and a Term Loan Prepayment Fee (as defined in the Agreement) in whole, but not in part, upon not less than 60 days prior written notice to the Lender.

The Senior Facilities require that the Company maintain Tangible Net Worth of at least $4,000,000 or greater (“Minimum Tangible Net Worth”). Minimum Tangible Net Worth may be adjusted downward by the Lender, from time to time, in its sole and absolute discretion, based on the effect of non-cash charges and other factors on the calculation of Tangible Net Worth. Other debt subordinated to Lender is not considered as a reduction of this calculation. The Company believes it was in compliance with this covenant for all relevant months, including as of June 30, 2025 and December 31, 2024, respectively.

The Senior Facilities contain certain affirmative and negative covenants that limit the ability of the Company, among other things and subject to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, and acquisitions, pay dividends and make other restricted payments, or make capital expenditures exceeding $1,000,000 in the aggregate in any fiscal year.

As of June 30, 2025 and December 31, 2024, the term loan balance amounted to approximately $0.6 and $0.6 million, which consisted of the principal and interest payable balance of $0.6 and $0.6 million respectively, net of deferred financing costs of approximately $5,000 and $17,000 respectively. The balance of the Revolving Line of Credit as of June 30, 2025 and December 31, 2024 amounted to approximately $4.7 million and $6.6 million, respectively. As of December 31, 2024, the Revolving Line of Credit exceeded $6 million due to upcoming holidays and the bank approved extra funding to continue operations, the excess balance was reduced below the $6 million cap on January 3, 2025.

The Term Loan is repaid approximately $15,000 per month, offset by any applicable fees. As June 30, 2025, there was approximately $1.3 million remaining available for borrowing under our Revolving Credit Facility.

The Company is party to a note payable to John H. Schwan, Director and former Chairman of the Board, with a loan balance due of $1.3 million as of December 31, 2023 and an interest rate of 6%. The Company repaid $1 million to Mr. Schwan during January 2024. The parties agreed to the payment of the remaining $0.3 million at a future date to be determined. This related party note payable is subordinate to the Senior Facilities.

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Note 4 - Shareholders’ Equity

Series E Convertible Preferred Stock

In March 2024, the Company amended its Articles of Incorporation to authorize the issuance of 130,000 shares of Series E Convertible Preferred Stock (“Series E Preferred”) resulting in gross proceeds of $1.3 million from an unrelated third party. In aggregate, between Series E Preferred and Series F Convertible Preferred Stock (“Series F Preferred”) financings, $1.5 million of the total Series E and F proceeds were received as an advance prior to December 31, 2023. These funds advanced were initially classified as a current liability until the agreement was finalized and shares were issued, at which time it was reclassified as equity, similar to the prior Convertible Preferred issuances. The issuance of the Series E Preferred Stock resulted in an allocation of $0.8 million to the convertible preferred stock and $0.5 million to the warrants described below and classified as Additional Paid-In Capital. Holders of the Series E Preferred will be entitled to receive quarterly dividends at the annual rate of 8.5% of the stated value ($10 per share) and have a liquidation preference over common stock. Such dividends may be paid in cash or otherwise based on the terms of the agreement. In addition, warrants to purchase 361,400 shares of the Company’s common stock were issued with respect to this transaction. These warrants are exercisable until March 2027, at the lower of $1.52 per share or 90% of the variable price based on the ten-day volume weighted average price (“VWAP”) of the Company’s common stock prior to exercise. Accrued dividends of $149,000 and $93,000 were recorded as of June 30, 2025 and December 31, 2024, respectively.

Series F Convertible Preferred Stock

In March 2024, the Company amended its Articles of Incorporation to authorize the issuance of 70,000 shares of Series F Preferred resulting in gross proceeds of $0.7 million from an unrelated third party. As disclosed above certain of these proceeds were received as an advance prior to December 31, 2023. This investment was initially classified as a current liability until the agreement was finalized and shares were issued, at which time it was classified as equity, similar to the prior Convertible Preferred issuances. The issuance of the Series F Preferred Stock resulted in an allocation of $0.4 million to the convertible preferred stock and $0.3 million to the warrants described below and classified as Additional Paid-In Capital. Holders of the Series F Preferred will be entitled to receive quarterly dividends at the annual rate of 8.5% of the stated value ($10 per share) and have a liquidation preference over common stock. Such dividends may be paid in cash or stock, at the Company’s discretion, based on the terms of the agreement. In addition, warrants to purchase 194,600 shares of the Company’s common stock were issued with respect to this transaction. These warrants are exercisable until March 2027, at the lower of $1.52 per share or 90% of the variable price based on the ten-day volume weighted average price (“VWAP”) of the Company’s common stock prior to exercise. Accrued dividends of $80,000 and $50,000 were recorded as of June 30, 2025 and December 31, 2024, respectively.

Warrants

As described above, in connection with the Series E and F convertible preferred equity issuances, a total of 556,000 warrants were issued, convertible in the Company’s common stock at the lower of $1.52 per share or 90% of the 10 day VWAP prior to exercise.

The Company has applied the Black-Scholes model to value stock-based awards. That model incorporates various assumptions in the valuation of stock-based awards relating to the risk-free rate of interest to be applied, the estimated dividend yield and expected volatility of the Company’s Common Stock. The risk-free rate of interest is the U.S. Treasury yield curve for periods within the expected term of the option at the time of grant. The expected volatility is based on historical volatility of the Company’s Common Stock

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A summary of the Company’s stock warrant activity is as follows:

	Shares under Option (warrant)		Weighted Average Exercise Price
Balance at December 31, 2024		556,000	$	1.52
Granted		-		-
Cancelled/Expired		-		-
Exercised/Issued		-		-
Outstanding at June 30, 2025		556,000		1.52

Exercisable at June 30, 2025		556,000	$	1.52

As of June 30, 2025 the Company reserved the following shares of its common stock for the exercise of warrants, and preferred stock:

2024 Warrants			556,000
Shares reserved as of June 30, 2025			556,000

Restricted Stock Awards

Restricted Stock Units, Performance-Based Restricted Stock Units and Restricted Stock Awards:

Aggregated information regarding RSUs, PSUs and RSAs granted under the Plan is summarized below:

	RSUs, PSUs & RSAs			Weighted Average Grant-Date Fair Value
Outstanding, unvested at December 31, 2024		242,750			0.64
Granted		-
Vested		(19,750	)		0.79
Forfeited		-
Outstanding, unvested at June 30, 2025		223,000			0.85

Note 5 - Legal Proceedings

The Company may be party to certain lawsuits or claims arising in the normal course of business. The ultimate outcome of these matters is unknown but, in the opinion of management, we do not believe any of these proceedings will have, individually or in the aggregate, a material adverse effect upon our financial condition, cash flows or future results of operation.

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Note 6 – Inventories

	June 30, 2025		December 31, 2024
Raw materials	$	959,000	$	862,000
Work in process		2,544,000		2,444,000
Finished goods		4,677,000		5,187,000
Total inventories	$	8,180,000	$	8,493,000

Note 7 - Concentration of Credit Risk

Concentration of credit risk with respect to trade accounts receivable is generally limited due to the large number of entities comprising the Company’s customer base. The Company performs ongoing credit evaluations and provides an allowance for potential credit losses against the portion of accounts receivable which is estimated to be uncollectible. Such losses have historically been within management’s expectations.

During the three and six months ended June 30, 2025 and 2024, there were two customers whose purchases represented more than 10% of the Company’s consolidated net sales. Sales to these customers for the three and six months ended June 30, 2025 and 2024 are as follows:

	Three Months Ended					Three Months Ended
	June 30, 2025					June 30, 2024
Customer	Net Sales		% of Net Sales			Net Sales		% of Net Sales
Customer A	$	2,153,000		38	%	$	2,655,000		60	%
Customer B	$	2,456,000		44	%	$	1,040,000		24	%

	Six Months Ended					Six Months Ended
	June 30, 2025					June 30, 2024
Customer	Net Sales		% of Net Sales			Net Sales		% of Net Sales
Customer A	$	5,244,000		50	%	$	4,921,000		53	%
Customer B	$	2,979,000		28	%	$	2,751,000		30	%

As of June 30, 2025, the outstanding accounts receivable balance from these customers was $3.5 million.

Note 8 - Related Party Transactions

Ms. Jana M. Schwan is the Company’s Chief Executive Officer. Her father, John H. Schwan, held several positions with the Company over many years, most recently as Chairman of the Board until June 2020 as discussed in Note 3, Mr. John H. Schwan was owed approximately $0.3 million as of both June 30, 2025 and December 31, 2024, in a note from the Company.

Icy Melon LLC, the landlord of the Company’s Barrington Facility, is also a shareholder of the Company. On January 13, 2025, the Company issued 276,039 common shares, with a fair value of $182,000 to settle rent payable which was included in accrued expenses as of December 31, 2024.

During the three months ended June 30, 2025, the Company issued 1,500,000 common shares to Mitzners Consulting, LLC, an existing shareholder of the company, for proceeds of $1,050,000. Such proceeds were received prior to December 31, 2024 and were recorded within advance investor deposit on the consolidated balance sheet as of December 31, 2024.

The Company formed a wholly owned subsidiary, Yunhong Technology (Hubei) Co. Ltd., in the Hubei Province of China. On June 30, 2024, the Company, through the China subsidiary, acquired certain production assets and prepaid expenses asset 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. The prepaid expenses asset in the amount of $2.2 million as of June 30, 2025 and December 31, 2024 represents prepayment to the Selling Parties for the Company’s anticipated operational expenses, which the Selling Parties will pay on the Company’s behalf. No start-up operational expenses have been incurred by the China subsidiary as of June 30, 2025.

Note 9 - Leases

We enter into lease contracts for certain of our facilities at two locations. Our leases have remaining lease terms of 3three and six years.

The weighted average discount rate for our operating leases is 14.15%. We calculated the weighted-average discount rate using incremental borrowing rates, which equal the rates of interest that we would pay to borrow funds on a fully collateralized basis over a similar term.

Note 10 - Subsequent Events

In July 2025, the Company entered into a settlement agreement with a former service provider to resolve certain outstanding disputes. Under the terms of the agreement, signed on July 10, 2025, the Company was entitled to receive a cash settlement. The Company received the settlement amount of $315,000 on July 29, 2025, and in accordance with U.S. GAAP, will recognize the amount as Other Income on the Consolidated Statements of Income (Loss) in the third quarter of 2025.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Cautionary Note Regarding Forward Looking Statements

This Quarterly Report on Form 10-Q includes both historical and “forward-looking statements” within the meaning of federal securities law. All such statements are qualified by this cautionary note, which is provided pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future results. Words such as “may,” “should,” “could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” “continue,” or similar words are intended to identify forward-looking statements, although not all forward-looking statements contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially from the views and expectations set forth in this Quarterly Report on Form 10-Q. We disclaim any intent or obligation to update any forward-looking statements after the date of this Quarterly Report on Form 10-Q to conform such statements to actual results or to changes in our opinions or expectations. These forward-looking statements are affected by factors, risks, uncertainties and assumptions that we make, including, without limitation, those discussed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 under the heading “Risk Factors.”

Overview

We produce film products for novelty, packaging and container applications. These products include foil balloons, latex balloons and related products, films for packaging and custom product applications, and flexible containers for packaging and consumer storage applications. We produce all of our film products for packaging, container applications and most of our foil balloons at our plant in Lake Barrington, Illinois. The Company purchases latex balloons from an unrelated vendor and distributes in the United States, particularly to those customers that prefer a combined solution for foil and latex balloons. Substantially all our film products for packaging and custom product applications are sold to customers in the United States. We market and sell our novelty items, Balloon inspired gifts (balloons and candy arranged to look like a flower bouquet for gifting) and flexible containers for consumer use primarily in the United States. During 2023 we changed our name to include “Green”, to communicate our intention to supply biodegradable and compostable materials to the marketplace that are developed by our partners in Asia. We created a new subsidiary, in part, for this purpose. In recent periods, the U.S. government has imposed tariffs on certain goods imported from countries including China. Existing and future trade tariffs, import duties and quotas could also materially increase our costs of procuring the materials we use and disrupt the markets for the products we handle, which in turn could have a material adverse effect on our financial position, results of operations and cash flows.

Summary of Significant Events

On October 21, 2024, Yunhong Green CTI Ltd. received written notice from Nasdaq indicating that the Company’s common stock had not maintained a minimum closing bid price of $1.00 per share for 30 consecutive business days, thereby failing to comply with Nasdaq Listing Rule 5550(a)(2). The notice provided the Company with an initial 180-day grace period, through April 21, 2025, to regain compliance.

As the Company did not meet the minimum bid requirement by the end of the initial period, Nasdaq granted a second 180-day compliance period on April 24, 2025, extending the deadline to October 19, 2025. The Company intends to continue actively monitoring the closing bid price of its common stock and will evaluate all available options to regain compliance, including, if necessary, effecting a reverse stock split.

If, at any time before the extended deadline, the Company’s common stock closes at or above $1.00 per share for a minimum of 10 consecutive business days, Nasdaq will provide written confirmation that the Company has regained compliance with the Minimum Bid Price Rule.

Senior Credit Facilities

On September 30, 2021 (the “Closing Date”), the Company entered into a loan and security agreement (the “Agreement”) with Line Financial (the “Lender”), which provides for a senior secured financing consisting of a revolving credit facility (the “Revolving Credit Facility) in an aggregate principal amount of up to $6 million (the “Maximum Revolver Amount”) and term loan facility (the “Term Loan Facility”) in an aggregate principal amount of $731,250 (“Term Loan Amount” and, together with the Revolving Credit Facility, the “Senior Facilities”). The Senior Facilities are secured by substantially all assets of the Company. The Company believes it has been in compliance with the terms of these Senior Facilities since their inception in September 2021.

Interest on the Senior Facilities was set at the prime rate published from time to time published in the Wall Street Journal (7.5% as of June 30, 2025), plus 1.45% per annum, accruing daily and payable monthly. Interest shall be calculated on the basis of a 360-day year for the actual number of days elapsed. The Term Loan Facility shall be repaid by the Company to Lender in 48 equal monthly installments of principal and interest, each in the amount of $15,000, commencing on November 1, 2021, and continuing on the first day of each month thereafter until the Term Loan Maturity Date (as defined in the Agreement). Also, the Company paid the Lender collateral monitoring fees of 4.62% of the eligible accounts receivable, inventory, and equipment supporting the Revolving Credit Facility and the Term Loan.

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The Senior Facilities matured on September 30, 2023 and were extended with a maturity date of September 30, 2025. The facility automatically extends for successive periods of one year each, unless the Company or the Lender gives the other party written notice of termination not less than 90 days prior to the end of such term or renewal term, as applicable. If the Senior Facilities are renewed, the Company shall pay the Lender a renewal fee of 1.25% of the Maximum Revolver Amount and the Term Loan Amount upon each renewal on the anniversary of the Closing Date. The Company has the option to prepay the Term Loan Facility (together with all accrued but unpaid interest and a Term Loan Prepayment Fee (as defined in the agreement) in whole, but not in part, upon not less than 60 days prior written notice to the Lender.

As of both June 30, 2025 and December 31, 2024, the term loan balance amounted to approximately $0.6 million, which consisted of the principal and interest payable balance of $0.6 million and deferred financing costs of approximately $5,000 and $17,000 respectively. The balance of the Revolving Line of Credit as of June 30, 2025 and December 31, 2024 amounted to $4.7 million and $6.6 million, respectively. As of December 31, 2024, the Revolving Line of Credit exceeded $6,000,000 due to the year-end holiday schedule of the lender, and returned to less than $6,000,000 on January 3, 2025.

Note Payable, Related Party

The Company is party to a note payable to John H. Schwan, Director and former Chairman of the Board, with a loan balance of $1.3 million and interest rate of 6% as of December 31, 2023. The Company repaid $1 million to Mr. Schwan during January 2024. The parties agreed to the payment of the remaining $0.3 million at a future date to be determined. This related party note payable is subordinate to the Senior Facilities.

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Results of Operations

Net Sales: Net sales for the three-month periods ended June 30, 2025 and 2024 were approximately $5,457,000 and $4,354,000, respectively, representing an increase of $1,103,000 or 25% quarter-over-quarter.

For the three-month period ended June 30, 2025 and 2024, net sales by product category were as follows:

	Three Months Ended
	June 30, 2025					June 30, 2024
Product Category	$ (000) Omitted		% of Net Sales			$ (000) Omitted		% of Net Sales			Variance			% change

Foil Balloons	$	3,012		55	%	$	3,252		75	%	$	(240	)		-7	%

Film Products		350		6	%		171		4	%		179			105	%

Other		2,095		38	%		931		21	%		1,164			125	%

Total	$	5,457		100	%	$	4,354		100	%	$	1,103			222	%

For the six-month period ended June 30, 2025 and 2024, net sales were $10,259,000 and $9,248,000 respectively, representing an increase of $1,011,000, or 11%.

For the six-month periods ended June 30, 2025 and 2024, net sales by product category were as follows

	Six Months Ended
	June 30, 2025					June 30, 2024
Product Category	$ (000) Omitted		% of Net Sales			$ (000) Omitted		% of Net Sales			Variance			% change

Foil Balloons	$	7,245		71	%	$	6,171		67	%	$	1,074			17	%

Film Products		777		8	%		476		5	%		301			63	%

Other		2,237		22	%		2,601		28	%		(364	)		-14	%

Total	$	10,259		100	%	$	9,248		100	%	$	1,011			67	%

Foil Balloons. Revenues from the sale of foil balloons decreased during the three-month period ended June 30, 2025 to $3,012,000 compared to $3,252,000 during the same period of 2024. The slight decrease in revenue is due to the timing of shipments.

Revenues from the sale of foil balloons increased during the six-month period ended June 30, 2025 to $7,245,000 compared to $6,171,000 during the same period of 2024. The main reason for this change is as majority of our valentine’s day foil balloons this year were shipped in Q1 2025 whereas last year the majority of our Valentine’s Day foil balloons were shipped in Q4 2023. The increase is related to the timing of orders and shipment.

Films. Revenues from the sale of commercial films were $350,000 and $777,000 during the three and six month periods ended June 30, 2025, compared to $171,000 and $476,000 during the same periods of 2024. Sales in this area have been inconsistent due to a small number of customers and a significant number of competitors.

Other Revenues: Revenues from the sale of other products were $2,095,000 and $2,237,000 during the three and six month periods ended June 30, 2025 compared to $931,000 and $2,601,000 during the same periods of 2024. Other revenues during these periods primarily consisted of: (i) sales of balloon-inspired gift products, including candy and small inflated balloons packaged in small containers; and (ii) sales of accessories and supply items related to balloon products. The main reason for the fluctuation of the sales is due to timing of Valentine’s Day related shipments, which occurred in December 2024 compared to Q1 2024 for the following year.

Sales to a limited number of customers continue to represent a large percentage of our net sales. The table below illustrates the impact on sales of our top three and ten customers for the three and six month periods ended June 30, 2025 and 2024.

	Three Months Ended June 30,
	% of Sales
	2025			2024

Top 3 Customers		86	%		87	%

Top 10 Customers		94	%		93	%

	Six Months Ended June 30,
	% of Sales
	2025			2024

Top 3 Customers		84	%		86	%

Top 10 Customers		93	%		94	%

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	Three Months Ended June 30,
	2025					2024
Customer	Net Sales		% of Net Sales			Net Sales		% of Net Sales
Customer A	$	2,153,000		38	%		2,655,000		60	%
Customer B	$	2,456,000		44	%		1,040,000		24	%

	Six Months Ended June 30,
	2025					2024
Customer	Net Sales		% of Net Sales			Net Sales		% of Net Sales
Customer A	$	5,244,000		50	%		4,921,000		53	%
Customer B	$	2,979,000		28	%		2,751,000		30	%

As of June 30, 2025, the total amounts owed to the Company by these customers were approximately $3,484,000 or 89% of the Company’s consolidated net accounts receivable. The amounts owed at June 30, 2024 by these customers were $3,232,000 or 94% of the Company’s consolidated net accounts receivable.

Cost of Sales. During the three and six month periods ended June 30, 2025, the cost of sales was $4,479,000 and $8,415,000 compared to $3,662,000 and $7,660,000 respectively for the same periods of 2024, with the change driven largely by changes in sales volume. As a percentage of sales, cost of sales was 82% during the three and six months ended June 30, 2025, compared to 84% and 83% during the three and six months ended June 30, 2024.

General and Administrative. During the three and six month periods ended June 30, 2025, general and administrative expenses were $754,000 and $1,593,000 as compared to $640,000 and $1,698,000, respectively, for the same periods of 2024. The company had higher than usual audit fees in both years. Of note are the “re-audit” costs associated with 2023 due to the Company’s former auditor being suspended from practicing before the SEC during May 2024.

Selling, Advertising and Marketing: During the three and six month periods ended June 30, 2025, selling, advertising and marketing expenses were $168,000 and $338,000 as compared to $223,000 and $413,000, respectively, for the same period in 2024. Selling costs have decreased by $55,000 and $75,000.

Other Income (Expense): During the three and six month periods ended June 30, 2025, the Company incurred interest expense of $227,000 and $465,000 as compared to interest expense of $236,000 and $454,000, respectively, during the same periods of 2024.

Financial Condition, Liquidity and Capital Resources

Cash Flow Items.

Operating Activities. During the six months ended June 30, 2025, net cash provided by operations was $1,714,000, compared to net cash provided by operations during the six months ended June 30, 2024 of $108,000.

Significant changes in working capital items during the six months ended June 30, 2025 included:

	●	A decrease in accounts receivable of $1,608,000 compared to a decrease in accounts receivable of $545,000 in the same period of 2024.

	●	A decrease in inventory of $313,000 compared to a decrease in inventory of $347,000 in 2024.

	●	A decrease in trade payables of $104,000 compared to a decrease in trade payables of $70,000 in 2024.

	●	A decrease in prepaid expenses and other assets of $169,000 compared to an increase of $21,000 in 2024.

	●	A decrease in accrued liabilities of $50,000 compared to an increase in accrued liabilities of $49,000 in 2024.

Investing Activity. During the six months ended June 30, 2025, cash used in investing activity was $42,000, compared to cash used in investing activity for the same period of 2024 in the amount of $274,000.

Financing Activities. During the three months ended June 30, 2025, cash used in financing activities was $1,874,000 compared to cash used by financing activities for the same period of 2024 in the amount of $733,000. Financing activity during 2025 consisted principally of changes in the balances of revolving and term loan debt.

Liquidity and Capital Resources.

At June 30, 2025, the Company had cash balances of $18,000 compared to cash balances of $22,000 for the same period of 2024.

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The ability of the Company to continue as a going concern is dependent on the Company executing its business plan and, if unable to do so, in obtaining adequate capital on acceptable terms to fund any operating losses. Management’s plans to continue as a going concern include executing its business plan, continuing to focus our Company on the most profitable elements, and exploring alternative funding sources on an as needed basis. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The supply chain constraints, inflationary pressures and tariffs are expected to impact to some extent our operations and reduced access to capital. The ability of the Company to continue as a going concern is dependent upon its ability to successfully generate or otherwise secure other sources of financing and attain profitable operations. There is substantial doubt about the ability of the Company to continue as a going concern for one year from the issuance of the accompanying consolidated financial statements. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

The Company’s primary sources of liquidity have traditionally been comprised of cash and cash equivalents as well as availability under the Credit Agreement. While the Company expects to have access to needed capital at reasonable cost, there can be no assurance of success, and as such, might negatively impact the Company’s ability to continue as a going concern.

Seasonality

In the foil balloon product line, sales have historically been seasonal with approximately 40% occurring in the period from December through March of the succeeding year and 24% being generated in the period July through October in recent years.

Critical Accounting Estimates

The critical accounting estimates utilized by the Company in preparation of the accompanying financial statements are set forth in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. There have been no material changes to these policies since December 31, 2024.

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk

Not applicable.

Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in the reports filed or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission’s rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the time periods required by the Commission’s rules and forms.

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (principal executive officer) and Corporate Controller (principal financial officer), of the effectiveness of the design and operation of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of June 30, 2025. Based on this evaluation, the Chief Executive Officer and Corporate Controller concluded that our disclosure controls and procedures were not effective as of June 30, 2025, the end of the period covered by this Quarterly Report on Form 10-Q, due to the material weaknesses described below.

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(b) Management’s Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management has assessed the effectiveness of our internal control over financial reporting as of June 30, 2025. In making our assessment of the effectiveness of internal control over financial reporting, management used the criteria set forth in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”).

A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrant’s annual or interim financial statements will not be prevented or detected on a timely basis. As a result of our evaluation of our internal control over financial reporting, management identified the following material weakness in our internal control over financial reporting:

●

We lacked a sufficient number of accounting professionals with the necessary knowledge, experience and training to adequately account for significant, unusual transactions that have resulted in misapplications of GAAP, particularly with regard to equity financing arrangements and the timing of recognition of certain non-cash charges.

As a result of the material weakness, we have concluded that we did not maintain effective internal control over financial reporting as of June 30, 2025.

Plan for Remediation of Material Weakness

In 2024, a material weakness was identified in our internal control over financial reporting, specifically related to the accuracy of standard labor and overhead cost calculations. As of June 30, 2025, management has concluded that this material weakness has been remediated through the implementation of enhanced processes and controls to ensure that standard labor and overhead costs are calculated appropriately and accurately. These improvements include, but are not limited to, periodic monitoring and analysis of variances between actual and standard manufacturing costs, overseen by both the Chief Executive Officer and the Corporate Controller (Principal Financial Officer).

The Company believes that the combination of responsibilities held by the Chief Executive Officer and the Corporate Controller strengthens financial oversight, enhances internal control effectiveness, and promotes leadership continuity. As management continues to evaluate and refine our internal control framework, additional steps may be taken to address any remaining deficiencies or to further strengthen and remediation measures already in place.

This quarterly report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management’s report in this quarterly report.

(c) Changes in Internal Control over Financial Reporting

On April 25, 2025, Frank Cesario notified the Board of Directors of his resignation as Director, effective immediately, due to personal reasons. Mr. Cesario’s departure was not due to any disagreement with the Company on any matter relating to its operations, policies, or practices.

On May 1, 2025, Douglas Bosley notified the Board of Directors of his resignation as Director, effective immediately, due to personal reasons. Mr. Bosley’s departure was not due to any disagreement with the Company on any matter relating to its operations, policies, or practices.

Other than as described in the Plan for Remediation of Material Weakness, there were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits

The following are being filed as exhibits to this report:

Exhibit Number		Description

31.1*		Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).
31.2*		Certification of Corporate Controller and Principal Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).
32**		Certification of Chief Executive Officer, Corporate Controller and Principal Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
101*		Interactive Data Files, including the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2025, formatted in inline XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements.
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

*		Filed herewith
**		furnished herewith

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 14, 2025	Yunhong Green CTI Ltd.

	By:	/s/ Jana M. Schwan
		Jana M. Schwan
		Chief Executive Officer

	By:	/s/ Sree Kommana
		Sree Kommana
		Corporate Controller and Principal Financial Officer

Source: View Original Filing on SEC EDGAR

FAQ

What liquidity risk does YHGJ disclose in the 10-Q?

The company states its cash resources from operations may be insufficient to meet anticipated needs during the next twelve months and has prepared the financial statements on a going concern basis.

How much availability remained on Yunhong Green CTI's revolver at June 30, 2025?

Approximately $1.3 million was available for borrowing under the Revolving Credit Facility as of June 30, 2025.

What are the key terms of the company's term loan?

The Term Loan Facility principal aggregate is $731,250, repaid in 48 equal monthly installments of $15,000, with a maturity of September 30, 2025, and secured by substantially all assets.

What preferred financings did YHGJ complete?

The company issued 130,000 Series E preferred shares for $1.3 million and 70,000 Series F preferred shares for $0.7 million; both carry an 8.5% annual dividend and liquidation preference over common stock.

How many shares and warrants are outstanding that could affect dilution?

As of June 30, 2025, common shares issued were 27,767,884 (27,723,626 outstanding) and 556,000 warrants were outstanding exercisable at $1.52 or a VWAP-based measure.

Has the company started operations at its China production subsidiary?

No; the company acquired production assets in China on June 30, 2024, but the subsidiary has not yet commenced operations.

[10-Q] Yunhong Green CTI Ltd. Quarterly Earnings Report

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How many shares and warrants are outstanding that could affect dilution?

Has the company started operations at its China production subsidiary?

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[10-Q] Yunhong Green CTI Ltd. Quarterly Earnings Report

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Financial Analyst neutral

Risk Analyst negative

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What liquidity risk does YHGJ disclose in the 10-Q?

How much availability remained on Yunhong Green CTI's revolver at June 30, 2025?

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How many shares and warrants are outstanding that could affect dilution?

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