季報
季度報告
10-Q
2026-08-07
运鸿CTI第二季銷售跌29% 淨虧損擴大至54.3萬美元 持續經營存疑
AI 繁中摘要
雲鴻綠色CTI有限公司（Yunhong Green CTI Ltd.，納斯達克：YHGJ）已向美國證交會提交截至2026年6月30日止第二季度（2026財年）的10-Q季度報告。
📊 業績重點（未經審計）
• 第二季淨銷售額約390萬美元，按年下跌29%（2025年同期為545.7萬美元）；上半年淨銷售額則約1,005.4萬美元，按年僅跌2%，表現相對平穩。
• 第二季毛利53.8萬美元，毛利率約14%；上半年毛利155.2萬美元，毛利率約15%，兩者均遜於去年同期，主要受美國通脹推高採購成本影響。
• 第二季淨虧損54.3萬美元（去年同期虧損18.5萬美元）；上半年累計淨虧損88.4萬美元（去年同期虧損60.1萬美元）。
• 歸屬於普通股股東的每股虧損：第二季0.22美元，上半年0.37美元。
📉 銷售下跌原因
管理層指，第二季銷售大跌主要由於春季產品出貨時間集中在第一季，加上一家大型零售客戶自2025年下半年起調整補貨模式，令鋁箔氣球出貨量減少。期內鋁箔氣球銷售按季跌13%至261.8萬美元；薄膜產品跌41%；其他產品（包括氣球禮品及配件）跌49%。
⚠️ 財務狀況與持續經營風險
• 截至2026年6月30日，現金及現金等價物僅32萬美元（2025年底為9.7萬美元）；總資產1,862萬美元，總負債1,089.7萬美元，股東權益772.3萬美元。
• 累計虧損約2,927萬美元，管理層明確表示對未來十二個月能否持續經營存在重大疑問（going concern）。
• 公司依賴Line Financial的優先抵押信貸額度，循環信貸上限700萬美元及定期貸款70萬美元，已延長至2027年4月30日。截至季末，循環信貸結欠460萬美元，定期貸款約45萬美元，尚有約240萬美元可用借貸空間。
• 公司計劃透過潛在的註冊股權發售、借貸及探索其他融資渠道集資，但無法保證成功。
🔍 其他關注點
• 客戶集中風險極高：前兩大客戶佔第二季淨銷售額合共81%，應收賬款中97%來自該兩名客戶，任何一方流失或延遲付款都會嚴重影響現金流。
• 內部監控存在重大缺陷，主要原因是缺乏足夠資深的會計專業人員處理新股權融資及非現金開支確認等複雜交易。
• 公司已委任董事 Fred H.F. Chak 為董事會主席，2026年4月27日起生效。
📌 投資者提示
公司基本面仍然疲弱，銷售增長動力不足，盈利能力受壓，加上現金儲備極低及持續經營存疑，短期財務穩健性令人憂慮。雖然管理層正尋求集資及改善營運，但存在高度不確定性，投資者宜審慎評估風險。
展開英文正文
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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, 2026 OR ☐ 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 7, 2026 was 2,609,244 (excluding treasury shares). INDEX PART I – FINANCIAL INFORMATION Item No. 1. Financial Statements Unaudited Condensed Consolidated Balance Sheets at June 30, 2026 and December 31, 2025 1 Unaudited Condensed Consolidated Statements of Loss for the three and six months ended June 30, 2026 and 2025 2 Unaudited Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 3 Unaudited Condensed Consolidated Statements of Shareholders’ Equity for the three and six months ended June 30, 2026 2025 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 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 17 Item No. 4 Mine Safety Disclosures 17 Item No. 5 Other Information 17 Item No. 6 Exhibits 18 Signatures 19 Exhibit 31.1 Exhibit 31.2 Exhibit 32 Table of Contents Yunhong Green CTI, Ltd. Unaudited Condensed Consolidated Balance Sheets June 30, December 31, 2026 2025 ASSETS Current assets: Cash and cash equivalents $320,000 $97,000 Accounts receivable, net 3,295,000 5,955,000 Inventories 7,827,000 8,738,000 Prepaid expenses 351,000 283,000 Total current assets 11,793,000 15,073,000 Property, plant and equipment: Machinery and equipment 21,993,000 21,993,000 Office furniture and equipment 2,122,000 2,122,000 Intellectual property 783,000 783,000 Leasehold improvements 39,000 39,000 Fixtures and equipment 518,000 518,000 Projects under construction 170,000 140,000 Property, plant and equipment gross 25,625,000 25,595,000 Less: accumulated depreciation and amortization (21,885,000) (21,599,000) Total property, plant and equipment, net 3,740,000 3,996,000 Other assets: Operating lease right-of-use 3,087,000 3,393,000 Total other assets 3,087,000 3,393,000 TOTAL ASSETS $18,620,000 $22,462,000 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Trade payables $1,482,000 $1,677,000 Line of credit 4,591,000 6,822,000 Notes payable – current portion 443,000 146,000 Notes payable related party 344,000 344,000 Notes payable 344,000 344,000 Operating lease liabilities – current portion 659,000 596,000 Advance investor deposits 225,000 150,000 Accrued liabilities 627,000 950,000 Total current liabilities 8,371,000 10,685,000 Long-term liabilities: Notes payable – net of current portion - 348,000 Operating lease liabilities – noncurrent 2,526,000 2,873,000 Total long-term liabilities 2,526,000 3,221,000 TOTAL LIABILITIES $10,897,000 $13,906,000 SHAREHOLDERS’ EQUITY Series E Preferred Stock — no par value, 130,000 shares authorized, issued and outstanding at June 30, 2026 and December 31, 2025 (liquidation preference of $1,300,000) 1,032,000 976,000 Series F Preferred Stock — no par value, 70,000 shares authorized, issued and outstanding at June 30, 2026 and December 31, 2025 (liquidation preference of $700,000) 555,000 525,000 Preferred stock, value 555,000 525,000 Common stock - no par value, 2,000,000,000 shares authorized, 2,613,670 and 2,601,788 shares issued and 2,609,244 and 2,597,362 shares outstanding at June 30, 2026 and December 31, 2025, respectively 27,891,000 27,891,000 Additional paid-in-capital 7,676,000 7,711,000 Accumulated deficit (29,270,000) (28,386,000) Less: Treasury stock, 4,426 shares, at cost (161,000) (161,000) TOTAL SHAREHOLDERS’ EQUITY 7,723,000 8,556,000 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $18,620,000 $22,462,000 See accompanying notes to condensed consolidated unaudited financial statements. Reflects a 1-for-10 reverse stock split of the Company’s common stock, effective October 1, 2025 1 Table of Contents Yunhong Green CTI Ltd. Unaudited Condensed Consolidated Statements of Income (Loss) 2026 2025 2026 2025 For the Three Months Ended For the Six Months Ended June 30, June 30, 2026 2025 2026 2025 Net sales $3,900,000 $5,457,000 $10,054,000 $10,259,000 Cost of sales 3,362,000 4,479,000 8,502,000 8,415,000 Gross profit 538,000 978,000 1,552,000 1,844,000 Operating expenses: General and administrative 675,000 754,000 1,598,000 1,593,000 Selling 34,000 37,000 71,000 72,000 Advertising and marketing 149,000 168,000 302,000 338,000 Total operating expenses 858,000 959,000 1,971,000 2,003,000 Income (loss) from operations (320,000) 19,000 (419,000) (159,000) Other (expense) income: Interest expense (225,000) (227,000) (467,000) (465,000) Other income/(expense) 2,000 23,000 2,000 23,000 Total other expense, net (223,000) (204,000) (465,000) (442,000) Net loss (543,000) (185,000) (884,000) (601,000) Deemed dividends on preferred stock $(43,000) $(43,000) $(86,000) $(86,000) Net loss attributable to common shareholders $(586,000) $(228,000) $(970,000) $(687,000) Basic income (loss) per common share $(0.22) $(0.09) $(0.37) $(0.26) Diluted income (loss) per common share $(0.22) $(0.09) $(0.37) $(0.26) Weighted average number of shares and equivalent shares of common stock outstanding: Basic 2,608,638 2,608,082 2,604,856 2,608,082 Diluted 2,608,638 2,608,082 2,604,856 2,608,082 See accompanying notes to condensed consolidated unaudited financial statements. Reflects a 1-for-10 reverse stock split of the Company’s common stock, effective October 1, 2025 2 Table of Contents Yunhong Green CTI Ltd. Unaudited Condensed Consolidated Statements of Cash Flows 2026 2025 For the Six Months Ended June 30, 2026 2025 Cash flows from operating activities: Net loss $(884,000) $(601,000) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Depreciation and amortization 286,000 322,000 Equity compensation expense 51,000 17,000 Change in assets and liabilities: Accounts receivable 2,660,000 1,608,000 Inventories 911,000 313,000 Prepaid expenses and other assets (68,000) 169,000 Trade payables (195,000) (104,000) Operating leases 22,000 40,000 Advance investor deposit 75,000 - Accrued liabilities (323,000) (50,000) Net cash (used in) provided by operating activities 2,535,000 1,714,000 Cash flows from investing activities: Purchases of property, plant and equipment (30,000) (42,000) Net cash (used in) provided by investing activities (30,000) (42,000) Cash flows from financing activities: Repayment of note payable (51,000) (42,000) Net repayments on revolving line of credit (2,231,000) (1,832,000) Net cash provided by (used in) financing activities (2,282,000) (1,874,000) Net increase (decrease) in cash and cash equivalents 223,000 (202,000) Cash and cash equivalents at beginning of period 97,000 220,000 Cash and cash equivalents at end of period $320,000 $18,000 Supplemental disclosure of cash flow information and noncash investing and financing activities: Cash payments for interest $467,000 $465,000 Accretion of dividends on preferred stock 86,000 86,000 Conversion of advance received from investors into common stock - 1,050,000 Common stock issued in exchange for rent due to Icy Mellon - 182,000 See accompanying notes to condensed consolidated unaudited financial statements. Reflects a 1-for-10 reverse stock split of the Company’s common stock, effective October 1, 2025 3 Table of Contents 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, 2025 130,000 $976,000 70,000 $525,000 2,601,788 $27,891,000 $7,711,000 $(28,386,000) (4,426) $(161,000) $8,556,000 Series E Accrued Deemed Dividend - 28,000 - - - (28,000) - - - - Series F Accrued Deemed Dividend - - - 15,000 - - (15,000) - - - - Stock Issuance - Vesting Milestone - - - - 6,917 - 38,000 - - - 38,000 Equity Compensation Charge - - - - - - 6,000 - - - 6,000 Net Loss - - - - - - - (341,000) - - (341,000) Balance March 31, 2026 130,000 $1,004,000 70,000 $540,000 2,608,705 $27,891,000 $7,712,000 $(28,727,000) (4,426) $(161,000) $8,259,000 Series E Accrued Deemed Dividend - 28,000 - - - (28,000) - - - - Series F Accrued Deemed Dividend - - - 15,000 - (15,000) - - - - Stock Issuance - Vesting Milestone - - - - - - - - - Equity Compensation Charge - - - - 4,965 - 7,000 - - - 7,000 Net Loss - - - - - - - (543,000) - - (543,000) Balance June 30, 2026 130,000 $1,032,000 70,000 $555,000 2,613,670 $27,891,000 $7,676,000 $(29,270,000) (4,426) $(161,000) $7,723,000 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, 2024 130,000 $864,000 70,000 $465,000 2,599,185 $27,533,000 $7,858,000 $(25,856,000) (4,426) $(161,000) $10,703,000 Series E Accrued Deemed Dividend - 28,000 - - - (28,000) - - - - Series F Accrued Deemed Dividend - - - 15,000 - - (15,000) - - - - Common Stock Issuance for Rent - - - 27,604 182,000 - - - - 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 2,626,789 $27,715,000 $7,824,000 $(26,272,000) (4,426) $(161,000) $10,478,000 Series E Accrued Deemed Dividend - 28,000 - - - (28,000) - - - - Series F Accrued Deemed Dividend - - - 15,000 - - (15,000) - - - - Common Stock Issuance for Advance Investor Deposit - - - 150,000 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 2,776,789 $28,765,000 $7,789,000 $(26,457,000) (4,426) $(161,000) $11,351,000 See accompanying notes to condensed consolidated unaudited financial statements. Reflects a 1-for-10 reverse stock split of the Company’s common stock, effective October 1, 2025 4 Table of Contents Yunhong Green CTI Ltd. 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 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, 2026 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2026. 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, 2025, filed on March 23, 2026, which can be found on the Company’s website (www.ctiindustries.com) or www.sec.gov. 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. All of the Company’s historical share and per share information related to issued and outstanding common stock, outstanding share based awards and warrants exercisable for common stock in these financial statements have been adjusted, on a retroactive basis, to reflect the 1-for-10 reverse stock split approved by the Company’s shareholders on August 22, 2025 and effective October 1, 2025. 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. See Note 2 to the consolidated financial statements included in Form 10-K for the fiscal year ended December 31, 2025. 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 recoverability and impairment of long-lived assets, valuation allowances for doubtful accounts, inventory valuation and valuation of deferred tax assets. 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 Loss. There are no significant segment expenses reported to the chief operating decision maker (CODM), which is the Chief Executive Officer. The Company’s CODM regularly reviews financial information presented and does not evaluate the Company’s operating segment using asset or liability information. Instead, the CODM uses revenue, gross margin, and net income or loss to allocate operating and capital resources and assess performance by comparing actual results to historical results and previously forecasted financial information. 5 Table of Contents Earnings per share: Basic (loss) per share is computed by dividing net loss attributable to common shareholders 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 attributable to common shareholders 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, 2026 and 2025 , shares to be issued upon the exercise of warrants aggregated 55,600. No options were outstanding for the three months ended June 30, 2026 and 2025. The number of shares included in the determination of earnings on a diluted basis for the three months ended June 30, 2026 and 2025 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, 2026 of approximately $29 million. The accompanying financial statements for the three months ended June 30, 2026 have been prepared assuming the Company will continue as a going concern. Existing cash resources and cash expected to be generated from operations are not expected to be sufficient to fund the Company’s anticipated operating requirements over the next twelve months without additional financing. 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 include raising additional capital , including through a potential registered offering of equity securities, as well as borrowings, continuing to focus on attaining profitable operations, 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 a Credit Agreement. The Credit Agreement with Line Financial, as most recently amended in September 2025, includes a revolving credit facility for up to $7 million and a term loan of $0.7 million, all supported by the majority of our assets. This Agreement was extended during September 2025, to mature April 30, 2027, under substantially similar terms. 6 Table of Contents Note 3 - Debt Senior 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 $7 million, as amended (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 has remained in compliance with all material covenants since inception. Borrowings under the Revolving Credit Facility bear interest at the prime rate + 7.82% (14.57% as of June 30, 2026), payable monthly in arrears. The Term Loan Facility bears interest at the prime rate + 1.45% (8.2% as of June 30, 2026) and is repaid in 48 monthly installments of approximately $15,000. The Company also pays collateral monitoring fees of 4.62% of the eligible accounts receivable, inventory, and equipment supporting both facilities. Originally maturing September 30, 2023, the Senior Facilities were extended to April 30, 2027 pursuant to a Fifth Amendment executed on September 30, 2025, which also increased the revolving commitment from $6.0 million to $7.0 million and added a 0.75% renewal fee, payable in two equal installments in October 2025 and September 2026. A $12,500 commitment fee was also incurred. All other material terms, including borrowing base, collateral, and covenants, remained unchanged. The facility automatically renews for successive one-year periods unless either party provides written notice of termination not less than 90 days prior to the end of the then-current term. The Company may prepay the Term Loan Facility (together with accrued interest and any applicable prepayment fee) in whole, but not in part, upon at least 60 days’ prior written notice. The Agreement requires the Company to maintain minimum tangible net worth of $4.0 million, subject to adjustment by the Lender. The Company was in compliance with this covenant as of June 30, 2026 and 2025. The Agreement also limits additional indebtedness, liens, dividends, mergers, and annual capital expenditures exceeding $1.0 million. As of June 30, 2026 and December 31, 2025, the term loan balance was approximately $0.45 and $0.5 million, respectively, and the revolving balance was $4.6 million and $6.8 million, respectively. There was $2.4 million remaining available for borrowing under the Revolving Credit Facility as of June 30, 2026. Notes payable, Related Party The Company is party to a note payable to John H. Schwan, Director and former Chairman of the Board, for an initial amount 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. 7 Table of Contents Note 4 - Shareholders’ Equity Series E Convertible Preferred Stock The Company’s Articles of Incorporation, as amended, authorized the issuance of 130,000 shares of Series E Convertible Preferred Stock (“Series E Preferred”). The Series E Preferred can be converted to common stock, at the option of the holder, at the rate of ten (10) shares of the company’s common stock, no par value. 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. Accrued dividends of $261,000 and $205,000 were recorded as of June 30, 2026 and December 31, 2025, respectively. In addition, warrants to purchase 36,140 shares of the Company’s common stock were issued with respect to this transaction and are equity classified instruments. These warrants are exercisable until March 2027. Series F Convertible Preferred Stock The Company’s Articles of Incorporation, as amended, authorized the issuance of 70,000 shares of Series F Preferred. The Series F Preferred can be converted to common stock, at the option of the holder, at the rate of ten (10) shares of the Company’s common stock, no par value. 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. Accrued dividends of $140,000 and $110,000 were recorded as of June 30, 2026 and December 31, 2025, respectively. In addition, warrants to purchase 19,460 shares of the Company’s common stock were issued with respect to this transaction and are equity classified instruments. These warrants are exercisable until March 2027. Warrants As described above, in connection with the Series E and F convertible preferred equity issuances, a total of 55,600 warrants were issued, exercisable for the Company’s common stock at the lower of $15.2 per share or 90% of the 10 day VWAP. 8 Table of Contents A summary of the Company’s stock warrant activity is as follows: Schedule of Company’s Stock Warrant Activity Shares under Option (warrant) Weighted Average Exercise Price Balance at December 31, 2025 55,600 $15.2 Granted - - Cancelled/Expired - - Exercised/Issued - - Outstanding at June 30, 2026 55,600 15.2 Exercisable at June 30, 2026 55,600 $15.2 As of June 30, 2026 the Company reserved the following shares of its common stock for the exercise of warrants, and preferred stock: Schedule of Reserved Shares For Exercise of Warrants and Preferred Stock 2025 Common Stock Warrants 55,600 Shares reserved for warrants as of June 30, 2026 55,600 Security Preferred Shares Authorized/ Outstanding Conversion Ratio Common Shares Reserved Series E Preferred Stock 130,000 10:1 1,300,000 Series F Preferred Stock 70,000 10:1 700,000 Shares reserved for Preferred Stock as of June 30, 2026 2,000,000 In total, 2,055,600 shares of common stock were reserved for issuance upon exercise of outstanding warrants and conversion of the Series E and Series F Preferred Stock as of June 30, 2026 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: Summary of Aggregated Information Regarding RSUs, PSUs and RSAs granted RSUs, PSUs & RSAs Weighted Average Grant- Date Fair Value Outstanding, unvested at December 31, 2025 20,158 3.63 Granted - - Vested (8,104) 6.47 Forfeited - - Outstanding, unvested at June 30, 2026 12,054 3.01 Differences between amount of vested awards and shares of common stock issued are attributable to timing differences. 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. 9 Table of Contents Note 6 – Inventories Schedule of Inventories June 30, 2026 December 31, 2025 Raw materials $883,000 $749,000 Work in process 2,489,000 2,569,000 Finished goods 4,455,000 5,420,000 Total inventories $7,827,000 $8,738,000 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, 2026 and 2025, 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, 2026 and 2025 are as follows: Schedule of Concentration Risk Three Months Ended Three Months Ended June 30, 2026 June 30, 2025 Customer Net Sales % of Net Sales Net Sales % of Net Sales Customer A $1,805,000 44% $2,153,000 38% Customer B $1,536,000 37% $2,456,000 44% Six Months Ended Six Months Ended June 30, 2026 June 30, 2025 Customer Net Sales % of Net Sales Net Sales % of Net Sales Customer A $4,183,000 41% $5,244,000 50% Customer B $4,504,000 44% $2,979,000 28% As of June 30, 2026, the outstanding accounts receivable balance from these two customers was $3.2 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, 2026 and December 31, 2025, in a note from the Company. Icy Mellon LLC, the landlord of the Company’s Barrington Facility, is a shareholder of the Company. The Company’s Vice President – Strategy and Business Development also serves as a Manager of Icy Mellon LLC. On January 13, 2025, the Company issued 27,604 shares of common stock with an aggregate fair value of approximately $182,000 to settle rent payable that had been included in accrued expenses as of December 31, 2024. Rent expense related to Barrington facility was approximately $144,000 and $139,000 for the three months ended June 30, 2026, and 2025, respectively. As of June 30, 2026 and December 31, 2025, amounts due to Icy Mellon LLC totaled approximately $283,000 and $234,000.