Based on the provided financial report articles, I generated the title for the article: "Quarterly Financial Report for Q1 2024: [Company Name]" Please note that the title may not be exact, as the provided text does not contain the company name.
The financial report presents the financial statements of the company for the quarter ended March 31, 2024, as well as the year ended December 31, 2023. The company reported total revenues of $X million for the quarter, a decrease of Y% compared to the same period last year. Net income for the quarter was $Z million, a decrease of W% compared to the same period last year. The company’s balance sheet as of March 31, 2024, showed total assets of $A million, total liabilities of $B million, and total stockholders’ equity of $C million. The company’s cash and cash equivalents as of March 31, 2024, were $D million. The report also includes notes to the financial statements, which provide additional information about the company’s financial position and results of operations.
Forward Looking Statements
This Quarterly Report on Form 10-Q includes both historical and “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. The company has based these forward-looking statements on its current expectations and projections about future results. While the company believes its opinions and expectations reflected in the forward-looking statements are reasonable, it cannot guarantee future results, levels of activity, performance or achievements. The company’s actual results may differ substantially from the views and expectations set forth in this report due to various factors, risks, uncertainties and assumptions discussed in the “Risk Factors” section of the company’s Annual Report on Form 10-K.
Overview
The company produces film products for novelty, packaging and container applications, including foil balloons, latex balloons, films for packaging and custom product applications, and flexible containers. The company produces all of its film products and most of its foil balloons at its plant in Lake Barrington, Illinois. The company previously produced latex balloons at a majority-owned facility in Mexico, but this facility was sold in October 2021. The company now purchases latex balloons from an unrelated vendor and distributes them in the United States.
In 2023, the company changed its name to include “Green” to communicate its intention to supply biodegradable and compostable materials developed by its partners in Asia.
Summary of Significant Events
September 30, 2021 financing, amended and extended to September 30, 2025
In September 2021, the company entered into a loan and security agreement with Line Financial that provided for a $6 million revolving credit facility and a $731,250 term loan facility. The facilities were secured by substantially all of the company’s assets.
In September 2023, the facilities were extended to September 30, 2025, with several changes to the terms:
- The asset monitoring fee on the revolving credit facility was replaced with an increase in the interest rate to Prime plus 7.82% per annum.
- The interest rate on the term loan was reduced to Prime plus 1.45% per annum, and the lender made a one-time additional advance of $206,000 to reset the term loan to $731,000.
- The renewal fee for the transaction was reduced to $50,000.
- The term loan asset monitoring fee was set to 0.385% per month.
The facilities require the company to maintain a minimum tangible net worth of $4 million, which the company believes it has complied with.
Results of Operations
Net Sales
For the three months ended March 31, 2024 and 2023, net sales were $4,894,000 and $5,051,000, respectively. The breakdown by product category is as follows:
| Product Category | Q1 2024 ($000) | % of Net Sales | Q1 2023 ($000) | % of Net Sales | Variance ($000) | % Change |
|---|---|---|---|---|---|---|
| Foil Balloons | $2,919 | 60% | $3,474 | 69% | $(555) | (16%) |
| Film Products | $305 | 6% | $89 | 2% | $216 | 243% |
| Other | $1,670 | 34% | $1,488 | 29% | $182 | 12% |
| Total | $4,894 | 100% | $5,051 | 100% | $(157) | (3%) |
Foil balloon revenues decreased due to timing of orders and shipments, while film product revenues increased significantly but from a low base. Other revenues, which include balloon-inspired gifts and accessories, increased 12%.
Sales to the company’s top 3 and top 10 customers represented 86% and 93% of net sales in Q1 2024, respectively, compared to 86% and 91% in Q1 2023.
Cost of Sales and Margins
Cost of sales was $3,999,000 in Q1 2024 compared to $3,924,000 in Q1 2023. Gross margin declined from 22% in Q1 2023 to 18% in Q1 2024 due to lower sales volume, mix inefficiencies, and unusual repair and maintenance expenses.
Expenses
General and administrative expenses increased from $961,000 in Q1 2023 to $1,040,000 in Q1 2024, primarily due to a $50,000 increase in professional services costs related to the company’s change in independent auditors.
Selling, advertising and marketing expenses increased from $154,000 in Q1 2023 to $208,000 in Q1 2024.
Interest expense increased from $142,000 in Q1 2023 to $218,000 in Q1 2024 due to higher interest rates and changes in the company’s borrowing structure.
Financial Condition, Liquidity and Capital Resources
Cash used in operating activities decreased from $1,369,000 in Q1 2023 to $767,000 in Q1 2024, primarily due to changes in working capital. Cash used in investing activities increased from $56,000 in Q1 2023 to $154,000 in Q1 2024.
The company had cash balances of $49,000 at March 31, 2024 compared to $130,000 at the same time in 2023. The company’s ability to continue as a going concern is dependent on executing its business plan and obtaining adequate capital, as there is substantial doubt about the company’s ability to continue as a going concern for one year from the issuance of the financial statements.
The company’s sales are seasonal, with approximately 40% occurring in the December through March period and 24% in the July through October period in recent years.
