What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-11-18 compared with 2022-08-12 · 95 added, 98 removed, 212 unchanged (48% of the section changed)

25 unchanged sentences

Now 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

of our film products for packaging and custom product applications are sold to customers in the United States.

We market and sell our

novelty items, Candy Blossoms (balloons and candy arranged to look like a flower bouquet for gifting) and flexible containers for consumer

use primarily in the United States.

in the United States, primarily to those customers that prefer a combined solution for foil and latex balloons..

Substantially all of

our film products for packaging and custom product applications are sold to customers in the United States.

We market and sell our novelty

items, Candy Blossoms (balloons and candy arranged to look like a flower bouquet for gifting) and flexible containers for consumer use

primarily in the United States.

April 23, 2021, the Company entered into a Purchase and Sale Agreement (“PSA”) with an unaffiliated purchaser (the “Purchaser”)

25 unchanged sentences

Additionally, certain

additions and amendments to the Loan Agreement were set forth in the Amendment Agreement, including:

Maximum Revolving Advance Amount was reduced from $18,000,0000 to $9,000,000;

Termination Date of the Loan Agreement was revised from December 14, 2022 to December 31, 2021;

or before June 30, 2021, or such later date as the Prior Lender agreed in its sole discretion, the Company shall receive an equity

investment of at least $1,500,000 and apply 100% of the proceeds to a reduction of the Revolving Credit Advance under the Loan Agreement

(the “Equity Investment”);

or before August 15, 2021, or such later date as the Prior Lender agrees in its sole discretion, the Company shall deliver to Lender

(i) a binding term sheet, in form and substance acceptable to Prior Lender, from a financing source that provides for the refinance

and payment in full, in cash, of the obligations owing under the Loan Agreement on or before September 30, 2021, or (ii) evidence,

in form and substance satisfactory to the Prior Lender, that certain equity holders of the Company have available and identifiable

funds that are on deposit with a depository institution that are sufficient to pay in full, in cash, all of the Company obligations

under the Loan Agreement on or before September 30, 2021;

or before September 30, 2021, the Company will cause all of the amounts owing under the Loan Agreement to be paid in full in cash;

Forbearance Reserve (as defined in Amendment No.

5 to the Loan Agreement) was increased from $1,025,000 to $2,525,000;

August 1, 2021, accounts receivable from Wal-Mart Stores and its affiliates was no longer considered eligible receivables;

Modifications

will be made to the budget, testing and variance provisions of the Loan Agreement.

additions and amendments to the Loan Agreement were set forth in the Amendment Agreement.

consideration for entering into the Loan Amendment, the Company agreed to pay the Prior Lender a Forbearance Fee of $1,000,000.

15 unchanged sentences

Senior Facilities are secured by substantially all assets of the Company.

on the Senior Facilities shall be the prime rate published from time to time published in the Wall Street Journal (4.75% as of July 12,

on the Senior Facilities shall be the prime rate published from time to time published in the Wall Street Journal (6.25% as of October

7, 2022), plus 1.95% per annum, accruing daily and payable monthly.

7 unchanged sentences

the Company paid the Lender a loan fee of 1.25% of the Maximum Revolver Amount and the Term Loan Amount upon the execution of the Agreement.

During August 2022, these terms were modified to reduce the collateral monitoring fee to 2.77% and prevent the Company from repaying

the facility prior to September 2023.

Senior Facilities mature on September 30, 2023 and shall automatically be extended for successive periods of one year each, unless the

12 unchanged sentences

The Company believes it was in compliance with

this covenant during each relevant month, including as of June 30, 2022 and December 31, 2021.

this covenant during each relevant month, including as of September 30, 2022 and December 31, 2021.

Senior Facilities contain certain affirmative and negative covenants that limit the ability of the Company, among other things and subject

1 unchanged sentence

pay dividends and make other restricted payments, or make capital expenditures exceeding $1 million in the aggregate in any fiscal year.

of June 30, 2022 and December 31, 2021, the term loan balance amounted to $0.5 million and $0.6 million, respectively, which consisted

of September 30, 2022 and December 31, 2021, the term loan balance amounted to $0.5 million and $0.6 million, respectively, which consisted

of the principal and interest payable balance of $0.6 million and $0.7 million and deferred financing costs of $0.1 million.

of the Revolving Line of Credit as of June 30, 2022 and December 31, 2021 amounted to $4.8 and $5.0 million, respectively.

of the Revolving Line of Credit as of September 30, 2022 and December 31, 2021 amounted to $3.9 and $5.0 million, respectively.

Comparability

16 unchanged sentences

of Operations

For the three month periods ended June 30, 2022 and 2021, net sales were $4,418,000 and $5,712,000, respectively.

the three-month period ended June 30, 2022 and 2021, net sales by product category were as follows:

For the three month periods ended September 30, 2022 and 2021, net sales were $2,263,000 and $5,184,000, respectively.

the three-month period ended September 30, 2022 and 2021, net sales by product category were as follows:

Three Months Ended

June 30, 2022

June 30, 2021

September 30, 2022

September 30, 2021

Product Category

1 unchanged sentence

Film Products

the six month periods ended June 30, 2022 and 2021, net sales were $10,215,000 and $12,311,000, respectively.

the six month period ended June 30, 2022 and 2021, net sales by product category were as follows:

June 30, 2022

June 30, 2021

the nine month periods ended September 30, 2022 and 2021, net sales were $12,478,000 and $17,495,000, respectively.

the nine month period ended September 30, 2022 and 2021, net sales by product category were as follows:

September 30, 2022

September 30, 2021

Product Category

1 unchanged sentence

Film Products

Revenues from the sale of foil balloons decreased during the three months period from $4,563,000 ending June 30, 2021 compared

to $2,674,000 during the three month period of 2022.

Revenues from the sale of foil balloons decreased during the six month period from

$9,498,000 ending June 30, 2021 compared to $6,506,000 during the six month period of 2022.

An increase in the price of helium during

2022 negatively impacted customers of most types of foil balloons.

This price increase was the result of both the broad inflationary

pressures and restrictions on trade with Russia, as we believe the latter supplies approximately 5% of the helium used in the marketplace.

Revenues from the sale of foil balloons decreased during the three months period from $4,295,000 ending September 30, 2021

compared to $1,612,000 during the three month period of 2022.

Revenues from the sale of foil balloons decreased during the nine month

period from $13,793,000 ending September 30, 2021 compared to $8,118,000 during the nine month period of 2022.

An increase in the price

of helium during 2022 negatively impacted customers of most types of foil balloons.

This price increase was the result of both the broad

inflationary pressures and restrictions on trade with Russia, as we believe the latter supplies approximately 5% of the helium used in

the marketplace.

This combined with temporary individual supply issues created increased pricing in the market.

We also discontinued certain products

for which we were not able to secure adequate inflationary price increases.

Revenues from the sale of commercial films were $535,000 and $1,363,000 during the three and six month periods ended June 30, 2022, compared

to $505,000 and $811,000 during the same periods of 2021.

Revenues from the sale of other products were $1,209,000 and $2,346,000 during the three and six month periods ended June

We also discontinued

certain products for which we were not able to secure adequate inflationary price increases.

The price of helium has reduced during recent

months and there are reasons to believe that it will continue to trend lower over the next several months.

This dynamic had a severe

impact on the sales of foil balloons, particularly for our largest customer.

Revenues from the sale of commercial films were $537,000 and $1,900,000 during the three and nine month periods ended September 30, 2022,

compared to $689,000 and $1,500,000 during the same periods of 2021.

Revenues from the sale of other products were $114,000 and $2,460,000 during the three and nine month periods ended September

30, 2022, compared to $200,000 and $2,202,000 during the same periods of 2021.

The revenues from the sale of other products during these

1 unchanged sentence

sold in small containers, (ii) latex balloons, and (iii) the sale of accessories and supply items related to balloon products.

shipments of candy blossoms during 2021 occurred during March, while the same shipments during 2022 occurred during April.

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 month periods ended June 30, 2022 and 2021.

Three Months Ended June 30,

sales of our top three and ten customers for the three month periods ended September 30, 2022 and 2021.

Three Months Ended

September 30,

Top 3 Customers

Top 10 Customers

Six Months Ended June 30,

Nine Months Ended

September 30,

Top 3 Customers

Top 10 Customers

the three and six months ended June 30, 2022 and 2021, there were two customer 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, 2022 and 2021 are as follows:

the three and nine months ended September 30, 2022 and 2021, there were two customer whose purchases represented more than 10% of the

Company’s consolidated net sales.

Sales to these customers for the three and nine months ended September 30, 2022 and 2021 are

Three Months Ended

June 30, 2022

June 30, 2021

Six Months Ended

June 30, 2022

June 30, 2021

of June 30, 2022, the total amounts owed to the Company by these customers were approximately $2,008,000 or 73% of the Company’s

September 30, 2022

September 30, 2021

Nine Months Ended

September 30, 2022

September 30, 2021

of September 30, 2022, the total amounts owed to the Company by these customers were approximately $679,000 or 45% of the Company’s

consolidated net accounts receivable.

The amounts owed at June 30, 2021 by these customers were approximately $2,202,000 or 64% of the

Company’s consolidated net accounts receivable.

During the three and six month period ended June 30, 2022, the cost of sales was $3,615,000 and $8,373,000, compared to

$4,718,000 and $10,031,000 respectively for the same period of 2021 due to lower sales volume.

The amounts owed at September 30, 2021 by these customers were approximately $1,451,000 or 38%

of the Company’s consolidated net accounts receivable.

During the three and nine month period ended September 30, 2022, the cost of sales was $2,021,000 and $10,394,000, compared

to $4,528,000 and $14,559,000 respectively for the same period of 2021 due to lower sales volume.

As a percentage of sales, cost of sales

was 81.8% and 82.0% during the three and six months ended June 30, 2022, compared to 82.6% and 81.5% during the three and six months

ended June 30, 2021.

was 89% and 83% during the three and nine months ended September 30, 2022, compared to 87% and 83% during the three and nine months ended

September 30, 2021.

and Administrative .

During the three and six month period ended June 30, 2022, general and administrative expenses were $998,000

and $1,835,000 compared to $1,048,000 and $1,897,000 respectively for the same period in 2021.

During the three and nine month period ended September 30, 2022, general and administrative expenses were $896,000

and $2,731,000 compared to $833,000 and $2,730,000 respectively for the same periods in 2021.

Advertising and Marketing .

During the three and six month period ended June 30, 2022, selling, advertising and marketing expenses

were $111,000 and $332,000 as compared to $107,000 and $246,000 respectively for the same period in 2021.

The Company is expanding its

customer outreach and engagement activities during 2022

During the three and nine month period ended September 30, 2022, selling, advertising and marketing expenses

were $103,000 and $435,000 as compared to $104,000 and $350,000 respectively for the same periods in 2021.

The Company expanded its customer

outreach and engagement activities during 2022

on Sale of Assets .

2 unchanged sentences

Income (Expense) .

During the three and six month period ended June 30, 2022, the Company incurred interest expense of $109,000 and

$205,000 compared to interest expense of $148,000 and $348,000 respectively during the same period of 2021.

During the three and nine month period ended September 30, 2022, the Company incurred interest expense of $120,000

and $325,000 compared to interest expense of $89,000 and $437,000 respectively during the same period of 2021.

Interest expense decreased

4 unchanged sentences

Condition, Liquidity and Capital Resources

During the six months ended June 30, 2022, net cash provided by operations was $303,000, compared to net cash used by

operations during the six months ended June 30, 2021 of $617,000.

changes in working capital items during the three months ended June 30, 2022 included:

decrease in accounts receivable of $707,000 compared to a decrease in accounts receivable of $162,000 in the same period of 2021.

increase in inventory of $405,000 compared to an increase in inventory of $457,000 in 2021.

decrease in trade payables of $112,000 compared to an increase in trade payables of $43,000 in 2021.

gain on sale of assets of $3,357,000 in 2021

decrease in prepaid expenses and other assets of $333,000 compared to a decrease of $219,000 in 2021.

increase in accrued liabilities of $88,000 compared to an increase in accrued liabilities of $314,000 in 2021.

During the six months ended June 30, 2022, cash used in investing activity was $94,000, compared to cash provided by investing

activity for the same period of 2021 in the amount of $3,454,000.

Investing activity consisted principally of the cash flows from the

sale and leaseback of our Lake Barrington, Illinois facility, as further described below under the heading “Liquidity and Capital

During the six months ended June 30, 2022, cash used in financing activities was $221,000 compared to cash used in financing

activities for the same period of 2021 in the amount of $2,695,000.

Financing activity consisted principally of changes in the balances

of revolving and long-term debt, as well as additional investment during 2021.

During the six months ended June 30, 2021, cash provided by discontinued operations was $538,000 with related exchange

rate impact of a cash use of $481,000.

During the nine months ended September 30, 2022, net cash provided by operations was $1,187,000, compared to net cash

used by operations during the nine months ended September 30, 2021 of $1,204,000.

changes in working capital items during the nine months ended September 30, 2022 included:

A decrease in accounts

receivable of $2,032,000 compared to a decrease in accounts receivable of $169,000 in the same period of 2021.

An increase in inventory

of $1,286,000 compared to an increase in inventory of $401,000 in 2021.

A decrease in trade payables

of $54,000 compared to an decrease in trade payables of $714,000 in 2021.

A gain on sale of assets of $3,357,000 in 2021

An decrease in prepaid

expenses and other assets of $562,000 compared to an increase of $694,000 in 2021.

An increase in accrued

liabilities of $877,000 compared to an increase in accrued liabilities of $490,000 in 2021.

During the nine months ended September 30, 2022, cash used in investing activity was $121,000, compared to cash provided

by investing activity for the same period of 2021 in the amount of $3,406,000.

Investing activity consisted principally of the cash flows

from the sale and leaseback of our Lake Barrington, Illinois facility, as further described below under the heading “Liquidity

and Capital Resources”.

June 30, 2022, the Company had cash balances of $54,000 compared to cash balances of $265,000 for the same period of 2021.

During the nine months ended September 30, 2022, cash used in financing activities was $1,031,000 compared to cash used

in financing activities for the same period of 2021 in the amount of $650,000.

Financing activity consisted principally of changes in

the balances of revolving and long-term debt, as well as additional investment during 2021.

During the nine months ended September 30, 2021, cash used by discontinued operations was $1,227,000 with related

exchange rate impact of a cash use of $12,000.

and Capital Resources .

September 30, 2022, the Company had cash balances of $101,000 compared to cash balances of $379,000 for the same period of 2021.

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,

59 unchanged sentences

No material changes to such information have occurred during

the three and six months ended June 30, 2022.

the three and nine months ended September 30, 2022.

Quantitative and Qualitative Disclosures Regarding Market Risk

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis