What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-14 compared with 2025-05-20 · 102 added, 75 removed, 133 unchanged (57% of the section changed)

33 unchanged sentences

We created a new subsidiary, in part, for this purpose.

In recent periods, the

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.

In recent periods, the U.S.

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.

of Significant Events

1 unchanged sentence

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).

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.

15 unchanged sentences

in September 2021.

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 March

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.

14 unchanged sentences

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 the Agreement) in whole, but not in part, upon not less than 60 days prior written notice to the

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

Senior Facilities require that the Company maintain Tangible Net Worth of at least $4,000,000 or greater (“Minimum Tangible Net

4 unchanged sentences

The Company believes it was in compliance with this covenant for all relevant months,

including as of March 31, 2025 and December 31, 2024, respectively.

including as of June 30, 2025 and December 31, 2024, respectively.

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 $1,000,000 in the aggregate in any fiscal year.

of both March 31, 2025 and December 31, 2024, the term loan balance amounted to $0.6 million, which consisted of the principal and interest

payable balance of $0.6 million and deferred financing costs of approximately $11,000 and $17,000 respectively.

The balance of the Revolving

Line of Credit as of March 31, 2025 and December 31, 2024 amounted to $5.6 million and $6.6 million, respectively.

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.

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.

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.

Payable, Related Party

9 unchanged sentences

of Operations

Net sales for the three-month periods ended March 31, 2025 and 2024 were approximately $4.80 million and $4.89 million, respectively,

representing a slight decrease of $92,000, or 1.9% year-over-year.

the three-month period ended March 31, 2025 and 2024, net sales by product category were as follows:

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.

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

Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Product Category

(000) Omitted

Foil Balloons

Film Products

Revenues from the sale of foil balloons increased during the three-month period ended March 31, 2025 to $4,234,000 compared

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%.

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

Foil Balloons

Film Products

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 majority of 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.

This increase is related to the timing

of orders and shipments.

Revenues from the sale of commercial films increased during the three-month period ended March 31, 2025 to $427,000 compared to $305,000

during the same period of 2024.

Sales in this area have been inconsistent due to a small number of customers and a significant number

of competitors.

Other revenues decreased to $141,000 for the three-month period ended March 31 , 2025, compared to $1,670,000 for

the same period in 2024.

The primary reason for the decrease was the timing of spring product shipments, which will occur in the second

quarter of 2025 rather than the first quarter, as they did in 2024.

Other revenues during these periods primarily consisted of:

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.

Sales to a limited number of customers continue to represent a large percentage of our

The table below illustrates the impact on sales of our top three and ten customers for the three-month periods ended March

31, 2025 and 2024.

Three Months Ended March 31,

The slight decrease in revenue is due to the timing of shipments.

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.

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.

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

(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.

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,

Top 3 Customers

Top 10 Customers

the three-month period ended March 31, 2025, there were two customers whose purchases represented more than 10% of the Company’s

Six Months Ended June 30,

Top 3 Customers

Top 10 Customers

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-month period ended March 31, 2025 were $3,091,000 and $523,000, or 64%

and 11%, respectively of consolidated net sales.

Sales to these customers for the three months ended March 31, 2024 were $2,226,000 and

$1,710,000, or 46% and 35%, respectively of consolidated net sales.

As of March 31, 2025, the total amount owed to the Company by these

customers was approximately $4,335,000, or 89% of the Company’s consolidated net accounts receivable.

During the three-month period ended March 31, 2025, the cost of sales was $3,936,000, compared to $3,999,000 for the same

period of 2024.

Even though the volume was lower than 2024, the gross margin of 18% remained the same for both periods

Sales to these customers for the three and six months ended June 30, 2025 and 2024 are as follows:

Three Months Ended June 30,

% of Net Sales

Six Months Ended June 30,

% of Net Sales

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.

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.

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.

and Administrative .

During the three-month period ended March 31, 2025, general and administrative expenses were $839,000 as compared

to $1,040,000 for the same period in 2024.

The largest change was due to decrease in audit fees by $167,000 this was because of the timing

of the audit by Borgers CPA LLC.

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.

Advertising and Marketing :

During the three-month period ended March 31, 2025, selling, advertising and marketing expenses were $205,000

as compared to $208,000 for the same period in 2024.

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.

Income (Expense) :

During the three-month period ended March 31, 2025, the Company incurred interest expense of $237,000 as compared

to interest expense of $218,000 during the same period of 2024.

The Company changed its borrowing structure to replace lender fees with

interest payments.

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.

Condition, Liquidity and Capital Resources

During the three months ended March 31, 2025, net cash provided by operations was $970,000, compared to net cash used

in operations during the three months ended March 31, 2024 of $767,000.

changes in working capital items during the three months ended March 31, 2025 included:

decrease in accounts receivable of $772,000 compared to an increase in accounts receivable of $423,000 in the same period of 2024.

increase in inventory of $175,000 compared to a decrease in inventory of $81,000 in 2024.

increase in trade payables of $334,000 compared to an increase in trade payables of $47,000 in 2024.

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.

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

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

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

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

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

increase in accrued liabilities of $220,000 compared to a decrease in accrued liabilities of $18,000 in 2024.

During the three months ended March 31, 2025, cash used in investing activity was $20,000, compared to cash used in investing

decrease in accrued liabilities of $50,000 compared to an increase in accrued liabilities

of $49,000 in 2024.

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.

During the three months ended March 31, 2025, cash used in financing activities was $998,000 compared to cash provided

by financing activities for the same period of 2024 in the amount of $49,000.

Financing activity during 2025 consisted principally of

changes in the balances of revolving and long-term debt.

During the period ended March 31, 2024, $0.5 million was received for convertible

preferred stock while $1.0 million of Notes Payable was repaid.

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.

and Capital Resources .

March 31, 2025, the Company had cash balances of $172,000 compared to cash balances of $49,000 for the same period of 2024.

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

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,

27 unchanged sentences

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