Note 3 - Liquidity and Going Concern	9 Months Ended
Sep. 30, 2019
Notes to Financial Statements
Liquidity and Going Concern [Text Block]	Note 3 – Liquidity and Going Concern The Company’s primary sources of liquidity are cash and cash equivalents as well as availability under the Credit Agreement with PNC Bank, National Association (“PNC”) (see Note 4 ). As indicated in Note 4, twice during 2018 we violated covenants in our credit facility and as of March 2019 we entered into a forbearance agreement with PNC. Under the terms of this agreement, financial covenants as of March 31, 2019 were not considered and all previously identified compliance failures were waived, but we remain out of compliance with the terms of our credit facility, as amended, including the covenants as of June 30, 2019 calculated on or about July 31, 2019. On August 1, 2019, PNC issued a Default and Reservation of Rights letter to the Company, in which PNC advised that line of credit advances would continue to be available to the Company at PNC’s sole discretion, and subject to its terms and conditions. On October 18, 2019, we entered into a new forbearance agreement with PNC (“Amendment 4” ). Identified events of default were waived until January 10, 2020 with respect to Yunhong CTI, LTD, but not its Mexican subsidiary (Flexo), subject to its terms and conditions. On January 13, 2020, we entered into a new forbearance agreement with PNC (“Amendment 5” ). PNC agreed to (i) waive the Loan Agreement’s requirement that the Company apply the net proceeds of the Offering first to the Term Loans (as defined in the Loan Agreement), and agreed that the Company shall instead apply the net proceeds of the Offering to the Revolving Advances (as defined in the Loan Agreement) and in connection therewith the Revolving Commitment Amount (as defined in the Loan Agreement) shall be reduced on a dollar for dollar basis by the amount so applied to the Revolving Advances, and (ii) forebear from exercising the rights and remedies in respect of the Existing Defaults afforded to Lender under the Loan Agreement for a period ending no later than December 31, 2020. During 2019 we attempted to execute a major capital event with a partner that would infuse money, among other attributes. That effort was unsuccessful as envisioned. We are currently seeking to execute on one or more smaller transactions, as well as pursue other financing options. There is no assurance that any of these efforts will be successful. In addition to the above, due to financial performance in 2016, 2017 and 2018, including net income/(losses) attributable to the Company of $0.7 million, ( $1.6 million), and ( $3.6 million), respectively, we believe that substantial doubt about our ability to continue as a going concern exists at September 30, 2019. Additionally, we have experienced challenges in maintaining adequate seasonal working capital balances, made more challenging by increases in financing and labor costs, along with a supply disruption in the helium market. These changes in cash flows have created very significant strain within our operations and have therefore increased our attempts to obtain additional funding resources. Finally, four claims have been filed in court by vendors, one current and three former, regarding claims of non-payment pursuant to contractual obligations. The sum of these claims is approximately $0.7 million. The cost of defense and potential ultimate resolution increases the strain on our financial resources. Management’s plans include: ( 1 ) Pursuing a smaller strategically significant major capital event. ( 2 ) Working with our bank to resolve our compliance failure on a long-term basis. ( 3 ) Evaluating and potentially executing a transaction of our facility in Lake Barrington, IL. ( 4 ) Simplifying our group structure, and ( 5 ) Exploring alternative funding sources. Management Assessment Considering both quantitative and qualitative information, we believe that our plans to obtain additional financing may provide us with an ability to finance our operations through 2020 and, if successfully executed, may mitigate the substantial doubt about our ability to continue as a going concern.

Note

– Liquidity and Going Concern

The Company’s primary sources of liquidity are cash and cash equivalents as well as availability under the Credit Agreement with PNC Bank, National Association (“PNC”) (see Note

). As indicated in Note

twice during

2018

we violated covenants in our credit facility and as of

March 2019

we entered into a forbearance agreement with PNC. Under the terms of this agreement, financial covenants as of

March 31, 2019

were

not

considered and all previously identified compliance failures were waived, but we remain out of compliance with the terms of our credit facility, as amended, including the covenants as of

June 30, 2019

calculated on or about

July 31, 2019.

August 1, 2019,

PNC issued a Default and Reservation of Rights letter to the Company, in which PNC advised that line of credit advances would continue to be available to the Company at PNC’s sole discretion, and subject to its terms and conditions. On

October 18, 2019,

we entered into a new forbearance agreement with PNC (“Amendment

4”

). Identified events of default were waived until

January 10, 2020

with respect to Yunhong CTI, LTD, but

not

its Mexican subsidiary (Flexo), subject to its terms and conditions. On

January 13, 2020,

we entered into a new forbearance agreement with PNC (“Amendment

5”

). PNC agreed to (i) waive the Loan Agreement’s requirement that the Company apply the net proceeds of the Offering

first

to the Term Loans (as defined in the Loan Agreement), and agreed that the Company shall instead apply the net proceeds of the Offering to the Revolving Advances (as defined in the Loan Agreement) and in connection therewith the Revolving Commitment Amount (as defined in the Loan Agreement) shall be reduced on a dollar for dollar basis by the amount so applied to the Revolving Advances, and (ii) forebear from exercising the rights and remedies in respect of the Existing Defaults afforded to Lender under the Loan Agreement for a period ending

later than

December 31, 2020.

During

2019

we attempted to execute a major capital event with a partner that would infuse money, among other attributes. That effort was unsuccessful as envisioned. We are currently seeking to execute on

one

or more smaller transactions, as well as pursue other financing options. There is

assurance that any of these efforts will be successful.

In addition to the above, due to financial performance in

2016,

2017

and

2018,

including net income/(losses) attributable to the Company of

$0.7

million, (

$1.6

million), and (

$3.6

million), respectively, we believe that substantial doubt about our ability to continue as a going concern exists at

September 30, 2019.

Additionally, we have experienced challenges in maintaining adequate seasonal working capital balances, made more challenging by increases in financing and labor costs, along with a supply disruption in the helium market. These changes in cash flows have created very significant strain within our operations and have therefore increased our attempts to obtain additional funding resources.

Finally,

four

claims have been filed in court by vendors,

one

current and

three

former, regarding claims of non-payment pursuant to contractual obligations. The sum of these claims is approximately

$0.7

million. The cost of defense and potential ultimate resolution increases the strain on our financial resources.

Management’s plans include:

(

) Pursuing a smaller strategically significant major capital event.

(

) Working with our bank to resolve our compliance failure on a long-term basis.

(

) Evaluating and potentially executing a transaction of our facility in Lake Barrington, IL.

(

) Simplifying our group structure, and

(

) Exploring alternative funding sources.

Management Assessment

Considering both quantitative and qualitative information, we believe that our plans to obtain additional financing

may

provide us with an ability to finance our operations through

2020

and, if successfully executed,

may

mitigate the substantial doubt about our ability to continue as a going concern.