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 UNITED
STATES

 SECURITIES
AND EXCHANGE COMMISSION

 WASHINGTON,
D.C. 20549

 FORM

 (Mark
One)

 ANNUAL
 REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For
the fiscal year ended December 31, 2023

 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

 Lake
 Barrington, Illinois

 60010

 (Address
 of principal executive offices)

 (Zip
 Code)

 Registrant's
telephone number, including area code: (847) 382-1000

 Securities
registered pursuant to Section 12(b) of the Act:

 Title
 of each class

 Ticker
 symbol(s)

 Name
 of each exchange on which registered

 Common
 Stock, no par value per share

 YHGJ

 The
 NASDAQ Stock Market LLC

 Securities
registered pursuant to Section 12(g) of the Act: None

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes
 No

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

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

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.

by check mark whether the registrant has fi led a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting fi rm that prepared or issued its audit report.

 If
securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements.

by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive o cers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 Based
upon the closing price of $1.97 per share of the Registrant's Common Stock as reported on NASDAQ Capital Market tier of The NASDAQ
Stock Market on June 30, 2023, the aggregate market value of the voting common stock held by non-affiliates of the Registrant was then
approximately $ 14,768,000. (The determination of stock ownership by non-affiliates was made solely for the purpose of responding to the
requirements of the Form and the Registrant is not bound by this determination for any other purpose.)

 The
number of shares outstanding of the Registrant's Common Stock as of March 20, 2024 was 20,771,937 (excluding treasury shares).

 DOCUMENTS
INCORPORATED BY REFERENCE

 The
Registrant's definitive Proxy Statement for the Annual Meeting of Shareholders (the "2024 Proxy Statement") is incorporated
by reference in Part III of this Form 10-K to the extent stated herein. The 2024 Proxy Statement, or an amendment to this Form 10-K,
will be filed with the SEC within 120 days after December 31, 2023. Except with respect to information specifically incorporated by reference
in this Form 10-K, the Proxy Statement is not deemed to be filed as a part hereof.

 TABLE
OF CONTENTS

 FORWARD
LOOKING STATEMENTS

 Item
 No. 1

 Description of Business

 Item
 No. 1B

 Unresolved Staff Comments

 Item
 No. 1C

 Cybersecurity

 Item
 No. 2

 Properties

 Item
 No. 3

 Legal Proceedings

 Item
 No. 5

 Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Item
 No. 7

 Management's Discussion and Analysis of Financial Condition and Results of Operations

 Item
 No. 7A

 Quantitative and Qualitative Disclosures Regarding Market Risk

 Item
 No. 8

 Financial Statements and Supplementary Data

 Item
 No. 9

 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item
 No. 9A

 Controls and Procedures

 Item
 No. 9B

 Other Information

 Item
 No. 10

 Directors and Executive Officers of the Registrant

 Item
 No. 11

 Executive Compensation

 Item
 No. 12

 Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 Item
 No. 13

 Certain Relationships and Related Transactions

 Item
 No. 14

 Principal Accounting Fees and Services

 Item
 No. 15

 Exhibits and Financial Statement Schedules

 FORWARD-LOOKING
STATEMENTS

 This
Annual Report on Form 10-K includes both historical and "forward-looking statements" within the meaning of Section 21E of
the Securities Exchange Act of 1934, as amended. We have based these forward-looking statements on our current expectations and projections
about future results. Words such as "may," "should," "could," "would," "expect,"
"plan," "anticipate," "believe," "estimate," "predict," "potential,"
"continue," or similar words are intended to identify forward-looking statements, although not all forward-looking statements
contain these words. Although we believe that our opinions and expectations reflected in the forward-looking statements are reasonable,
we cannot guarantee future results, levels of activity, performance or achievements, and our actual results may differ substantially
from the views and expectations set forth in this Annual Report on Form 10-K. We disclaim any intent or obligation to update any forward-looking
statements after the date of this Annual Report on Form 10-K to conform such statements to actual results or to changes in our opinions
or expectations. These forward-looking statements are affected by factors, risks, uncertainties and assumptions that we make, including,
without limitation, our participation in highly competitive markets, potential changes in the cost or availability of raw materials,
our dependence on a limited number of suppliers, the possible inability to obtain an adequate supply of raw materials, our reliance on
a limited number of key customers, the loss of one or more of our key customers, changing consumer demands, developments or changes in
technology, risks of international operations and political environments, dependence on our intellectual property, compliance with federal,
state or local regulations, the resolution of litigation or other legal proceedings to which we may become involved, restrictions included
in the Company's credit facility, the availability of funds under the Company's credit facility, damage to or destruction
of one or both of the Company's principal plants, our ability to service our indebtedness, our ability to invest in needed plant
or equipment.

 PART
I

 Item
No. 1 – Business

 Business
Overview

 We
develop, produce, distribute and sell a number of consumer products throughout the United States and in several other countries, and
we produce film products for commercial and industrial uses in the United States. Many of our products utilize flexible films and, for
a number of years, we have been a leading developer of innovative products which employ flexible films including novelty balloons, pouches
and films for commercial packaging applications.

 Our
principal lines of products include:

 Novelty
Products consisting principally of foil and latex balloons and related gift items; and

 Flexible
Films for food and other commercial and packaging applications.

 In
addition to these principal product lines, for the past several years, we have engaged in the assembly and sale of balloon-inspired gift
items (small gift bouquets of arranged candy items often including ribbons and/or a small foil balloon).

2023 we expanded to include samples of compostable material intended to replace single-use plastic and other materials. Adding these
materials to our Company inspired us to ask our shareholders to include "Green" in our name and to reflect our name in new
trading symbol "YHGJ". Our shareholders approved of these actions during August 2023.

 We
leverage our technology to design and develop proprietary products which we develop, market and sell for our customers. We have been
engaged in the business of developing flexible film products for over 40 years and have acquired significant technology and know-how
in that time. We currently hold several patents related to flexible film products, including specific films, zipper closures, valves
and other features of these products.

 We
print, process and convert flexible film into finished products and we produce balloons and novelty items. Our principal production processes
include:

 Coating
 and laminating rolls of flexible film. Generally, we adhere polyethylene film to another film such as nylon or polyester;

 Printing
 film and latex balloons. We print on plastic films, with a variety of graphics, for use as packaging film or for balloons;

 Converting
 printed film to balloons;

 Converting
 film to flexible containers;

 Producing
 or reselling latex balloons and other latex novelty items; and

 Assembling
 and inflating of novelty products and balloons and Candy Blossoms.

 In
1978, we began manufacturing metalized balloons (often referred to as "foil" balloons), which are balloons made of a base
material (usually nylon or polyester) often having vacuum deposited aluminum and polyethylene coatings. These balloons remain buoyant
when filled with helium for much longer periods than latex balloons and permit the printing of graphic designs on the surface. In 1985,
we began marketing latex balloons and, in 1988, we began manufacturing latex balloons. In 1999, we acquired an extrusion coating and
laminating machine and began production of coated and laminated films, which we have produced since that time.

 For
more than 20 years, we have been engaged in the coating, laminating and printing of flexible films for our novelty and container products
and for the production of laminated and printed films we supply to others.

 We
market and sell our foil and latex balloons and related novelty items throughout the United States, Canada and Mexico and in a number
of other countries. We supply directly to retail stores and chains and through distributors, who in turn sell to retail stores and chains.
Our balloon and novelty products are sold to consumers through a wide variety of retail outlets including general merchandise, discount
and drugstore chains, grocery chains, card and gift shops and party goods stores, as well as through florists and balloon decorators.

 Most
of our foil balloons contain printed characters, designs and social expression messages, such as "Happy Birthday," "Get
Well" and similar items. We may obtain licenses from time to time for well-known characters and print those characters and messages
on our balloons.

 We
provide customized laminated films and printed films to customers who utilize the film to produce bags or pouches for the packaging of
food, liquids and other items. In 2014, we began assembling and producing balloon-inspired gifts - containers including candy items and,
often, air-inflated balloons.

 In
2023, our revenues from our product lines, as a percent of total revenues were:

 Novelty
 Products

 66%
 of revenues

 Flexible
 Film Products

 5%
 of revenues

 Balloon-inspired
 gifts and Other Products

 29%
 of revenues

 We
are an Illinois corporation with our principal offices and plant at 22160 N. Pepper Road, Lake Barrington, Illinois.

 Business
Strategies and Developments

 Our
business strategies, and recent developments related to our business, include:

 Management.
 During 2020 Ms. Jana Schwan became our Chief Operating Officer after having served as Vice President of Operations and a number of
 other roles of increasing responsibility during her 20 years with the Company. During 2021, Mr. Cesario rejoined the Company's
 Board of Directors. During January 2022, Mr. Cesario rejoined the Company as Chief Executive Officer and Acting Chief Financial Officer,
 with Mr. Yubao Li retaining the role of Chairman of the Board of Directors.

 Financing.
 We entered into a credit facility during September 2021 that was extended during 2023 expiring September 2025. We have been in compliance
 with this credit facility since inception.

 Strategy.
 Our management determined to focus on achieving growth and profitability within the current scope of our core product lines –
 foil balloons and related products – from our United States based business. In addition, we seek to leverage advancements in
 compostable materials from a group of companies based in China that are directly or indirectly controlled by our
Chairman and director, Mr. Yubao Li (collectively, and including LF International plc, these other companies are referred to herein as
the "Yunhong Companies" or "Yunhong Group"). We believe the combination of traditional product optimization with risk-managed
 investment in new materials is the right combination for our company.

 Focus
 on our Core Assets and Expertise. We have been engaged in the development, production and sale of film and container products
 for 40 years and have developed assets, technology and expertise which, we believe, enable us to develop, manufacture, purchase,
 market and sell innovative products of high quality within our areas of knowledge and expertise. We have focused our efforts on these
 core assets and areas of expertise – film novelty products, specialty film products, laminated films and printed films –
 to develop new products, to market and sell our products and to build our revenues.

 Develop
 New Products, Product Improvements and Technologies. We engage in research, design, innovation and development for the purpose
 of developing and improving products, materials, methods and technologies within our core product categories. We work to develop
 and identify new products, to improve existing products and to develop new technologies within our core product areas in order to
 enhance our competitive position and increase our sales. We seek to leverage our technology to develop innovative and proprietary
 products. In our novelty product lines, our development work includes new designs, new character licenses, new product developments,
 new materials and improved production methods. We work with customers to develop custom film products which serve the unique needs
 or requirements of the customer. We seek to leverage the advancements of other Yunhong Companies.

 Develop
 New Channels of Distribution and New Sales Relationships. We seek to organically develop new channels of distribution and new
 sales relationships, both for existing and new products. Over the past several years, we have developed new distributors and customers
 for our products in the United States and in Europe, Mexico, Latin America and Australia. We also look to leverage resources within
 the Yunhong China Group for a wide range of topics, from sales to sourcing.

 Product
 and Line Extensions. We intend to pursue new product lines and product line extensions, through internal developments.

 Products

 Foil
Balloons. We have designed, produced and sold foil balloons since 1979 and, we believe, are one of the larger manufacturers of foil
balloons in the United States. Currently, we produce several hundred foil balloon designs, in different shapes and sizes.

 In
addition to size and shape, a principal element of our foil balloon products is the printed design or message contained on the balloon.
These designs may include figures and licensed characters, but typically are of our own design. We recognize that consumer trends and
preferences, and competing products, are constantly changing. In order to compete effectively in this product line we must constantly
innovate and develop new designs, shapes and products.

 Latex
Balloons. Our former subsidiary in Guadalajara, Mexico, Flexo Universal, S. de R.L. de C.V. ("Flexo Universal") manufactures
latex balloons in a wide variety of sizes and colors. Flexo Universal was sold during October 2021. The Company currently sources latex
products from a foreign supplier and resells those products to customers that seek both foil and latex solutions.

 Packaging
Films and Custom Film Products. A large and increasing number of both consumer and commercial products are packaged in pouches or
containers utilizing flexible films. Often such containers include printed labels and designs. We produce and sell films that may be
utilized for the packaging of a wide variety of products and liquids. We laminate, extrusion coat and adhesive coat flexible films for
these purposes and we provide flexographic printing for the films we produce. We can produce a variety of customized film products, and
printing services, to meet the specific packaging needs of a wide variety of customers.

 Other
Products. In 2014, we began assembly and sale of our balloon-inspired gifts product line (typically a presentation of candy with
a balloon in a decorative arrangement for gifting). We have since supplemented this product line with related products.

 Markets

 Foil
Balloons

 The
foil balloon came into existence in the late 1970s. During the 1980s, the market for foil balloons grew rapidly. Initially, the product
was sold principally to individual vendors, small retail outlets and at fairs, amusement parks, shopping centers and other outdoor facilities
and functions. Foil balloons remain buoyant when filled with helium for extended periods of time and they permit the printing and display
of graphics and messages. As a result, the product has significant appeal as a novelty and message item. Foil balloons became part of
the "social expression" industry, carrying graphics designs, characters and messages like greeting cards. In the mid-1980s,
we and other participants in the market began licensing character and cartoon images for printing on the balloons and directed marketing
of the balloons to retail outlets including grocery, general merchandise, discount and drug store chains, card and gift shops, party
goods stores as well as florists and balloon decorators. These outlets now represent the principal means for the sale of foil balloons
throughout the United States and in a number of other countries, although individual vendors remain a means of distribution in certain
areas.

 Foil
balloons are now sold in virtually every region of the world. The United States remains the largest market for these products.

 Foil
balloons are sold in the United States and foreign countries directly by producers to retail outlets and through distributors and wholesalers.
Often the sale of foil balloons by the wholesalers/distributors is accompanied by related products including latex balloons, floral supplies,
candy containers, mugs, plush toys, baskets and a variety of party goods.

 Latex
Balloons

 For
a number of years, latex balloons and related novelty/toy latex items have been marketed and sold throughout the United States and in
many other countries. Latex balloons are sold as novelty/toy items for decorative purposes, as part of floral designs and as party goods
and favors. In addition to standard size and shape balloons, inflatable latex items include punch balls, water bombs, balloons to be
twisted into shapes, and other specialty designs. Often, latex balloons include printed messages or designs.

 Latex
balloons are sold principally in retail outlets, including party goods stores, general merchandise stores, discount chains, gift stores
and drugstore chains. Latex balloons are also purchased by balloon decorators and floral outlets for use in decorative or floral designs.
Printed latex balloons are sold both in retail outlets and for balloon decoration purposes including floral designs.

 Latex
balloons are sold both through distributors and directly to retail outlets by the producers.

 Printed
and Specialty Films

 The
industry and market for printed and specialty films are fragmented and include many participants. There are hundreds of manufacturers
of printed and specialty film products in the United States and in other markets. In many cases, companies who provide food and other
products in film packages also produce or process the films used for their packages. The market for the Company's film products
consists principally of companies who utilize the films for the packaging of their products, including food products and other items,
usually by converting the film to a flexible container.

 Marketing,
Sales and Distribution

 Balloon
Products

 We
work in collaboration with our customers on designs, promotions, and other elements of marketing and selling. Our customers are typically
retailers who sell our products to individual consumers. These relationships generally can be terminated unilaterally by either us or
our customers. We must maintain good relationships with our customers if this sales model is to be successful.

 We
market and sell our foil balloon, latex balloon and related novelty products throughout the United States and in a number of other countries.
We maintain marketing, sales and support staff and a customer service department in the United States. We sell directly to foreign customers
from the United States.

 We
sell and distribute our balloon products (i) through our sales staff and customer service personnel in the United States, (ii) through
a network of distributors and wholesalers, (iii) through several groups of independent sales representatives, and (iv) to retail chains.
Our balloon products are generally sold through retail outlets including grocery, general merchandise and drug store chains, card and
gift shops, party goods stores as well as florists and balloon decorators.

 We
sometimes engage in advertising and promotional activities to promote the sale of our balloon products. We produce catalogs of our balloon
products, and also prepare various flyers and brochures for special or seasonal products, which we disseminate to customers, potential
customers and others. We maintain websites which show images of our products.

 Printed
and Specialty Films

 We
market and sell printed and laminated films directly and through independent sales representatives throughout the United States. We sell
laminated and printed films to companies that utilize these films to produce packaging for a variety of products, including food products,
in both solid and liquid form, such as cola syrup, coffee, juices and other items. We seek to identify and maintain customer relationships
in which we provide added value in the form of technology or systems.

 Other
Products

 Other
products are sold by our internal sales force directly to customers and also by independent sales representatives. These products are
generally sold directly to retail outlets or other intermediaries to the ultimate consumer (for example, to a florist).

 Production
and Operations

 We
conduct our operations at our facilities including: (i) our 68,000 square feet facility in Lake Barrington, Illinois, incorporating our
headquarters office, production and warehouse space, and (ii) our 69,000 square foot facility in Elgin, Illinois consisting of warehouse,
packaging and office space.

 Our
production operations include (i) lamination and extrusion coating of films, (ii) slitting of film rolls, (iii) printing on film and
on latex balloons, (iv) converting film to completed products including balloons, flexible containers and pouches, (v) distributing latex
balloon products, (vi) inflating of air-filled balloons, and (vii) assembling Candy blossoms. We perform all of the lamination, extrusion
coating and slitting activities in our Lake Barrington, Illinois plant. We complete air-filling and assembly of balloons and balloon-inspired
gifts in our Elgin, Illinois facility.

 We
warehouse raw materials in Lake Barrington, Illinois and we warehouse finished goods at our facilities in Lake Barrington, Illinois and
Elgin, Illinois. We maintain customer service and fulfillment operations at each of our locations. We conduct sales operations for the
United States and for all other markets at the Lake Barrington, Illinois facility.

 We
maintain a graphic arts and development department at our Lake Barrington, Illinois facility which designs our balloon products and graphics.
Our creative department operates a networked, computerized graphic arts system for the production of these designs and of printed materials
including catalogues, advertisements and other promotional materials. As many of our products are custom designed or created to fulfill
promotional schedules, we sometimes have excess inventory that must be sold at a discount or disposed of. Any such disposition will typically
negatively impact our profit margin.

 We
conduct administrative and accounting functions at our headquarters in Lake Barrington, Illinois.

 Raw
Materials

 The
principal raw materials we use in manufacturing our products are (i) petroleum or natural gas-based films, (ii) petroleum or natural
gas-based resin, (iii) printing inks, and (iv) bulk candy. The cost of raw materials represents a significant portion of the total cost
of our products, with the result that fluctuations in the cost of raw materials have a material effect on our profitability. During the
past several years, we have experienced significant fluctuations in the cost of these raw materials. We do not have any long-term agreements
for the supply of raw materials and may experience wide fluctuations in the cost of raw materials in the future. Further, although we
have been able to obtain adequate supplies of raw materials in the past, there can be no assurance that we will be able to obtain adequate
supplies of one or more of our raw materials in the future.

 Many
of the foil balloons we produce and sell are intended to be filled with helium in order to be buoyant. Over the past several years, the
price of helium has fluctuated substantially and the availability of helium has, on occasion, been limited. During 2018 and 2019, the
availability of helium declined and the cost of helium increased. The supply of helium improved significantly until 2022, when another
set of supply disruptions caused significant price escalation of helium. The price of helium has gradually decreased during the second
half of 2022 and through 2023, but remains higher than prior to February 2022. Any future occurrence of limited availability and/or an
increase in the cost of helium could adversely affect our sales of foil balloons.

 Competition

 The
balloon and novelty industry is highly competitive, with numerous competitors. We believe the principal manufacturers of foil balloons
whose products are sold in the United States include Anagram International, Inc., Pioneer Balloon Company, Convertidora International
S.A. de C.V., and Betallic, LLC. Several companies market and sell foil balloons designed by them and manufactured by others for them.
In addition, there are several additional foil balloon manufacturers in Europe and China who participate in our markets.

 We
compete for the sale of latex balloons in the United States, Canada, Mexico, Latin America, the United Kingdom, Australia and Europe.
There are a number of other companies situated in the United States, Mexico, Asia, South America and Europe who manufacture latex balloons
and with whom we compete in the markets in which we participate. The markets are highly competitive with respect to price, quality and
terms.

 The
market for films, packaging, and custom products is fragmented, and competition in this area is difficult to gauge. However, there are
numerous participants in this market and the Company can expect to experience intense quality and price competition.

 Many
of the companies in these markets offer products and services that are the same or similar to those offered by us and our ability to
compete depends on many factors within and outside our control. There are a number of well-established competitors in each of our product
lines, several of which possess substantially greater financial, marketing and technical resources and have established extensive, direct
and indirect channels of distribution for their products and services. As a result, such competitors may be able to respond more quickly
to new developments and changes in customer requirements, or devote greater resources to the development, promotion and sale of their
products and services than we can. Competitive pressures include, among other things, price competition, new designs and product development
and copyright licensing.

 Patents,
Trademarks and Copyrights

 We
have developed or acquired a number of intellectual property rights which we believe are significant to our business. As of December
31, 2023, we held 1 issued patent in the United States scheduled to expire in 2024. While intellectual property rights are helpful, we
believe that their degree of protection is uncertain. Competitors may violate our intellectual property rights, forcing us to decide
whether to challenge them. Such rights may or may not withstand challenge. Conversely, entities may charge us with violating their intellectual
property rights. Failure to protect our rights, or conflict with the rights of one or more other entities, may negatively impact our
financial and competitive position.

 Proprietary
Designs and Copyright Licenses. We design the shapes and graphic designs of most of our foil balloon products.

 Trademarks.
 We own nine registered trademarks in the United States relating to our balloon products, including trademark applications. Some of
these trademarks are registered in foreign countries, principally in the European Union.

 Patent
Rights. We own, or have license rights under, or have applied for, patents related to our balloon products, certain film products
and certain flexible container products.

 Research
and Development

 We
maintain a product development and research group for the development or identification of new products, product designs, product components
and sources of supply. Research and development includes (i) creative product development and design, (ii) creative marketing, and (iii)
engineering development. During each of the fiscal years ended December 31, 2023 and 2022, we estimate that the total amount spent on
research and development activities was approximately $200,000 and $200,000, respectively.

 Employees

 As
of December 31, 2023, the Company had 57 full-time employees in the United States, of whom 14 are executive or supervisory, 2 are in
sales, 29 are in manufacturing or warehouse functions and 12 are clerical. The Company is not a party to any collective bargaining agreement
in the United States, has not experienced any work stoppages, and believes that its relationship with its employees is satisfactory.

 Beginning
November 2018, the Company experienced severe difficulty in securing adequate seasonal workers in its US operations, forcing it to pay
substantially higher costs in the form of overtime and a holiday premium. The Company expects its local labor market in the US (near
Chicago) to continue to become more costly over time, which, if not changed, would negatively impact its future profitability. The Company
has introduced additional automation features in its production lines during 2022 and 2023 and expects to continue to implement automation
tools during 2024 and beyond.

 Regulatory
Matters

 Our
manufacturing operations in the United States are subject to the U.S. Occupational Safety and Health Act ("OSHA"). We believe
we are in material compliance with OSHA. The Company generates liquid, gaseous and solid waste materials in its operations in Lake Barrington,
Illinois and the generation, emission or disposal of such waste materials are, or may be, subject to various federal, state and local
laws and regulations regarding the generation, emission or disposal of waste materials. We believe we are in material compliance with
applicable environmental rules and regulations. Several states have enacted laws limiting or restricting the release of helium filled
foil balloons. We do not believe such legislation will have any material effect on our operations.

 An
increasing number of regulations and actions relate to the integrity and security of individually identifiable data. Additionally, we
require the effective use of data in running our business. While we are not aware of losses in the past, access of such data by unauthorized
persons may expose us to costs, fines, penalties, and loss of customer confidence.

 International
Operations

 We
have no international operations.

 Available
Information

 We
maintain our corporate website at www.ctiindustries.com and we make available, free of charge, through this website our annual report
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports that we file with, or furnish
to, the Securities and Exchange Commission ("SEC"), as soon as reasonably practicable after we electronically file that material
with, or furnish it to, the SEC. You may also read and copy material filed by us with the SEC at the SEC's Public Reference Room
at 100 F Street, N.E., Washington, D.C. 20549, and you may obtain information on the operation of the Public Reference Room by calling
the SEC in the U.S. at 1-800-SEC-0330. In addition, the SEC maintains an Internet website, www.sec.gov, which contains reports, proxy
and information statements and other information that we file electronically with the SEC. Our website also includes corporate governance
information, including our Code of Ethics, Clawback Policy and our Board Committee Charters. The information contained on our website
does not constitute a part of this report.

 Item
No. 1A – Risk Factors

 Our
business and results of operations have been and may continue to be negatively impacted by the spread of COVID-19.

 We
sell our products throughout the United States and in many foreign countries and may be impacted by public health crises beyond our control.
This could disrupt our operations and negatively impact consumer spending and confidence levels, and supply availability and costs, all
of which can affect our financial results, condition, and outlook. Our customers, suppliers and distributors may experience similar disruption.
Importantly, the global pandemic resulting from COVID-19 has disrupted global health, economic and market conditions.

 Throughout
2021 and into 2022 the landscape improved from 2020, but the issue continues to drive elements of disruption in the ability to travel,
attract and retain workers, manage production configurations and protocols, the supply chain and customer base. While we cannot predict
the duration or scope of the COVID-19 pandemic, the resurgence of infections in one or more markets, or the impact of vaccines across
the globe, the COVID-19 pandemic has negatively impacted our business and is expected to continue to impact our financial results, condition
and outlook in a way that may be material.

 COVID-19
has also delayed certain strategic transactions the Company intended to close during 2020, most notably its attempted sale of its former
subsidiary Flexo Universal which was ultimately realized during October 2021 and the potential relocation of certain activities to the
Laredo, Texas area, which is no longer a consideration of the Company.

 Our
business and results of operations have been and may continue to be negatively impacted by supply chain disruptions and inflationary
pressure.

 Beginning
in 2021 we saw material shortages, supply chain interruption, and reduced ability to transport goods throughout the United States and
on a global scale. These pressures forced us to take steps to ensure the availability of products, including buying materials at higher
prices and more aggressively managing lead times. Despite these efforts, our ability to fulfill customer demands was challenged. We also
were forced to pass cost increases on to customers in the form of price increases, which threatened our ability to maintain sales volume.
While we believe we were largely successful in passing along these increased costs, such pressures may negatively impact our financial
results and book of business going forward.

 The
price and availability of helium may negatively impact our largest product line.

 Beginning
in February 2022 we saw a dramatic increase in the price of helium. We understand Russia to be a net exporter of helium prior to February
2022, and at that time one of the largest manufacturing facilities in the United States was damaged by fire. Our largest product line
consists of balloons that are filled with helium by customers. When the cost of helium increases, our customers become more likely to
temporarily not carry helium, or to increase prices to customers that may have a negative impact on ultimate demand. From May 2022 through
the end of 2023, we believe our revenue was negatively impacted by several million dollars due to the price of helium. The price of helium
gradually reduced during 2022 and 2023. Helium remains slightly elevated, though not at the level experienced during 2022. The longer
the price of helium exceeds a normal range, the more negatively our business will be impacted.

 The
efficient trading of our common stock on an appropriate platform.

 Twice
during 2022 we were informed by Nasdaq that the bid price of our common stock had been below $1 for an extended period of time and that
we risked being delisted if that problem was not satisfactorily resolved. As of January 19, 2023, we received confirmation from the Nasdaq
that we had regained compliance with the minimum bid requirement for continued listing.

 Item
No. 1B – Unresolved Staff Comments

 As
of the filing of this Annual report on Form 10-K, we had no unresolved comments from the staff of the Securities and Exchange Commission.

 Item
No. 1C - – Cybersecurity

 Our
business is subject to risk from cybersecurity threats and incidents, including attempts to gain unauthorized access to our systems and
networks, or those of our managers, venture partners and third-party vendors and service providers, to disrupt operations, corrupt data
or steal confidential or personal information and other cybersecurity breaches. We consider cybersecurity risk a threat to our assets
and thus have put processes in place designed to mitigate the risk and impact of any such cybersecurity threat or incident.

 Risk
Management and Strategy

 As
part of our cybersecurity risk management process, we:

Research and consider recommendations and "best practices" in the field, including procedures with respect to evaluation
and monitoring of cybersecurity threats and incidents;

Consider whether and when to engage third-party security firms to monitor and respond to cybersecurity threats and incidents,
including those associated with our use of third-party vendors and service providers, and conduct periodic penetration tests with
the aim of identifying and remediating vulnerabilities.

 Periodically
evaluate and assess cybersecurity risks, including those associated with our use of key third-party business partners, vendors and
service providers. We do not control the cybersecurity plans and systems put in place by such third parties and we may have limited
contractual protections with such third parties, such as indemnification obligations to us, which could cause us to be negatively
impacted as a result;

Provide employees with the training, tools and resources designed to protect the Company from cybersecurity threats and incidents
and to identify and report such threats and incidents. Our employees receive training and reminders on cybersecurity protocols
throughout the year; and

Seek to minimize the amount of personal information collected to support business needs and use storage and transfer protocols
leveraging encryption of critical information, including confidential or personal information.

 Our
processes for assessing, identifying, and managing material risks from cybersecurity threats and incidents are integrated into our process,
which includes direct participation with personnel from our senior leadership team. Existing risks are evaluated for changes, and mitigation strategies
are discussed as needed. New risks are discussed and evaluated for consideration as a top risk. Results are discussed with our Board
of Directors on an as needed basis.

 The
Company has not identified any cybersecurity threats or incidents that have materially affected or are reasonably likely to materially
affect the Company, including with respect to our business strategy, results of operations, or financial condition. While we have implemented
measures designed to help mitigate the risk from cybersecurity threats and incidents, we cannot guarantee that we or our tenants, managers
or business partners will be successful in preventing a cybersecurity incident, which could result in a data center outage, disrupt our
systems and operations or the systems and operations of our tenants, managers or business partners, compromise the confidential or personal
information of our employees or partners, which could damage our business relationships and reputation. Although we have implemented
various measures designed to manage risks relating to these types of events, these measures and the systems supporting them could prove
to be inadequate and, if compromised, could become inoperable for extended periods of time, cease to function properly or fail to adequately
secure confidential or personal information. See "Risk Factors—Our Legal, Compliance and Regulatory Risks—The occurrence
of cybersecurity incidents could disrupt our operations or the operations of the third parties with whom we do business, invest in or
lend to, result in the loss of confidential or personal information or damage our or their business relationships and reputation. included
in Part I, Item 1A of this Annual Report.

 Governance

 Our
Board of Directors, directly and through its committees, routinely discusses significant enterprise risks with management and reviews
the procedures we have in place designed to manage those risks. At Board and committee meetings, directors engage in analyses and dialogue
which can include any aspect of business risk. In addition to the overall risk oversight function administered directly by our Board,
the Audit and Compliance Committee of our Board also exercises oversight over managing the Company's cybersecurity risks.

has primary responsibility for identifying, assessing and managing our exposure to cybersecurity threats and incidents, subject to oversight
by our Board of Directors of the processes we establish to assess, monitor and mitigate that exposure.

 If
a potentially material cybersecurity threat or incident is identified or discovered, the Company's Management Team will notify
relevant business executives, the Board of Directors, Legal Counsel, and other relevant entities. Our Chief Executive Officer, or that
person's designated representative, will work with the appropriate leaders and employees in any impacted business groups, as well
as appropriate personnel in our finance, legal and potentially impacted departments, to assess the risks to the Company and potential
impact while determining appropriate remediation steps.

 If
management determines that a cybersecurity threat or incident could be material to the Company, our management will notify the Audit
Committee, and to our full Board of Directors.

 Item
No. 2 – Properties

 We
executed a sale and leaseback transaction during 2021 on our principal plant and offices located in Lake Barrington, Illinois, approximately
45 miles northwest of Chicago, Illinois. The facility includes approximately 68,000 square feet of office, manufacturing and warehouse
space. The lease is for ten years, and annual rent increases from $500,000 the first year to $652,000 during the final year.

2021 we entered into a sublease agreement, which was extended during 2022, now expiring on December 31, 2025 to rent approximately 69,000
square feet of warehouse and assembly space in Elgin, Illinois. The annual lease cost for this facility will rise to $445,000 during
the final year of the lease.

 We
believe that our properties have been adequately maintained, are in generally good condition and are suitable for our business as presently
conducted. We believe our existing facilities provide sufficient production capacity for our present needs and for our presently anticipated
needs in the foreseeable future. We also believe that, with respect to leased properties, upon the expiration of our current leases,
we will be able to either secure renewal terms or to enter into leases for alternative locations at market terms.

 Item
No. 3 – 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.

 Item
No. 4. – Mine Safety Disclosures

 Not
Applicable.

 PART
II

 Item
No. 5 – Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

 Market
Information

 The
Company's common stock was admitted to trading on the NASDAQ SmallCap Market (now the NASDAQ Capital Market) under the symbol "CTIB"
on November 5, 1997. During September 2023 we changed our symbol to "YHGJ" when we renamed our company "Yunhong Green
CTI Ltd." These changes did not otherwise impact our shareholders or other attributes.

 As
of December 31, 2023 there were approximately 400 holders of record of the Company's Common Stock. The Company's total number
of beneficial owners of common stock of the Company was approximately 30.

 The
Company did not pay any cash dividends on its Common Stock during 2023 or 2022 and has no plans to pay dividends in the foreseeable future.
Under the terms of the Company's current loan agreements, the amount of dividends the Company may pay is limited by the terms of
the financial covenants. During 2022 the Company received three deficiency notices from NASDAQ – one for the failure to hold an
annual meeting of shareholders during 2021, and the other two for failure to maintain the required $1 bid price during a 30 day period
in 2022. The Company held an annual meeting on June 17, 2022, which resolved the first deficiency. The Company's common stock achieved
the required bid price during 2022, resolving the first bid price deficiency, but subsequently fell below the required bid price and
remained there for six months. NASDAQ provided the Company a notice of delisting in November 2022, which the Company appealed. A hearing
was held on January 5, 2023 on this matter. Subsequently, on January 19, 2023, NASDAQ confirmed that the Company had regained compliance
with the continued listing standard related to minimum bid price.

 On
March 14, 2024, our common stock closed at $1.62 per share.

 Equity
Compensation Plan Information

 There
were no stock option incentive plans outstanding as of December 31, 2023. Effective January 2022, the Company issued an inducement grant
to its newly hired Chief Executive Officer for 250,000 shares of restricted stock. 25,000 of those shares vested during January 2022,
while the remaining shares were subject to achievement of certain performance conditions. 56,250 of these remaining shares vested during
2022 when the Company refinanced the terms of its credit facility. Additionally, the restrictions on 56,250 shares of the award lapsed
and the award vested during 2023 when the Company's operating cash flow, calculated cumulatively from the date of employment, equaled
or exceeded $1.5 million. The Company also provided a grant of shares of restricted stock to its Chief Operating Officer, with 20,000
shares vesting over 12 months and the remaining 80,000 shares vesting based on performance criteria being met. Of these remaining shares,
20,000 subsequently vested when the Company refinanced the terms of its credit facility and another 20,000 shares vested upon the achievement
of operating cash flow described above.

2023, the Company's Board of Directors enacted an Executive Compensation Recovery Policy, commonly referred to as a "Clawback"
policy. This policy enhances the Company's ability to recover incentive compensation in the event of a restatement or similar adjustment
impacting the achievement of such incentive compensation.

 Item
No. 6 – Selected Financial Data

 We
are a smaller reporting company, as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, and are not required to
provide the information required under this item.

 Item
No. 7 – Management's Discussion and Analysis of Financial Condition and Results of Operations

 Overview

 The
Company produces film products for novelty, packaging container and custom film product applications. These products include foil balloons,
latex balloons (sourced from an external party) and related products, films for packaging applications, and custom film products. We
produce all of our film products for packaging and container applications at our facilities in Lake Barrington, Illinois. Substantially
all of our film products for packaging applications and flexible containers for packaging and storage are sold to customers in the United
States. We market and sell our novelty items – principally foil balloons and latex balloons – in the United States and a
number of additional countries. In addition, the Company assembles and sells balloon-inspired gifts (including containers of arranged
candy items) in the United States.

 We
changed our capital structure, beginning January 2020. This includes:

A Preferred Stock

 On
January 3, 2020, the Company entered into a stock purchase agreement (as amended on February 24, 2020 and April 13, 2020 (the "LF
Purchase Agreement")), pursuant to which the Company agreed to issue and sell, and LF International Pte. Ltd., a Singapore private
limited company ("LF International"), which is controlled by Company director, Chairman, President and Chief Executive Officer,
Mr. Yubao Li, agreed to purchase, up to 500,000 shares of the Company's newly created shares of Series A Preferred Stock ("Series
A Preferred"), with each share of Series A Preferred initially convertible into ten shares of the Company's common stock,
at a purchase price of $10.00 per share, for aggregate gross proceeds of $5,000,000 (the "LF International Offering"). As
permitted by the Purchase Agreement, the Company may, in its discretion issue up to an additional 200,000 shares of Series A Preferred
for a purchase price of $10.00 per share (the "Additional Shares Offering," and collectively with the LF International Offering,
the "Offering"). Approximately $1 million of Series A Preferred has been sold, including to an investor which converted an
account receivable of $478,000 owed to the investor by the Company in exchange for 48,200 shares of Series A Preferred. The Company completed
several closings with LF International from January 2020 through June 2020. The majority of the funds received reduced our bank debt.
We issued a total of 400,000 shares of common stock to LF International and, pursuant to the LF Purchase Agreement, changed our name
from CTI Industries Corporation to Yunhong CTI Ltd. LF International had the right to name three directors to serve on our Board. They
were Mr. Yubao Li, Ms. Wan Zhang and Ms. Yaping Zhang. Ms. Wan Zhang and Ms. Yaping Zhang retired from the Board in January 2022.

 The
issuance of the Series A Preferred generated a beneficial conversion feature (BCF), which arises when a debt or equity security is issued
with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has
an effective strike price that is less than the market price of the underlying stock at the commitment date. The fair value of the common
stock into which the Series A Preferred was convertible exceeded the allocated purchase price fair value of the Series A Preferred Stock
at the closing dates by approximately $2.5 million as of the closing dates. We recognized this BCF by allocating the intrinsic value
of the conversion option, to additional paid-in capital, resulting in a discount on the Series A Preferred. As the Series A Preferred
is immediately convertible, the Company accreted the discount on the date of issuance. The accretion was recognized as dividend equivalents.
Holders of the Series A Preferred were entitled to receive quarterly dividends at the annual rate of 8% of the stated value ($10 per
share). Such dividends may be paid in cash or in shares of common stock at the Company's discretion. In the three months ended
September 30, 2023 and 2022 the Company accrued none and $67,000 of these dividends in each period, respectively, as the investor converted
Series A Convertible Preferred Stock into common stock on September 1, 2022. This conversation resulted in the issuance of 5 million
shares of common stock plus an additional approximately 1.3 million shares of common stock representing the accrued dividends.

B Preferred Stock

 In
November 2020, we issued 170,000 shares of Series B Preferred for an aggregate purchase price of $1,500,000. The Series B Preferred have
an initial stated value of $10.00 per share and liquidation preference over common stock. The Series B Preferred is convertible into
shares of our common stock equal to the number of shares determined by dividing the sum of the stated value and any accrued and unpaid
dividends by the conversion price of $1.00. The Series B Preferred accrues dividends at a rate of 8 percent per annum, payable at our
election either in cash or shares of the Company's common stock. Initially, the Series B Preferred, in whole or part, was redeemable
at the option of the holder (but not mandatorily redeemable) at any time on or after November 30, 2021 for the stated value, plus any
accrued and unpaid dividends and thus was classified as mezzanine equity and initially recognized at fair value of $1.5 million (the
proceeds on the date of issuance). The carrying value as of September 30, 2023 and December 31, 2022 amounted to none and $1,851,000,
respectively. On February 1, 2023, the investor converted Series B Preferred into approximately 1.9 million shares of common stock, including
accrued dividends.

C Preferred Stock

 In
January 2021 we entered into an agreement with a related party, LF International Pte. Ltd. which is controlled by Company director and
Chairman, Mr. Yubao Li, to purchase shares of Series C Preferred stock. We issued 170,000 shares of Series C Preferred for an aggregate
purchase price of $1,500,000. The Series C Preferred have an initial stated value of $10.00 per share and liquidation preference over
common stock. The Series C Preferred is convertible into shares of our common stock equal to the number of shares determined by dividing
the sum of the stated value and any accrued and unpaid dividends by the conversion price of $1.00. The Series C Preferred accrues dividends
at a rate of 8 percent per annum, payable at our election either in cash or shares of the Company's common stock. The issuance
of the Series C Preferred generated a beneficial conversion feature (BCF), which arises when a debt or equity security is issued with
an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective
strike price that is less than the market price of the underlying stock at the commitment date. The fair value of the common stock into
which the Series C Preferred was convertible exceeded the allocated purchase price of the Series C Preferred at the closing dates by
greater than the allocated purchase price. Therefore, the BCF was the purchase price of the Series C Preferred ($1.5 million) and was
allocated to Additional Paid-in Capital, resulting in a discount on the Series C Preferred Stock. As the Series C Preferred Stock is
immediately convertible, the Company accreted the discount on the date of issuance. The accretion to the carrying value of the Series
C Preferred is treated as a deemed dividend, recorded as a charge to Additional Paid in Capital and deducted in computing earnings per
share. On September 1, 2022, the investor converted Series C Preferred into approximately 2 million shares of common stock, including
accrued dividends.

D Preferred Stock

 In
June 2021, the Company received $1.5 million from an unrelated third party as an advance on a proposed sale of Series D Redeemable Convertible
Preferred Stock. As of September 30, 2021, the Company was in the process of negotiating and finalizing the terms of the arrangement.
As the agreement was not finalized as of September 30, 2021, the $1.5 million advance was classified as Advance from Investor within
liabilities on the balance sheet at that time. As of December 31, 2021, the terms had been finalized, the investment was classified as
equity, similar to the prior Convertible Preferred issuances, above. The issuance of the Series D Preferred generated a beneficial conversion
feature (BCF), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor
or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying
stock at the commitment date. The fair value of the common stock into which the Series D Preferred was convertible exceeded the allocated
purchase price fair value of the Series D Preferred Stock at the closing dates by approximately $0.3 million as of the closing dates.
We recognized this BCF by allocating the intrinsic value of the conversion option, to additional paid-in capital, resulting in a discount
on the Series D Preferred. As the Series D Preferred is immediately convertible, the Company accreted the discount on the date of issuance.
The accretion was recognized as dividend equivalents. Holders of the Series D Preferred will be entitled to receive quarterly dividends
at the annual rate of 8% of the stated value ($10 per share). Such dividends may be paid in cash or in shares of common stock at the
Company's discretion. In addition, 128,000 warrants to purchase the Company's common stock were issued with respect to this
transaction. These warrants are exercisable until December 1, 2024, at the lower of $1.75 per share or 85% of the variable price based
on the ten day volume weighted average price ("VWAP") of the Company's common stock. The value of these warrants was
determined to be $230,000 and recorded as an allocation of paid in capital associated with this transaction. On September 1, 2022, the
investor converted Series D Preferred into approximately 1.8 million shares of common stock including accrued dividends.

 Deposits
and Note Conversion to Common Stock

 In
connection with the 2021 sale and leaseback transaction of the Company's primary facility in Lake Barrington, IL, the landlord
advanced rent payments in the form of a note. The balance of that note on December 31, 2022 was approximately $172,000. The note paid
3% interest and was due March 2024. In addition, the same entity made investment deposits during 2022 that were recorded as short term
deposit liabilities. On February 1, 2023, our Board of Directors approved the conversion of these liabilities into common stock at a
rate of approximately 84% of the volume weighted average price (VWAP) of the Company's common stock during the period these deposits
were received. In total, approximately $0.9 million of liabilities were converted into approximately 1.8 million shares of our common
stock. Upon conversion, both the note and deposit liabilities were fully eliminated. During December 2023, the 128,000 warrants associated
with Series D were converted into approximately 41,000 shares of our common stock in a cashless exercise. In addition, the deferred rent
liability from 2022 was converted into approximately 0.6 million shares of our common stock based on the VWAP calculation above. These
transactions resolved all related outstanding liabilities from 2022.

 Investment
Banking Fee

 The
Company had an agreement with Garden State Securities beginning December 2019 and ending during 2020, wherein Garden State Securities
sought equity and debt investment opportunities and was due a fee related to successful investment. That agreement had a tail provision
wherein Garden State Securities would be entitled to compensation related to investments from identified parties during a fixed period
of time following the termination of the agreement, which has now expired. Pursuant to negotiation between the parties during April 2023,
it was agreed that a total presentation of 125,000 restricted shares of common stock would result in the final resolution of compensation
due Garden State Securities, including that related to Series C Preferred Stock, subsequently converted to common stock, and that the
agreement and all related potential claims were concluded. The proceeds from this investment were not impacted by this resolution.

 Warrants

 A
summary of the Company's stock warrant activity is as follows:

 Shares under
Option

 Weighted
Average
Price

 Balance at December 31, 2022

 128,000

 $
 1.75

 Granted

 -

 -

 Cancelled/Expired

 -

 -

 Exercised/Issued

 (128,000
)

 $
 1.75-

 Outstanding at December 31, 2023

 -

 -

 Exercisable at December 31, 2023

 -

 $
 -

November 2023, the Company issued 675,183 shares of its common stock to retire all outstanding warrants, as well as a $317,000 deferred
liability. The warrants were converted in a cashless transaction based on the terms of the warrants. The Board of Directors determined
the conversion price of the deferred liability would be consistent with the approach listed above, 84% of the volume weighted average
price during the relevant time period. Both of these items are fully resolved upon this transaction.

 Effective
January 2022, and in accordance with the Employment Agreement of Chief Executive Officer Frank Cesario, a grant of restricted stock was
made in the amount of 250,000 shares. 25,000 shares vested immediately, while the remaining 225,000 are subject to performance conditions
as further detailed in the share grant. Specifically, the restrictions on the remaining 225,000 shares will lapse based on satisfaction
of the following performance goals and objectives and continued employment through the date of meeting such targets:

The restrictions on 56,250 shares of the award will lapse and the award will vest when the Company's trailing-twelve-month EBITDA
equals or exceeds $1 million at any time on or after January 1, 2022.

The restrictions on 56,250 shares of the award will lapse and the award will vest in the event the Company's common shares trade
at or above $5/share for ten or more consecutive trading days.

The restrictions on 56,250 shares of the award will lapse and the award will vest when the Company's operating cash flow, calculated
cumulatively from the date of employment, equals or exceeds $1.5 million. On February 16, 2023, the Compensation Committee determined
this condition had been satisfied.

The restrictions on 56,250 shares of the award will lapse and the award will vest in the event the Company is able to refinance its current
lender with a traditional lender on terms and conditions customary for such financing. On August 23, 2022, the Compensation Committee
determined this condition had been satisfied with an amended agreement with the Company's lender.

2022, the Compensation Committee awarded the Company's Chief Operating Officer a grant of 100,000 shares of restricted stock. 20,000
of those shares vest over a 12 month period while the remaining shares vest 20,000 each based on the performance conditions above.

 The
Compensation Committee (as defined in the Plan) shall be responsible for determining when the conditions above have been satisfied. The
Company records compensation expense with each vesting, and records a likelihood of vesting weighted analysis to the extent it has visibility
to do so. Without such visibility, it considers such probability as de minimis until additional information is available.

 Our
revenues from continuing operations from each of our product categories in each of the past two years have been as follows:

 Twelve Months Ended

 December 31, 2023

 December 31, 2022

 $

 % of

 $

 % of

 Product Category

 (000) Omitted

 (000) Omitted

 Foil Balloons

 11,769

 %

 10,858

 %

 Film Products

 %

 2,036

 %

 Other

 5,107

 %

 5,154

 %

 Total

 17,804

 %

 18,048

 %

 Our
primary expenses include the cost of products sold and selling, general and administrative expenses.

 Cost
of products sold primarily consists of expenses related to raw materials, labor, quality control and overhead expenses such as supervisory
labor, depreciation, utilities expense and facilities expense directly associated with production of our products, warehousing and fulfillment
expenses and shipping costs relating to the shipment of products to customers. Cost of products sold is impacted by the cost of the raw
materials used in our products, the cost of shipping, along with our efficiency in managing the production of our products.

 Selling,
general and administrative expenses include the compensation and benefits paid to our employees, all other selling expenses, marketing,
promotional expenses, travel and other corporate administrative expenses. These other corporate administrative expenses include professional
fees, depreciation of equipment and facilities utilized in administration, occupancy costs, communication costs and other similar operating
expenses. Selling, general and administrative expenses can be affected by a number of factors, including staffing levels and the cost
of providing competitive salaries and benefits, the cost of regulatory compliance and other administrative costs.

 Purchases
by a limited number of customers represent a significant portion of our total revenues. During 2023 and 2022, respectively, sales to
our top 10 customers represented 94% and 90%, respectively, of net revenues for each year. During 2023 and 2022, there were two customers
to whom our sales represented more than 10% of net revenues.

 Our
principal customer sales for 2023 and 2022 were:

 Customer

 Product

 2023 Sales

 % of 2023
 Revenues

 2022 Sales

 % of 2022
 Revenues

 Wal-Mart

 Balloons; Gifts

 $
 6,466,000

 %

 $
 6,497,000

 %

 Dollar Tree Stores

 Balloons

 $
 8,174,000

 %

 $
 6,729,000

 %

 The
loss of one or both of these principal customers, or a significant reduction in purchases by one or both of them, could have a material
adverse effect on our business.

 We
generally do not have agreements with our customers under which customers are obligated to purchase any specific or minimum amount of
product from us.

 Year
Ended December 31, 2023 Compared to Year Ended December 31, 2022

 Net
Sales

 For
the fiscal year ended December 31, 2023, consolidated net sales from continuing operations of the sale of all products were $17,804,000
compared to consolidated net sales of $18,048,000 for the year ended December 31, 2022, a decrease of 1% as more fully described below.

 Sales
of foil balloons were $11,769,000 in 2023 and $10,858,000 in 2022, a increase of 8%. The first half of 2022 saw a significant increase
in the price of helium which gradually reduced as the year progressed and into 2023. As most of our foil balloons are ultimately filled
with helium, this was the primary reason for the decline in sales related to 2022 and increase in this area during 2023.

 Sales
of film products were $928,000 in 2023 and $2,036,000 in 2022, a decrease of 54%. Our largest customer in this area purchased more material
than usual during the first nine months of 2022, ending with sufficient material to reduce orders during the last three months of 2022
and 2023.

 Sales
of other products increased to $5,107,000 in 2023 from $5,154,000 in 2022, a decrease of 1%. This category includes sales of balloon
inspired gifts, which featured larger holiday orders than the prior year as well as the launch of an everyday offering.

 Cost
of Sales

 Cost
of sales decreased to $14,546,000 in 2023 from $14,910,000 in 2022, a decrease of 2%. The decrease in cost of sales was primarily attributable
to the 1% decrease in sales and impact of certain efficiencies including the increased deployment of robotics on the manufacturing floor..

 General
and Administrative Expenses

 General
and administrative expenses increased to $2,995,000 in 2023 from $3,720,000 in 2022, a decrease of 19%. We reduced spending during 2022
due to the helium issue.

 Selling
and Marketing

 Selling
expenses from continuing operations decreased to $131,000 in 2023 from $136,000 in 2022. Marketing and advertising expense increased
to $531,000 in 2023, from $402,000 in 2022, an increase of 32% related to enhanced commissions from areas that improved during 2023.

 Other
Income or Expense

2023, we incurred net interest expense of $628,000 compared to net interest expense of $450,000 during 2022. Market rates of interest
increased substantially throughout 2022, from 3.25% to 7.5%, and up to 8.5% by July 2023.

 Deemed
Dividends on Preferred Stock and Amortization of Beneficial Conversion Feature

 In
2020 the Company issued Series A Preferred Stock and Series B Preferred Stock. In connection with these preferred stock issuances, and
the related beneficial conversion features, the Company had deemed dividends of $4.4 million in 2020. During 2021, the Company issued
Series C Preferred Stock and Series D Preferred Stock. In connection with all of these preferred stock issuances, and the related beneficial
conversation features, the Company had deemed dividends of $0.6 million during 2022 and $3.6 million during 2021. Although these deemed
dividends do not impact Net loss attributable to Yunhong CTI, Ltd., they do impact Net loss attributable to Yunhong CTI Ltd. Common Shareholders
and EPS. As Series A, C and D preferred stock all converted during 2022, only Series B preferred stock dividends remained on an ongoing
basis. Series B converted into common during 2023, ending the related dividend accrual.

 Financial
Condition, Liquidity and Capital Resources

 Cash
(Used In) Provided By Operating Activities

2023, cash used in operating activities amounted to $1,117,000, compared to cash generated by operating activities during 2022 of $2,368,000.
Significant changes in working capital items affecting cash flow used in operating activities were:

 Depreciation
 and amortization of $279,000 compared to depreciation and amortization for 2022 of $383,000;

 A
 decrease in inventories of $534,000 compared to an increase in inventories of $449,000 in 2022;

 An
 increase in accounts receivable of $2,357,000 compared to a decrease in accounts receivable of $1,825,000 in 2022;

 A
 decrease in prepaid expenses and other assets of $57,000 compared to a decrease in prepaid expenses and other assets of $836,000
 in 2022; and

 A
 decrease in trade payables of ($396,000) compared to a decrease in trade payables of ($819,000) in 2022.

 Cash
Provided By (Used In) Investing Activities

fiscal 2023, cash used in investing activities amounted to ($221,000) compared to cash used in investing activities during fiscal 2022
of ($163,000).

 Cash
Provided By (Used In) Financing Activities

fiscal 2023, cash provided by financing activities amounted to $2,113,000, compared to cash used in financing activities of ($2,125,000)
during fiscal 2022.

 Going
Concern, Liquidity and Financial Condition

 The
Company's financial statements are prepared using account 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 December 31, 2023 of approximately $24 million. The accompanying financial statements
for the year ended December 31, 2023 have been prepared assuming the Company will continue as a going concern. The Company's cash
resources may be insufficient to meet its anticipated needs during the next twelve months. The Company may require additional financing
to fund it future planned operations. The ability of the Company to continue as a going concern is dependent on the Company's execution
of its business plans and the ability to raise any needed additional capital at acceptable terms to the Company. While Management plans
to mitigate this issue with improved performance now that it has disposed of subsidiaries and their related losses, there can be no guarantee
this will be successful. The accompanying financial statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.

 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 $6 million (the "Maximum Revolver Amount")
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. This Agreement and the Senior Facilities were extended on similar terms during September 2023 with a termination
date of September 30, 2025. The Company has been in compliance with the terms of these Senior Facilities since inception in September
2021.

 Interest
on the Senior Facilities was set at the prime rate published from time to time published in the Wall Street Journal (8% as of March 31,
2023), plus 1.95% per annum, accruing daily and payable monthly. Interest shall be calculated on the basis of a 360-day year for the
actual number of days elapsed. The Term Loan Facility shall be repaid by the Company to Lender in 48 equal monthly installments of principal
and interest, each in the amount of $15,000, commencing on November 1, 2021, and continuing on the first day of each month thereafter
until the Term Loan Maturity Date (as defined in the Agreement). Also, the Company paid the Lender collateral monitoring fees of 4.62%
of the eligible accounts receivable, inventory, and equipment supporting the Revolving Credit Facility and the Term Loan. In addition,
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 the terms were modified to reduce the collateral monitoring fee to 2.77% and added a provision that barred the Company
from repaying the facility prior to September 2023. This Term Loan was re-established effective with the September 30, 2023 renewal at
the original values on September 30, 2021.

 The
Senior Facilities matured on September 30, 2023 and were extended by agreement between the parties until September 30, 2025. The facility
automatically extends for successive periods of one year each, unless the Company or the Lender gives the other party written notice
of termination not less than 90 days prior to the end of such term or renewal term, as applicable. If the Senior Facilities are renewed,
the Company shall pay the Lender a renewal fee of 1.25% of the Maximum Revolver Amount and the Term Loan Amount upon each renewal on
the anniversary of the Closing Date. 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 Lender. With this September 30, 2023 renewal, the parties agreed changes in terms including:

 -
 Replace
 the asset monitoring fee on the Revolving Credit Facility with an increase in interest rate,
 to Prime plus 7.82% per annum. This change was intended by the parties to be financially
 neutral while easier to administrate.

 -
 Reduce
 the interest rate on the Term Loan to Prime plus 1.45% per annum, with lender making a one-time
 additional advance of $206,000 to reset the Term Loan to $731,000.

 -
 Reduce
the renewal fee for this transaction to $50,000 from the formula described above.

 -
 Set
the Term Loan asset monitoring fee to 0.385% per month.

 The
Senior Facilities require that the Company maintain Tangible Net Worth of at least $4,000,000 or greater ("Minimum Tangible Net
Worth"). Minimum Tangible Net Worth may be adjusted downward by the Lender, from time to time, in its sole and absolute discretion,
based on the effect of non-cash charges and other factors on the calculation of Tangible Net Worth. Other debt subordinated to Lender
is not considered as a reduction of this calculation. The Company believes it was in compliance with this covenant for all relevant months,
including as of December 31, 2023 and 2022, respectively.

 The
Senior Facilities contain certain affirmative and negative covenants that limit the ability of the Company, among other things and subject
to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, and acquisitions,
pay dividends and make other restricted payments, or make capital expenditures exceeding $1,000,000 in the aggregate in any fiscal year.

 As
of December 31, 2023, the term loan balance amounted to $0.7 million, which consisted of the principal and interest payable balance of
$0.7 million and deferred financing costs of approximately $30,000. The balance of the Revolving Line of Credit as of December 31, 2023
and 2022 amounted to $4,991,000 and $2,878,000, respectively. By virtue of the September 30, 2023 extension above, the Company was advanced
$206,000 and the Term Loan was reset to $731,000. Due to the timing of execution, this change was reflected in the Company's October
2023 financial statements.

 As
of January 1, 2019, the Company had a note payable to John H. Schwan, former Director and former Chairman of the Board, for $1.6 million,
including accrued interest. This loan accrues interest, is due December 31, 2023, and is subordinate to the Senior Facilities. During
January 2019, Mr. Schwan converted $600,000 of the note into approximately 181,000 shares of our common stock at the then market rate
of $3.32 per share. As a result of the conversion, the loan balance decreased to $1 million. The loan and interest payable to Mr. Schwan
amounted to $1.3 million as of December 31, 2023. Based on agreement between the parties, the Company paid $0.5 million on January 2,
2024, an additional $0.5 million on January 16, 2024, and the remainder agreed to later during 2024.

 As
of December 31, 2022, the Company had a note payable to Alex Feng for $0.2 million. This loan accrued interest at a rate of 3% and is
subordinated to the Senior Facilities. In accordance with the subordination agreement, payments may be made beginning April 2022 subject
to availability under the revolving line of credit, and the maturity date for this loan was March 2024. Along with certain deposits received
during 2022, this note was converted into common stock during February 2023.

 Through
September 30, 2022, the Company has received approximately $160,000 in Employee Retention Tax Credits ("ERTC") from the United
States Government related to claims that were filed during 2021. $123,000 was listed as General and Administrative, while the remainder
is in Other Income. During October 2022 the Company executed a financing transaction wherein the remaining open claims for $1.2 million
in ERTC was sold to a third party for $0.9 million. Once the $1.2 million was ultimately paid, those funds were immediately transferred
to the third party. To the extent any of the $1.2 million in ERTC claims were determined by the United States Government not to be payable,
a prorated portion of the $0.9 million would have been returned to that investor. The $0.9 million was listed as a deferred income current
liability as of December 31, 2022, which was recognized upon acceptance and processing of the amended returns by the United States Government.
During 2023, all claims had been processed and refunds issued, which were forwarded to the third party above. As a result, approximately
$0.9 million of the deferred income liability was recognized during 2023.

 Seasonality

 In
the foil balloon product line, sales have historically been seasonal. Approximately half of these sales are considered "everyday"
in nature while the other half tend to be event driven (certain holidays, graduation season, and other events). The COVID-19 pandemic
changed the shape of graduation season for 2020, resulting in a lower demand for balloons during the second quarter 2020, but then a
surge of demand related to at-home parties and events. This increase in demand continued in 2021. As 2022 returned to a more standardized
calendar of events relative to COVID-19, the sales activities returned to a more traditional shape (excluding the impact of helium pricing).

 Since
2022, we have seen an enhanced impact of seasonality, with increased order flow related to events, and lower order flow related to everyday
items.

 Critical
Accounting Policies

 The
financial statements of the Company are based on the selection and application of significant accounting policies which require management
to make various estimates and assumptions. The following are some of the more critical judgment areas in the application of our accounting
policies that currently affect our financial condition and results of operation.

 Revenue
Recognition. Substantially all of the Company's revenues are derived from the sale of products. With respect to the sale of
products, revenue from a transaction is recognized once it has (i) identified the contract(s) with a customer, (ii) identified the performance
obligations in the contract, (iii) determined the transaction price, (iv) allocated the transaction price to the performance obligations
in the contract, and (v) recognized revenue as the company satisfies a performance obligation. The Company generally recognizes revenue
for the sale of products when the products have been shipped and invoiced. In some cases, product is provided on consignment to customers.
In those cases, revenue is recognized when the customer reports a sale of the product.

 The
Company adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers. Our revenue arrangements
generally consist of a single performance obligation to transfer promised goods at a fixed price.

 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.

 Allowance
for Doubtful Accounts. We estimate our allowance for doubtful accounts based on an analysis of specific accounts, an analysis of
historical trends, payment and write-off histories. Our credit risks are continually reviewed, and management believes that adequate
provisions have been made for doubtful accounts. However, unexpected changes in the financial condition of customers or changes in the
state of the economy could result in write-offs which exceed estimates and negatively impact our financial results.

 Inventory
Valuation. Inventories are stated at the lower of cost or net realizable value. Cost is determined using standard costs which approximate
costing determined on a first-in, first out basis. Standard costs are reviewed and adjusted at the time of introduction of a new product
or design, periodically and at year-end based on actual direct and indirect production costs. On a periodic basis, the Company reviews
its inventory levels for estimated obsolescence or unmarketable items, in reference to future demand requirements and shelf life of the
products. As of December 31, 2023, the Company had established a reserve for obsolescence, marketability or excess quantities with respect
to inventory in the aggregate amount of $155,000. As of December 31, 2022, the amount of the reserve was $155,000. In addition, on a
periodic basis, the Company disposes of inventory deemed to be obsolete or unsaleable and, at such time, charges reserve for the value
of such inventory. We record freight income as a component of net sales and record freight costs as a component of cost of goods sold.

 Valuation
of Long-Lived Assets. We evaluate whether events or circumstances have occurred which indicate that the carrying amounts of long-lived
assets (principally property and equipment and goodwill) may be impaired or not recoverable. Significant factors which may trigger an
impairment review include: changes in business strategy, market conditions, the manner of use of an asset, underperformance relative
to historical or expected future operating results, and negative industry or economic trends. We apply the provisions of generally accepted
accounting principles in the United States of America ("U.S. GAAP") U.S. GAAP, under which goodwill is evaluated at least
annually for impairment.

 Foreign
Currency Translation. All balance sheet accounts are translated using the exchange rates in effect at the balance sheet date. Non
US Dollar transactions are negligible.

 Stock-Based
Compensation. We follow U.S. GAAP which requires all stock-based payments to employees, including grants of employee stock options,
to be recognized in the consolidated financial statements based on their grant-date fair values.

 We
use the Black-Scholes option pricing model to determine the fair value of stock options which requires us to estimate certain key assumptions.
In accordance with the application of U.S. GAAP, we incurred no employee stock-based compensation cost for the year ended December 31,
2023. At December 31, 2023, we had approximately $3,000 unrecognized compensation cost relating to stock options, as well as performance
based awards for which the ultimate vesting is unknown.

 Income
Taxes and Deferred Tax Assets. Income taxes are accounted for as prescribed in U.S. GAAP. Under the asset and liability method of
U.S. GAAP, the Company recognizes the amount of income taxes currently payable. Deferred tax assets and liabilities are recognized for
the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities,
and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years these temporary differences are expected to be recovered or settled.

 We
evaluate all available positive and negative evidence in each tax jurisdiction regarding the recoverability of any asset recorded in
our Consolidated Balance Sheets and provide valuation allowances to reduce our deferred tax assets to an amount we believe is more likely
than not to be realized. We regularly review our deferred tax assets for recoverability considering historical profitability, our ability
to project future taxable income, the expected timing of the reversals of existing temporary differences and tax planning strategies.
If we continue to operate at a loss in certain jurisdictions or are unable to generate sufficient future taxable income within the defined
lives of such assets, we could be required to increase our valuation allowance against all or a significant portion of our deferred tax
assets. This increase in valuation allowance could result in substantial increases in our effective tax rate and could have a material
adverse impact on our operating results. Conversely, if and when our operations in some jurisdictions become sufficiently profitable
before what we have estimated in our current forecasts, we would be required to reduce all or a portion of our current valuation allowance
and such reversal would result in an increase in our earnings in such period.

 Prior
to September 30, 2021, we had been out of compliance with the terms of our credit facility and operating under a forbearance agreement,
and had related going concern disclosure. We therefore established a valuation allowance reserve for substantially all of our deferred
tax assets. As of December 31, 2023 and 2022, the amount of the net deferred tax asset was none, as we continued to record a valuation
allowance against the gross value of the deferred tax asset. Each quarter and year-end, management makes a judgment to determine the
extent to which the deferred tax asset will be recovered from future taxable income. This value was reduced, in large part, due to changes
in US tax law effective 2018 which will impact the value of future deductions.

 Fair
Value Measurements. U.S. GAAP defines fair value, establishes a framework for measuring fair value, establishes a fair value hierarchy
based on the quality of inputs used to measure fair value and enhances disclosure requirements for fair value measurements. U.S. GAAP
clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants. U.S. GAAP also requires that a fair value measurement reflect the assumptions
market participants would use in pricing an asset or liability based upon the best information available. In February 2008, the FASB
issued guidance now codified in U.S. GAAP which provides for delayed application of certain guidance related to non-financial assets
and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring
basis (at least annually).

 Item
No. 7A – Qualitative and Quantitative Disclosures Regarding Market Risk

 Not
applicable.

 Item
No. 8 – Financial Statements and Supplementary Data

 Reference
is made to the Consolidated Financial Statements contained in Part IV hereof.

 Item
No. 9 – Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

 None.

 Item
No. 9A – Controls and Procedures

 (a)
Evaluation of Disclosure Controls and Procedures

 We
maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act
of 1934 (the "Exchange Act"), that are designed to ensure that information required to be disclosed in the reports filed
or submitted under the Exchange Act, is recorded, processed, summarized, and reported within the time periods specified by the Commission's
rules and forms. Disclosure controls and procedures include controls and procedures designed to ensure that information required to be
disclosed in our reports filed or submitted under the Exchange Act are properly recorded, processed, summarized and reported within the
time periods required by the Commission's rules and forms.

 We
carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer
(principal executive officer) and Chief Financial Officer (principal financial officer), of the effectiveness of the design and operation
of these disclosure controls and procedures, as such term is defined in Exchange Act Rule 13a-15(e), as of December 31, 2023. Based on
this evaluation, the Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer)
concluded that our disclosure controls and procedures were not effective as of December 31, 2023, the end of the period covered by this
Annual Report on Form 10-K, due to the material weaknesses described below.

 (b)
Management's Report on Internal Control over Financial Reporting

of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules
13a-15(f) and 15d-15(f) under the Exchange Act.

 Internal
control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because
of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of
any evaluation of effectiveness of internal control over financial reporting to future periods are subject to the risk that controls
may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

has assessed the effectiveness of our internal control over financial reporting as of December 31, 2023. In making our assessment of
the effectiveness of internal control over financial reporting, management used the criteria set forth in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

 A
material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting such
that there is a reasonable possibility that a material misstatement of the registrant's annual or interim financial statements
will not be prevented or detected on a timely basis. As a result of our evaluation of our internal control over financial reporting,
management identified the following material weaknesses in our internal control over financial reporting:

 We
 lacked a sufficient number of accounting professionals with the necessary knowledge, experience and training to adequately account
 for significant, unusual transactions that resulted in misapplications of GAAP, particularly with regard to the timing of recognition
 of certain non-cash charges, and

 We
 are overly dependent upon our Acting Chief Financial Officer, who at present is our Chief Executive Officer, within an environment
 that is highly manual in nature

concluded that there is a reasonable possibility that a material misstatement could occur in the consolidated financial statements if
the control deficiencies were not remediated. Accordingly, management concluded that the matters described above are material weaknesses
in the Company's internal control over financial reporting and that the Company did not maintain effective internal control over
financial reporting as of December 31, 2023.

 Plan
for Remediation of Material Weakness

has enhanced its available resource base and adjusted its processes with respect to the areas listed above. Additional procedures are
in the process of being established and will be evaluated for effectiveness in the future. Two individuals were engaged to perform the
duties of controller during 2022, but neither remains with the Company as of December 31, 2023. Further, the Company views the combination
of Acting Chief Financial Officer duties with the Chief Executive Officer as temporary in nature.

 This
annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by its registered public accounting firm pursuant to the Dodd-Frank
Wall Street Reform and Consumer Protection Act, which permits the Company to provide only management's report in this annual report.

 (c)
Changes in Internal Control over Financial Reporting

 There
were no changes in our internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal
control over financial reporting.

 Item
No. 9B – Other Information

 None

 PART
III

 Item
No. 10 – Directors, Executive Officers and Corporate Governance of the Registrant

 The
members of our Board of Directors (the "Board"), and our executive officers, together with their respective ages and certain
biographical information are set forth below. Directors hold office until the next annual meeting of our shareholders and until their
successors have been duly elected and qualified. Our executive officers are elected by and serve at the designation and appointment of
the Board.

 The
following is a brief account of the business experience of each of our directors and executive officers during the past five years or
more.

 Name

 Age

 Position

 Yubao
 Li

 Chairman
 of the Board of Directors

 Frank
 J. Cesario

 Chief
 Executive Officer and Director; Acting Chief Financial Officer

 Jana
 M. Schwan

 Chief
 Operating Officer

 Douglas
 Bosley

 Gerald
 (J.D.) Roberts, Jr.

 Philip
 Wong

 Frank
Cesario, age 54, Chief Executive Officer and Director; Corporate Secretary; Acting Chief Financial Officer. Mr. Cesario first
joined the Company in November 2017 as Chief Financial Officer. In December 2019 he was named President and Chief Executive Officer,
and Director. He resigned as Chief Financial Officer in June 2020 and as President and Chief Executive Officer, and Director, in September
2020. During March 2021, he rejoined the Board as a Director. During January 2022 he was rehired by the Company as Chief Executive Officer
and he retained his role as a Director. Upon the resignation of the Company's then-Chief Financial Officer during January 2022,
Mr. Cesario also became the Acting Chief Financial Officer. Mr. Cesario brings 20 years of CFO experience at manufacturing entities.
Prior to joining the Company, Mr. Cesario served in similar roles with Nanophase Technologies Corporation and ISCO International, Inc.,
then publicly traded global suppliers of advanced materials and telecommunications equipment, respectively, as well as Turf Ventures
LLC, a privately held chemicals distributor. From September 2020 until January 2022, Mr. Cesario served as Chief Financial Officer of
Radiac Abrasives, Inc., a privately held manufacturer. He began his career with KPMG Peat Marwick and then served in progressively responsible
finance positions within Material Sciences Corporation and Outokumpu Copper, Inc. Mr. Cesario holds an MBA (Finance) from DePaul University
and a B.S. (Accountancy) from the University of Illinois and is a registered CPA in the State of Illinois.

 Yubao
Li, age 42, Chairman of the Board of Directors. Mr. Li has served as a Director of the Company since January 13, 2020 and was elected
as Chairman of the Board on June 1, 2020. Mr. Li served as the Company's Chief Executive Officer from September 2020 until January
2022. Mr. Li has been serving as the Chairman of Yunhong International since its inception in January 2019 and served as its Chief Executive
Officer from January 2019 to September 2019. Mr. Li has been serving as the president of Hubei Academy of Science and Technology Service
Station since July 2018. Since June 2018, Mr. Li has been serving as the Director of Photoproteins Research Centre at China's Academy
of Management Science, a research institute situated in Beijing where he supports innovation by defining the research focus of the group.
Mr. Li also serves as a director and/or officer of several other entities, including as the Executive Director and General Manager of
Hubei Teruiga Energy Co., Ltd, a new energy technology company, since November 2017, the Executive Director of Hubei Yuntong Energy Co.,
Ltd., a solar power and agriculture company, since April 2016, the Executive Director and General Manager of Hubei Yun Hong photovoltaic
Co., Ltd., a solar power and agriculture company, since May 2016, the President of Hubei Yunhong Deren Tourism Co., Ltd., a tourism project
developer, since May 2016 and the President of Yunhong Group Holdings Co., Ltd., a company engaged in the business of solar power construction
and solar photovoltaic power generation, since 2013. In addition, in 2013, Mr. Li founded China Hubei Yunhong Energy Group Co., Ltd.,
a Chinese nutrition company operating in China and abroad, and he currently serves as the Chairman of its board of directors.

 Douglas
Bosley, age 57, Director. Mr. Bosley has served as a director of the Company since January 2022 and is a founding partner of Witan
Law Group and a member of the firm's Corporate Transactional and Securities practice. Mr. Bosley represents businesses and entrepreneurs
at all stages of growth from inception to exit. Mr. Bosley's practice focuses on three general areas of financing transactions,
mergers and acquisitions and general corporate matters. Mr. Bosley's financing experience includes representing venture capital
firms and venture-backed companies, mezzanine debt transactions, and a wide range of other types of financing and securities transactions,
as well as general corporate matters including formation and start-ups; equity compensation; contracts such as licensing, joint ventures,
representative agreements, and development and service level agreements; and corporate governance matters. Before founding Witan Law,
Mr. Bosley was a partner at Bosley Till Neue & Talerico (BTNT), a law firm, where he headed the transactional and securities practices.
Prior to BTNT, Mr. Bosley operated Bosley Business Law, which he founded after more than a decade of sophisticated corporate and securities
transactional experience at some of the world's largest and most reputable corporate law firms. Mr. Bosley also served as general
counsel of a Sacramento-based venture capital and professional services firm. He is a frequent speaker on legal issues related to start-ups,
mergers and acquisitions and venture capital transactions. Mr. Bosley is a graduate of the Duke University School of Law, graduating
with high honors and earning the Order of the Coif. He received his B.A. in Economics from California State University (Sacramento).

 Gerald
(J.D.) Roberts, Jr., age 65, Director. Mr. Roberts is Vice President of Strategy and Business Development at a Fortune 50 Corporation,
having served in that capacity since 2018, and has served as a director of the Company since January 2022. In the previous 20 years,
he held several senior roles at Aerojet Rocketdyne Holdings, Inc. and GenCorp/Aerojet. His career began in the aerospace and electronics
industries in the United States and Australia, where he worked with companies including E-Systems, McDonnell Douglas, Northrop-Grumman,
Gulfstream, Learjet and Hawker de Havilland. Mr. Roberts combined his credentials in engineering, finance and operations and his significant
experience in strategic planning, organizational restructuring, and mergers, acquisitions, and divestitures to build value in international
business opportunities. He received his MBA (Finance) from the
University of California, Davis, and his B.S. in Mechanical Engineering from Virginia Tech.

 Philip
Wong, age 45, Director. Mr Wong has served as a director of the Company since January 2022 and is CEO of Shark AI Capital Corporation,
an innovative business lending firm which he co-founded in 2020. Previously, he served as Chief Investment Officer of American Credit,
Inc., as a Commercial Loan Officer at Applepie Capital, Inc., as Vice President / Senior Relationship Manager at Bank of the West / BNP
Paribas, and as First Vice President / Senior Relationship Manager at Preferred Bank, among other roles in banking and business credit.
Mr. Wong and has completed certifications in agile software development, software products management, healthcare analytics, and product
management and marketing. He received his B.A. in Asian Studies from San Francisco State University.

 Executive
Officers Other Than Nominees

 Jana
Schwan. Ms. Schwan has been employed by the Company in progressively more responsible roles in operational, purchasing, and product
development capacities since September 2002, and currently leads its Sales, Marketing and Business Development activities in addition
to all Operations of the Company. Ms. Schwan was named Vice President of Operations in 2017 and Chief Operating Officer in 2020.

 Jana
Schwan is the daughter of John Schwan, who prior to his retirement from the Company served in several capacities, including as Chairman
of the Board of Directors.

 Except
as disclosed in this Item 10 or Item 13 (Certain Relationships and Related Transactions, and Director Independence), there are no arrangements
or understandings with major shareholders, customers, suppliers or others pursuant to which any of our directors or members of senior
management were selected as such. In addition, there are no family relationships among our executive officers and directors.

 Our
future success depends, in significant part, on the continued service of certain key execute officers, managers, and others in various
aspects of our business. We may not be able to find an appropriate replacement for any of our key personnel. Any loss or interruption
of our key personnel's service to the Company could adversely affect our ability to implement our business plan.

 Corporate
Governance

 The
business and affairs of the Company are managed under the direction of the Board of Directors in accordance with the Illinois Business
Corporation Act and the Articles of Incorporation and By-laws of the Company, as amended. Members of the Board of Directors are kept
informed of the Company's business through discussions with the Chairman of the Board of Directors, the Chief Executive Officer,
the President and other officers, by reviewing materials provided to them and by participating in meetings of the Board of Directors
and its committees.

 As
of January 2022, the Board of Directors had five members. The Board has determined that each of Douglas Bosley, Gerald (J.D.) Roberts,
Jr., and Philip Wong, presently directors of the Company, are independent based upon the application of the rules and standards of the
NASDAQ Stock Market.

 The
Board of Directors met three times during 2023. No Director was absent for more than one meeting during 2023.

 Board
Leadership Structure

 Yubao
Li is Chairman of the Board of Directors, Frank Cesario is Chief Executive Officer and Jana Schwan is Chief Operating Officer. Mr. Cesario
and Ms. Schwan are responsible for senior management functions. Mr. Cesario reports into the Board of Directors. The Board of Directors
believes that this combination and allocation of roles provides the most efficient and effective leadership model for the Company, providing
perspective and direction with regard to business strategies and plans to both the Board and management. The Company has no bylaw or
policy in place that mandates that an officer serve as Chairman of the Board. The Board of Directors periodically evaluates its leadership
structure.

 Mr.
Wong has been designated as the lead independent director. Mr. Wong is responsible for (i) communicating regularly with the Chief Executive
Officer and other officers of the Company on behalf of the Board of Directors, and particularly the independent members of the Board
of Directors, and (ii) calling separate meetings of the independent directors of the Company. At any such meetings, only independent
directors are present and the independent directors are free to discuss any aspect of the Company's business and risk management
without the influence of interested directors or management.

 All
members of the Company's Audit, Compensation and Nominating and Governance Committees have been determined to be independent based
on application of the rules and standards of the NASDAQ Stock Market.

 Board
Role in Risk Oversight

 The
Board of Directors plays an active role, as a whole and at the committee level, in overseeing management of the Company's risks.
The Board regularly reviews information regarding our credit, liquidity and operations, as well as the risks associated with each. The
Audit Committee oversees management of financial risks through regular meetings with the Company's independent registered public
accounting firm and the Company's Chief Executive Officer, President and Chief Financial Officer. The Company's Compensation
Committee evaluates and addresses risks relating to executive compensation, our incentive compensation plans and other compensatory arrangements.
The Nominating and Governance Committee manages risks associated with the independence of the Board of Directors and potential conflicts
of interest. While each committee is responsible for evaluating certain risks and overseeing the management of those risks, the entire
Board of Directors is regularly informed through management and committee reports to the full Board about these and other operational
risks.

 Committees
of the Board of Directors

 The
Board of Directors has standing Audit, Compensation and Nominating and Governance Committees.

 Audit
Committee

 Since
2000, the Company has had a standing Audit Committee, which is presently composed of Mr. Wong (Chairman), Mr. Bosley and Mr. Roberts.
Each of the members of the Audit Committee is independent based on the application of the rules and standards of the NASDAQ Stock Market
and Rule 10a-3(b) under the Securities Exchange Act of 1934. Mr. Wong has been designated as, and is, the Company's "Audit
Committee Financial Expert" in accordance with Item 407(d)(5) of Regulation S-K and meets the requirements for an audit committee
expert as set forth in that item. The Audit Committee has primary responsibility meetings with management and independent auditors to
discuss the Company's financial statements. The Company's Board of Directors has adopted a written charter, as amended, for
the Company's Audit Committee, a copy of which has been posted and can be viewed on the Company's Internet website at
under the section entitled "Investor Relations." In addition, the Audit Committee has adopted a complaint monitoring procedure
to enable confidential and anonymous reporting to the Audit Committee of concerns regarding, among other things, questionable accounting
or auditing matters. The Audit Committee has primary responsibility for:

 Appointing,
compensating, and retaining our registered independent public accounting firm;

 Overseeing
the work performed by any outside accounting firm;

 Assisting
the Board of Directors in fulfilling its responsibility by reviewing the financial reports provided by us to the SEC, our shareholders,
or to the general public, as well as the Company's internal financial and accounting controls; and

 Recommending,
establishing, and monitoring procedures designed to improve the quality and reliability of the disclosure of our financial condition
and results of operations.

 The
Audit Committee met once during 2023.

 Compensation
Committee

 The
Compensation Committee is composed of Mr. Roberts (Chairman), Mr. Bosley and Mr. Wong. The Board has determined that each of the members
of the Compensation Committee is independent as defined in the listing standards for the NASDAQ Stock Market. The Compensation Committee
reviews and acts on the Company's executive compensation and employee benefit and retirement plans, including their establishment,
modification and administration. It also recommends to the Board of Directors the compensation of the Chief Executive Officer and certain
other executive officers. The Compensation Committee has a charter which has been posted and can be viewed on the Company's Internet
website at  under the section entitled "Investor Relations." The Compensation Committee met twice
in 2023.

 Nominating
and Governance Committee

 In
2005, the Company established a Nominating and Governance Committee. The Nominating and Governance Committee consists of Mr. Bosley (Chairman),
Mr. Roberts and Mr. Wong. The Nominating and Governance Committee does not have a charter. The Board of Directors has determined that
each of the members of the Nominating and Governance Committee is independent as defined in the listing standards for the NASDAQ Stock
Market.

 The
Nominating and Governance Committee has not adopted a formal policy with regard to consideration of director candidates recommended by
security holders. The Company believes that continuing service of qualified incumbent members of the Board of Directors promotes stability
and continuity at the Board level, contributes to the Board's ability to work as a collective body and provides the benefit of
familiarity and insight into the Company's affairs. Accordingly, the process of the Nominating and Governance Committee for identifying
nominees reflects the Company's practice of re-nominating incumbent directors who continue to satisfy the criteria for membership
on the Board. For vacancies that are anticipated on the Board of Directors, the Nominating and Governance Committee intends to seek out
and evaluate potential candidates from a variety of sources that may include recommendations by security holders, members of management,
the Board of Directors, consultants and others. The minimum qualifications for potential candidates for the Board of Directors include
demonstrated business experience, decision-making abilities, personal integrity and a good reputation.

 The
Board's statement regarding diversity is below. This has become a larger factor in the Nominating Committee's evaluation
of potential candidates. While there is no formal policy for considering diversity when nominating a potential director, it is a consideration
that is evaluated along with other qualifications of potential candidates, and broadly a goal of the Company. In light of the foregoing,
it is believed that a formal, written policy and procedure with regard to consideration of director candidates recommended by security
holders is not necessary in order for the Nominating and Governance Committee to perform its duties.

 The
Nominating Committee did not meet in 2023. All of the independent directors of the Board of Directors participated in the nominating
process and, in separate session, voted in favor of recommending to the Board of Directors the nomination of each of the nominees for
election as directors.

 Board
Diversity

 The
current Board has five directors, all male, two of whom are of Asian background and three Caucasian. The Board recently had two female
directors who retired from the Board during January 2022. With only five directors, the Company has limited opportunity to maintain the
breadth of diversity it seeks. The Company has made diversity a goal, particularly as it moved from a 100% Caucasian, 100% male Board
of Directors at the beginning of 2020 to three Asian directors, two of whom female, later that year. The Company plans to continue to
strive for broad representation on its Board of Directors.

 Section
16(a) Beneficial Ownership Reporting Compliance

 Section
16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of ownership and changes in ownership with the Securities
and Exchange Commission and with the NASDAQ Stock Market. Officers, directors and greater than ten-percent shareholders are required
by SEC regulation to furnish the Company with copies of all Section 16(a) forms they file.

 Based
solely on a review of such forms furnished to the Company, the Company believes that during calendar year 2023, all Section 16(a) filing
requirements applicable to the officers, directors and ten-percent beneficial shareholders were satisfied.

 Code
of Ethics

 The
Company has adopted a code of ethics that applies to its senior executive and financial officers. The Company's Code of Ethics
seeks to promote (i) honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal
and professional relationships, (ii) full, fair, accurate, timely and understandable disclosure of information to the Commission, (iii)
compliance with applicable governmental laws, rules and regulations, (iv) prompt internal reporting of violations of the Code to predesignated
persons, and (v) accountability for adherence to the Code. A copy of the Code of Ethics has been posted and may be viewed on the Company's
Internet website at  under the heading "Investor Relations." The Company will provide to any
person without charge upon request a copy of the Code of Ethics. You may make such request by sending a written request to the Corporate
Secretary at 22160 N. Pepper Road, Lake Barrington, Illinois 60010 and providing a return address.

 Executive
Compensation Recovery ("Clawback") Policy

2023, the Company adopted an Executive Compensation Recovery ("Clawback") Policy, wherein certain performance-based executive
compensation may be recovered by the Company if subsequent restatement or other adjustment negatively impacts the awarding of such incentive
compensation during a three year lookback period and under certain conditions as further defined in the policy.

 Item
No. 11 – Executive Compensation

 The
following table sets forth summary compensation information with respect to the Principal Executive Officer and each of the two other
most highly compensated executive officers. These individuals, including the Principal Executive Officer, are collectively referred to
in this proxy statement as the Named Executive Officers.

 Non-Equity

 Option

 Incentive Plan

 All other

 Name/Title

 Year

 Salary

 Awards

 Compensation

 compensation

 Total

 (1)

 (2)

 (3)

 Frank Cesario

 2023

 $
 250,000

 $
 39,400

 $
 -

 $
 -

 $
 289,400

 Chief Executive Officer(4)

 2022

 $
 235,577

 $
 102,500

 $
 -

 $
 -

 $
 338,077

 Jana M. Schwan

 2023

 $
 225,166

 $
 14,000

 $
 -

 $
 9,500

 $
 248,666

 Chief Operating Officer (5)

 2022

 $
 201,910

 $
 43,000

 $
 -

 $
 9,500

 $
 254,410

 SUMMARY
COMPENSATION TABLE

 (1)

 Reflects
 the compensation expense recognized in 2023 and 2022 for stock awards under ASC Topic 718 as reported in the Company's audited
 financial statements.

 (2)

 Amounts
 determined under the Company's incentive compensation program.

 (3)

 Amounts
 for include matching 401(k) contributions and insurance premiums

 (4)

 Mr.
 Cesario rejoined the Company in January 2022 as Chief Executive Officer and Acting Chief Financial Officer.

 (5)

 Ms.
 Schwan became Chief Operating Officer in 2020.

 Narrative
Disclosure for Summary Compensation Table

 Employment
Agreements with Our Named Executive Officers

 No
employment agreements existed until January 2022, when Mr. Cesario entered into an employment agreement with the Company. That agreement
includes a base salary of $250,000 per year. Mr. Cesario received an inducement grant of stock in the amount of 250,000 shares, 25,000
of which vested immediately, with the remaining shares scheduled to vest based upon the achievement of certain goals and objectives as
set forth in the agreement. Mr. Cesario is eligible to receive a performance-based bonus of $300,000. In the event that Mr. Cesario is
terminated without cause, he is eligible to receive twelve (12) months of salary in accordance with the agreement.

 Information
Relating to Cash Incentives

 The
Board of Directors previously had adopted an Incentive Compensation Plan providing for annual incentive compensation to be paid to executive
and managerial employees of the Company. Under the Plan, designated Named Executive Officers and several other executive officers and
managers may receive incentive compensation payments, determined on a quarterly and annual basis, based upon the income of the Company
before provision for income tax or for incentive compensation if the net income exceeds a threshold amount of profit for any quarter
of $100,000 and, for the year, of $250,000. The benefits under the Plan are divided into two Pools of compensation. Pool I (representing
the largest pool of incentive compensation) covers senior executive officers and managers who participate in the pool of incentive compensation
based upon a percentage allocation recommended by the Compensation Committee and determined by the Board of Directors each year. Pool
II covers other executives and managers who are selected to participate in proportions determined by management. The Compensation Committee
recommends the amount of the incentive compensation awards which, in the aggregate, may not exceed sixteen percent of the net income
of the Company (before provision for income tax or incentive compensation under the Plan). Further, the amount of incentive compensation
to any participant may not exceed the annual base compensation of the participant. The Compensation Committee believed such incentive
compensation motivates participants to achieve strong profitability which is viewed as the most significant element of corporate performance,
provides rewards for strong corporate performance and aligns the incentive with the interests of the shareholders. Incentive compensation
participation levels are generally determined during the first quarter of each fiscal year.

 In
determining the executives who participate in the incentive compensation awards in Pool I each year, and the relative amount of the award
to each participant, the Compensation Committee considers and takes into account (i) the position of the executive, (ii) the level of
responsibility and authority of the executive, (iii) the performance of the executive, and (iv) the extent to which the executive is
in a position to affect the financial results and profitability of the Company. The current Board of Directors is considering a revised
incentive plan and terminating the plan described in this section. No replacement plan has yet been adopted, but the Board of Directors
and Management have both indicated their desire to change this program.

 Long-Term
Equity Incentives

 The
Board of Directors adopted and approved a new incentive option plan in April 2018 which was submitted to, and approved by, our shareholders
at the annual meeting of shareholders on June 8, 2018 (the "Plan"). This Plan updated and replaced the prior Stock Incentive
Plan from 2009. Under the Plan, the Compensation Committee of the Board of Directors is authorized to issue incentive options, non-statutory
options, restricted stock awards and stock grants to officers, directors, management personnel and consultants of the Company. The Board
of Directors determined that no further options would be granted under the 2009 Incentive Stock Plan.

 Stock
and option grants under the Plan will be determined from time to time by the Compensation Committee in consultation with management.
The actual grant for each executive is determined by taking into consideration (i) individual performance, (ii) corporate performance
and (iii) prior grants to, or stock ownership of the Company by, the executive or director. Generally, stock options are granted with
an exercise price equal to or greater than the closing price of the Company's common stock on the NASDAQ Stock Market on the date
of the grant.

2023, each of the three independent Directors was granted 5,000 shares of restricted stock that vest over 12 months.

2022, each of the three independent Directors was granted 5,000 shares of restricted stock that vest over 12 months.

 Effective
January 2022, and in accordance with the Employment Agreement of Chief Executive Officer Frank Cesario, a grant of restricted stock was
made in the amount of 250,000 shares. 25,000 shares vested immediately, while the remaining 225,000 are subject to performance conditions
as further detailed in the share grant. Specifically, the restrictions on the remaining 225,000 shares will lapse based on satisfaction
of the following performance goals and objectives and continued employment through the date of meeting such targets:

The restrictions on 56,250 shares of the award will lapse and the award will vest when the Company's trailing-twelve-month EBITDA
equals or exceeds $1 million at any time on or after January 1, 2022.

The restrictions on 56,250 shares of the award will lapse and the award will vest in the event the Company's common shares trade
at or above $5/share for ten or more consecutive trading days.

The restrictions on 56,250 shares of the award will lapse and the award will vestwhen the Company's operating cash flow, calculated
cumulatively from the date of employment, equals or exceeds $1.5 million. The Compensation Committee determined this condition was satisfied
during February 2023.

The restrictions on 56,250 shares of the award will lapse and the award will vest in the event the Company is able to refinance its current
lender with a traditional lender on terms and conditions customary for such financing. On August 23, 2022, the Compensation Committee
determined this condition had been satisfied with an amended agreement with the Company's lender.

2022, the Compensation Committee awarded the Company's Chief Operating Officer a grant of 100,000 shares of restricted stock. 20,000
of those shares vest over a 12 month period while the remaining shares vest 20,000 each based on the performance conditions above.

 The
Compensation Committee (as defined in the Plan) shall be responsible for determining when the conditions above have been satisfied. The
Company records compensation expense with each vesting, and records a likelihood of vesting weighted analysis to the extent it has visibility
to do so. Without such visibility, it considers such probability as de minimis until additional information is available.

 Retirement
Benefits

 The
Company maintains a 401(k) employee savings plan in which all salaried employees are eligible to participate. The plan is a tax qualified
retirement plan.

 Under
the 401(k) Plan, employees may contribute up to 15% of their eligible compensation to the Plan and the Company will contribute a matching
amount to the Plan each year. Participating employees may direct the investment of individual and company contributions into one or more
of the investment options offered by the Plan. The Company has the ability to make matching contributions under the Plan, but none were
made during 2023 or 2022.

 OUTSTANDING
EQUITY AWARDS

 Equity Awards

 Number of Securities Underlying

 Unvested Performance Grants

 Name

 Exercisable

 Unexercisable

 Price ($)

 Frank J. Cesario

 -

 112,500

 $
 -

 Jana M. Schwan

 -

 40,000

 $
 -

 EQUITY
COMPENSATION PLAN INFORMATION

 The
following table sets forth the common stock of the Company authorized for issuance under the Company's equity compensation plans
as of December 31, 2023.

 Plan Category

 Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights

 Weighted-average
exercise price of
outstanding options,
warrants and rights

 Number of securities
remaining available for
future issuance under
equity compensation plans

 Equity compensation plans by security holders

 182,500

 $
 -

 182,500

 Equity compensation plans not approved by security holders

 -

 -

 -

 Total

 182,500

 $
 -

 182,500

 Payments
Upon Termination or Change of Control

 The
employment agreement with Frank Cesario, effective January 2022, includes payment of twelve months salary upon termination except for
cause as is defined by that agreement.

Compensation

 The
following table sets forth the compensation of directors of the Company during the year ended December 31, 2023:

 DIRECTOR
COMPENSATION

 Director's

 Stock

 All other

 Name

 Fees

 Awards (1)

 compensation

 Total

 Yubao Li

 $
 -

 $
 -

 $
 -

 $
 -

 Frank Cesario

 $
 -

 $
 -

 $
 -

 $
 -

 Douglas Bosley

 $
 12,000

 $
 4,750

 $
 -

 $
 16,750

 JD Roberts

 $
 12,000

 $
 4,750

 $
 -

 $
 16,750

 Philip Wong

 $
 12,000

 $
 4,750

 $
 -

 $
 16,750

 (1)

 Reflects
 the compensation expense recognized in 2022 for stock awards under ASC Topic 718 as reported in the Company's audited financial
 statements.

 Narrative
Description of Director Compensation

 Payments
to non-employee directors were suspended during 2019, and restarted as of January 2022.

 Agreements
Between Third Parties and Directors

 There
are no agreements or arrangements by which any directors or nominees are to receive compensation or other payments from third parties
in return for serving on the Board of Directors.

 Item
No. 12 – Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 The
Board of Directors knows of no other matters to be presented for shareholder action at the Annual Meeting. On matters which may be raised
at the Annual Meeting that are not covered by this Proxy Statement, the persons named in the proxy will have full discretionary authority
to vote.

 BENEFICIAL
OWNERSHIP OF SHARES BY MANAGEMENT

 AND
SIGNIFICANT SHAREHOLDERS

 The
following table provides information concerning the beneficial ownership of the Company's Common Stock by each director and nominee
for director, certain executive officers, and by all directors and officers of the Company as a group as of December 31, 2023. In addition,
the table provides information concerning the current beneficial owners, if any, known to the Company to hold more than 5 percent of
the outstanding Common Stock of the Company.

 The
amounts and percentage of stock beneficially owned are reported based on regulations of the Securities and Exchange Commission ("SEC")
governing the determination of beneficial ownership of securities. Under the rules of the SEC, a person is deemed to be a "beneficial
owner" of a security if that person has or shares "voting power," which includes the power to dispose of or to direct
the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right
to acquire beneficial ownership within 60 days after December 31, 2023. Under these rules, more than one person may be deemed a beneficial
owner of the same securities and a person may be deemed a beneficial owner of securities in which he has no economic interest. The percentage
of Common Stock beneficially owned is based on 20,771,937 shares of Common Stock outstanding as of December 31, 2023.

 Shares of
 Common Stock

 Shares of
 Preferred Stock

 Percent of

 Name and Address of Beneficial Owner

 Beneficially Owned

 Beneficially Owned

 Common

 Stock

 Yubao Li (Chairman of the Board of Directors)/Yunhong

 7,100,000
 (1)

 -

 %

 Mr. Shuai Wang

 1,888,078

 -

 %

 Icy Mellon LLC

 1,826,399

 -

 %

 Mitzners Consulting

 1,564,691

 -

 %

 Frank Cesario (Chief Executive Officer, Director, Acting Chief Financial Officer)

 139,500

 -

 *

 Jana Schwan (Chief Operating Officer)

 65,725

 -

 *

 Douglas Bosley, Director

 10,000

 -

 *

 Gerald JD Roberts, Jr., Director

 10,000

 -

 *

 Philip Wong, Director

 10,000

 -

 *

 All Current Directors and Executive Officers as a group

 7,335,225

 -

 %

 (1)

 These
 shares are held by LF Investments Pte. Ltd., a Singapore private limited company controlled by Mr. Li.

 *Less
than one percent

 Item
No. 13 – Certain Relationships and Related Transactions

 As
of December 2017, Mr. John H. Schwan was owed a total of $1.1 million, with additional accrued interest of $0.4 million, by the
Company. As part of the December 2017 financing with PNC Bank, Mr. Schwan executed a subordination agreement related to these amounts
due him, as evidenced by a related note representing the amount owed to Mr. Schwan. During January 2019, Mr. Schwan and the Company
agreed to an exchange of $0.6 million of his debt for approximately 181,000 shares of CTI common stock at the then market rate of
$3.32 per share. As of December 31, 2023, the balance of Mr. Schwan's note was approximately $1.3 million, including accrued
interest. Mr. Schwan is the father of Jana Schwan. Per agreement between the parties, this note was repaid in three installments:
$0.5 million on January 2, 2024, another $0.5 million on January 16, 2024, and the remaining $0.3 million during March
2024.

 Relationships
and transactions in which the Company and its directors and executive officers or their immediate family members are participants or
have conflicts of interest are reviewed and approved by the Audit Committee. While the Audit Committee has not adopted a written policy
for the review and approval of related party transactions, in determining whether to approve or ratify any such transaction, the Audit
Committee considers, in addition to such other factors it may deem appropriate in the circumstances, whether (i) the transaction is fair
and reasonable to the Company, (ii) under all of the circumstances, the transaction is in, or not inconsistent with, the Company's
best interests, and (iii) the transaction will be on terms no less favorable to the Company than could have been obtained in an arms'
length transaction with an unrelated third party. The Audit Committee, in its discretion, may request information from any party to facilitate
its consideration of matter. The Audit Committee does not allow a director to participate in any review, approval or ratification of
any transaction if he or she, or his or her immediate family member, has a direct or indirect material interest in the transaction.

 Item
No. 14 – Principal Accountant Fees and Services

 The
following table sets forth the amount of fees billed by our independent registered public accounting firm, for professional services
during the year. A combination of LJ Soldinger Associates LP and BF Borgers CPA, PC for the year ended December 31, 2022, and BF Borgers
CPA, PC for the year ended December 31, 2023:

 Dec. 31, 2023

 Dec. 31, 2022

 Audit Fees (1)

 $
 357,500

 $
 330,100

 Other Audit Related Fees (2)

 -

 -

 All Other Fees (3)

 -

 6,000

 Total Fees

 $
 357,500

 $
 336,100

 (1)

 Includes
 the annual financial statement audit and limited quarterly reviews and expenses.

 (2)

 Includes
 fees and expenses for other audit related activity.

 (3)

 May
 represent tax services and other consulting services.

 All
audits, tax and other services to be performed for the Company must be pre-approved by the Audit Committee. The Audit Committee reviews
the description of services and an estimate of the anticipated costs to perform those services. Services not previously approved cannot
commence until such approval has been granted. Pre-approval is granted usually at regularly scheduled meetings. If unanticipated items
arise between meetings of the Audit Committee, the Audit Committee has delegated approval authority to the Chairman of the Audit Committee,
in which case the Chairman communicates such pre-approvals to the full Committee at its next meeting.

 The
Audit Committee of the Board of Directors reviews all relationships with its independent auditors, including the provision of non-audit
services, which may relate to the independent registered public accounting firm's independence.

 PART
IV

 Item
No. 15 – Exhibits and Financial Statement Schedules

 (a)(1)
The following documents are filed under pages F-1 through F-20 and are included as part of this Form 10-K:

 REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 CONSOLIDATED BALANCE SHEETS

 CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

 CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

 CONSOLIDATED STATEMENTS OF CASH FLOWS

 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 (a)(2)
All financial statement schedules are omitted because the information is inapplicable or presented in the notes to the financial statements,
except for Schedule II – Valuation and qualifying accounts.

 (a)(3)
Exhibits required by Item 601 of Regulation S-K are incorporated herein by reference and are listed on the attached Exhibit Index.

 Exhibit

 Number

 Document

 3.1

 Restated Articles of Incorporation (Incorporated by reference to Exhibit A to Registrant's Schedule 14A Definitive Proxy Statement filed April 29, 2015).

 3.2

 Amended and Restated By-Laws of Yunhong CTI, Ltd (Incorporated by reference to Exhibit 3.2, contained in Registrant's Form 8-K filed on March 17, 2017).

 3.3

 Amended and Restated By-Laws o f Yunhong Green CTI Ltd (Incorporated by reference to Exhibit 3.2 contained in Registrant's Form 8-K filed on September 6, 2023)

 3.4

 Amended and Restated Certificate of Designation of Series A Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1, contained in the Registrant's form 8-K filed on February 19, 2020).

 3.5

 Articles of Amendment to the Registrant's Articles of Incorporation (Incorporated by reference to Exhibit 3.1, contained in the Registrant's form 8-K filed on March 16, 2020).

 3.6

 Certificate of Designations, Preferences and Rights of Series B Redeemable Convertible Preferred Stock, No Par Value (Incorporated by reference to Exhibit 3.1 contained in Registrant's Form 8-K/A filed on May 5, 2021).

 3.7

 Certificate of Designations of Series C Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in Registrant's Form 8-K/A filed on May 5, 2021).

 3.8

 Certificate of Designations of Series D Convertible Preferred Stock (Incorporated by reference to Exhibit 3.1 contained in Registrant's Form 8-K filed on December 7, 2021).

 4.1

 Form of Yunhong CTI, Ltd common stock certificate (Incorporated by reference to Exhibit 4.1 contained in Registrant's Report on Form 10-K dated March 31, 2017).

 10.1

 Yunhong CTI, Ltd 2018 Stock Incentive Plan (Incorporated by Reference to Schedule A contained in Registrant's 14A Definitive Proxy Statement, as filed with the Commission on April 30, 2018)

 10.2

 Subscription Agreement among Registrant and John H. Schwan dated December 21, 2018 (Incorporated by reference to Exhibit 10.1, contained in Registrant's form 8-K filed on January 17, 2019).

 10.3

 Stock Purchase Agreement, dated as of January 3, 2020 (Incorporated by reference to Exhibit 10.1, contain in Registrants form 8-K filed on January 3, 2020).

 10.4

 Amendment No. 1 to Securities Purchase Agreement, dated as of February 24, 2020 (Incorporated by reference to Exhibit 10.1, contained in the Registrant's form 8-K filed on February 26, 2020).

 10.5

 Amendment No.2 to Securities Purchase Agreement dated as of April 13, 2020 (Incorporated by reference to Exhibit 10.1, contained in Registrant's form 8-K filed on April 17, 2020.

 10.6

 Stock Purchase Agreement (Incorporated by reference to Exhibit 10.1 contained in Registrant's Form 8-K filed on November 25, 2020).

 10.7

 Securities Purchase Agreement (Incorporated by reference to Exhibit 10.1 contained in Registrant's Form 8-K filed on January 15, 2021).

 10.8

 Purchase and Sale Agreement (Incorporated by reference to Exhibit 10.1 contained in Registrant's Form 8-K filed on April 29, 2021).

 10.9

 Lease Agreement (Incorporated by reference to Exhibit 10.2 contained in Registrant's Form 8-K filed on April 29, 2021).

 10.10

 Promissory Note (Incorporated by reference to Exhibit 10.3 contained in Registrant's Form 8-K filed on April 29, 2021).

 10.11

 Stock Redemption Agreement (Incorporated by reference to Exhibit 10.1 contained in Registrant's Form 8-K filed on August 5, 2021).

 10.12

 Loan and Security Agreement (Incorporated by reference to Exhibit 10.1 contained in Registrant's Form 8-K filed on October 6, 2021).

 10.13

 Stock Purchase Agreement (Incorporated by reference to Exhibit 10.1 contained in Registrant's Form 8-K filed on December 7, 2021).

 10.14

 Warrant (Incorporated by reference to Exhibit 10.2 contained in Registrant's Form 8-K filed on December 7, 2021).

 10.15

 Employment Agreement (Offer Letter) between Frank Cesario and the Company dated December 29, 2021 (Incorporated by reference to Exhibit 10.1 contained in Registrant's Report on Form 8-K filed on January 11, 2022).

 10.16

 Exclusive Distribution Agreement, dated as of January 28, 2023 (Incorporated by reference to Exhibit 99.1 contained in Registrant's Form 8-K filed on February 2, 2023).

 14.1

 Code of Ethics (Incorporated by reference to Exhibit 14 contained in the Registrant's Form 10-K/A Amendment No. 2, as filed with the Commission on October 13, 2004).

 23.1

 Consent of Independent Registered Public Accounting Firm, BF Borgers CPA PC.

 31.1

 Certification of Chief Executive Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).

 31.2

 Certification of Chief Financial Officer pursuant to Rule 13a-14(a) and rule 15d-14(a) of the Securities Exchange Act, as amended (filed herewith).

 32.1

 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (filed herewith).

 Incentive compensation recovery (Clawback) policy

 Interactive
 Data Files, including the following materials from the Company's Annual Report on Form 10-K for the year ended December 31,
 Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements.

 Cover

 (a)

 The
 Exhibits listed in subparagraph (a)(3) of this Item 15 are attached hereto unless incorporated by reference to a previous filing.

 (b)

 The
 Schedule listed in subparagraph (a)(2) of this Item 15 is attached hereto.

 Item
No. 16 – Summary

 None.

 SIGNATURES

 In
accordance with Section 13 or 15(d) of the Exchange Act the Registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized on March 29, 2024.

 Green CTI, LTD

 By:

 /s/
 Frank Cesario

 Frank
 Cesario, Chief Executive Officer, Acting Chief

 Financial
 Officer, Director

 In
accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the Registrant in the capacities
and on the dates indicated.

 Signatures

 Title

 Date

 /s/
 Yubao Li

 Chairman
 of the Board of Directors

 March

 Yubao
 Li

 /s/
 Douglas Bosley

 March

 Douglas
 Bosley

 /s/
 Gerald (J.D.) Roberts, Jr.

 March

 Gerald
 (J.D.) Roberts, Jr.

 /s/
 Philip Wong

 March

 Philip
 Wong

Green CTI, LTD and Subsidiaries

Financial Statements

 Years
ended December 31, 2023 and 2022

 Contents

 Financial Statements:

 Report of Independent Registered Public Accounting Firm (PCAOB ID 5041)

 Consolidated Balance Sheets as of December 31, 2023 and 2022

 Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2023 and 2022

 Consolidated Statements of Shareholders' Equity as of December 31, 2023 and 2022

 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022

 Notes to Consolidated Financial Statements for the years ended December 31, 2023 and 2022

 Financial
Statement Schedule:

 All
other schedules for which a provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable and, therefore, have been omitted.

 Report
of Independent Registered Public Accounting Firm

 To
the shareholders and the board of directors of Yunhong Green CTI Ltd.

 Opinion
on the Financial Statements

 We
have audited the accompanying consolidated balance sheet of Yunhong Green CTI Ltd. (the "Company") as of December 31, 2023,
the related statement of operations, shareholders' equity (deficit), and cash flows for the year then ended, and the related notes
(collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows
for the year then ended, in conformity with accounting principles generally accepted in the United States.

 Substantial
Doubt about the Company's Ability to Continue as a Going Concern

 The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note
3 to the financial statements, the Company's significant operating losses raise substantial doubt about its ability to continue
as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's
financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides
a reasonable basis for our opinion.

 Critical
Audit Matters

 Critical
audit matters are matters arising from the current period audit of the financial statements that were communicated or are required to
be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements
and (2) involved especially challenging, subjective, or complex judgments.

 We
determined that there are no critical audit matters.

 /s
BF Borgers CPA PC

 BF
Borgers CPA PC (PCAOB ID 5041)

 We
have served as the Company's auditor since 2022

 Lakewood,
CO

 March

 F- 1

Green CTI, Ltd

Balance Sheets

 2023

 2022

 ASSETS

 Current assets:

 Cash and cash equivalents

 $
 921,000

 $
 146,000

 Accounts receivable, net

 3,975,000

 1,618,000

 7,791,000

 8,325,000

 Prepaid expenses

 332,000

 389,000

 Other current assets

 -

 -

 Total current assets

 13,019,000

 10,478,000

 Property, plant and equipment:

 Machinery and equipment

 17,940,000

 17,723,000

 Office furniture and equipment

 2,084,000

 2,084,000

 Intellectual property

 783,000

 783,000

 Leasehold improvements

 39,000

 39,000

 Fixtures and equipment at customer locations

 519,000

 519,000

 Projects under construction

 112,000

 108,000

 Property, plant and equipment,
 gross

 21,477,000

 21,256,000

 Less: accumulated depreciation and amortization

 ( 20,613,000
)

 ( 20,334,000
)

 Total property, plant and equipment, net

 864,000

 922,000

 Other assets:

 Operating lease right-of-use

 3,882,000

 Other assets

 -

 -

 Total other assets

 3,882,000

 TOTAL ASSETS

 17,247,000

 15,282,000

 LIABILITIES AND SHAREHOLDERS' EQUITY

 Current liabilities:

 Trade payables

 $
 917,000

 $
 1,313,000

 Line of credit

 4,991,000

 2,878,000

 Notes payable - current portion

 140,000

 289,000

 Notes payable - officers, subordinated

 1,344,000

 -

 Operating lease liabilities

 522,000

 518,000

 Accrued liabilities

 2,226,000

 2,480,000

 Total current liabilities

 10,140,000

 7,478,000

 Long-term liabilities:

 Notes payable – net of current portion

 533,000

 427,000

 Notes payable - officers, subordinated

 -

 1,267,000

 Notes payable

 -

 1,267,000

 Operating lease liabilities

 2,842,000

 Total long-term liabilities

 3,375,000

 5,058,000

 TOTAL LIABILITIES

 13,515,000

 12,536,000

 Equity:

 Yunhong CTI, Ltd shareholders' equity:

 Series B Preferred Stock — no par value, none and 170,000 shares authorized, issued and outstanding at December 31, 2023 and 2022 respectively (liquidation preference - $ 1.7 million as of December 31, 2022)

 -

 1,851,000

 Common stock - no
 par value, 2,000,000,000 and 50,000,000
 shares authorized, 20,815,595
 and 16,102,749
 shares issued and 20,771,937
 and 16,059,991
 shares outstanding at December 31, 2023 and December 31, 2022 respectively

 Paid-in-capital

 6,967,000

 3,895,000

 Accumulated deficit

 ( 24,357,000
)

 ( 24,122,000
)

 Less: Treasury stock, 43,658 shares

)

)

 Total Yunhong CTI, Ltd Shareholders' Equity

 3,732,000

 Total Shareholders' Equity

 3,732,000

 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 $
 17,247,000

 $
 15,282,000

 See
accompanying notes to consolidated financial statements

 F- 2

Green CTI, Ltd

Statements of Operations and Comprehensive Income (Loss)

 2023

 2022

 For the Twelve Months Ended

 2023

 2022

 $
 17,804,000

 $
 18,048,000

 Cost of Sales

 14,546,000

 14,910,000

 Gross profit

 3,258,000

 3,138,000

 Operating expenses:

 General and administrative

 2,995,000

 3,720,000

 Selling

 131,000

 136,000

 Advertising and marketing

 531,000

 402,000

 Total operating expenses

 3,657,000

 4,258,000

 Loss from operations

 ( 399,000
)

 ( 1,120,000
)

 Other (expense) income:

 Interest expense

 ( 628,000
)

 ( 450,000
)

 Other income/(expense)

 792,000

 103,000

 Total other expense, net

 164,000

 ( 347,000
)

 Loss from continuing operations before taxes

)

)

 Income tax expense

 -

 -

 Loss from continuing operations

)

)

 Income (Loss) from discontinued operations, net of tax

 -

 -

 Net Loss

 $
)

 $
)

 Less: Net loss attributable to noncontrolling interest

 -

 -

 Net loss attributable to Yunhong CTI, Ltd

 $
)

 $
)

 Other Comprehensive Income (Loss)

 Foreign currency adjustment

 -

 -

 Reclassification of foreign currency adjustment to earnings

 -

 -

 Comprehensive loss

 $
)

 $
)

 Deemed dividends on preferred stock and amortization of beneficial conversion feature

 $
 ( 11,000
)

 $
 ( 584,000
)

 Net Loss Attributable to Yunhong CTI Ltd Common Shareholders

 $
 ( 246,000
)

 $
 ( 2,051,000
)

 Basic income (loss) per common share

 Basic income (loss) per common share

 $
 ( 0.01
)

 $
 ( 0.22
)

 Diluted income (loss) per common share

 Diluted income (loss) per common share

 $
 ( 0.01
)

 $
 ( 0.22
)

 Weighted average number of shares and equivalent shares of common stock outstanding:

 Basic

 19,526,633

 9,301,888

 Diluted

 19,526,633

 9,301,888

 See
accompanying notes to consolidated financial statements

 F- 3

Green CTI, Ltd

Statements of Shareholders' Equity

 Capital

 (Deficit) Earnings

 Loss

 TOTAL

 Yunhong CTI, Ltd

 Accumulated

 Other

 Less

 Series B Preferred Stock

 Common Stock

 Paid-in

 Accumulated

 Comprehensive

 Treasury Stock

 Capital

 (Deficit) Earnings

 Loss

 TOTAL

 Balance December 31, 2022
 -

 $
 1,851,000

 -

 16,102,749
 -

 $

 $
 3,895,000

 $
 ( 24,122,000
)

 $
 -

)

 $
)

 Series B Convertible Preferred Stock Issuance

 ( 170,000
)

 ( 1,862,000
)

 1,888,078

 1,862,000

 -

 Common stock issued for notes payable and investor deposit

 1,908,336

 884,000

 884,000

 Accrued Deemed Dividend - Series B Preferred Stock

 11,000

 ( 11,000
)

 -

 Equity compensation

 116,250

 21,000

 21,000

 Broker issuance

 125,000

 -

 Conversion of warrants and deferred liability

 675,182

 316,000

 316,000

 Net Income (Loss)
 -

 -

 -

)

)

 Foreign Currency Translation

 -

 -

 -

 -

 Balance December 31, 2023
 -

 -

 $
 -

 -

 20,815,595
 -

 $

 $
 6,967,000

 $
 ( 24,357,000
)

 $
 -

)

 $
)

 $
 3,732,000

 Capital

 (Deficit) Earnings

 TOTAL

 CTI, Ltd

 Less

 A Preferred Stock

 B Preferred Stock

 Series C

 Preferred Stock

 Series D

 Preferred Stock

 Common
 Stock

 Paid-in

 Accumulated

 Treasury
 Stock

 Capital

 (Deficit) Earnings

 TOTAL

 Balance
 December 31, 2021

 500,000

 $
 3,155,000

 $
 1,715,000

 $
 1,630,000

 $
 1,512,000

 5,930,408

 $
 14,538,000

 $
 4,317,000

 $
 ( 22,655,000
)
 -

)

 $
)

 4,051,000

 Balance

 500,000

 $
 3,155,000

 $
 1,715,000

 $
 1,630,000

 $
 1,512,000

 5,930,408

 $
 14,538,000

 $
 4,317,000

 $
 ( 22,655,000
)
 -

)

 $
)

 4,051,000

 Accrued
 Deemed Dividend - Series A Preferred Stock

 267,000

 ( 267,000
)

 -

 Conversion
 Series A Preferred Stoock

 ( 500,000
)

 ( 3,422,000
)

 6,278,990

 3,422,000

 Accrued
 Deemed Dividend - Series B Preferred Stock

 136,000

 ( 136,000
)

 -

 Accrued
 Deemed Dividend - Series C Preferred Stock

 91,000

 ( 91,000
)

 -

 Conversion
 Series C Preferred Stoock

 ( 170,000
)

 ( 1,721,000
)

 1,985,702

 1,721,000

 Accrued
 Deemed Dividend - Series D Preferred Stock

 91,000

 ( 91,000
)

 -

 Conversion
 Series D Preferred Stoock

 ( 170,000
)

 ( 1,603,000
)

 1,826,399

 1,603,000

 Stock
 Issuance

 81,250

 ( 1,000
)

 1,000

 -

 Equity
 Compensation Charge

 162,000

 162,000

 Net
 Income (Loss)

)
 -

 -

 -

)

 Balance
 December 31, 2022

 -

 $
 -

 $
 1,851,000

 -

 $
 -

 -

 $
 -

 16,102,749

 $

 $
 3,895,000

 $
 ( 24,122,000
)
 -

)

 $
)

 Balance

 -

 $
 -

 $
 1,851,000

 -

 $
 -

 -

 $
 -

 16,102,749

 $

 $
 3,895,000

 $
 ( 24,122,000
)
 -

)

 $
)

 See
accompanying notes to consolidated financial statements

 F- 4

Green CTI, Ltd

Statements of Cash Flows

 2023

 2022

 For the Year Ended December 31,

 2023

 2022

 Cash flows from operating activities:

 Net loss

 $
)

 $
)

 Adjustments to reconcile net loss to net cash provided by (used in) operating activites

 Depreciation and amortization

 279,000

 383,000

 Equity compensation charge

 21,000

 162,000

 Change in assets and liabilities:

 Accounts receivable

 ( 2,357,000
)

 1,825,000
)

 534,000

 ( 449,000
)

 Prepaid expenses and other assets

 57,000

 836,000

 Trade payables

 ( 396,000
)

 ( 819,000
)

 Accrued liabilities

 980,000

 1,897,000
)

 Net cash (used in) provided by operating activities

 ( 1,117,000
)

 2,368,000
)

 Cash flows from investing activities:

 Purchases of property, plant and equipment

 ( 221,000
)

 ( 163,000
)

 Proceeds from Sale of building

 -

 -

 Net cash (used in) provided by investing activities

 ( 221,000
)

 ( 163,000
)

 Cash flows from financing activities:

 Repayment of debt and revolving line of credit

 -

 ( 2,125,000
)

 Proceeds from issuance of long-term debt and revolving line of credit

 2,113,000

 -

 Net cash provided by (used in) financing activities

 2,113,000

 ( 2,125,000
)

 Net increase (decrease) in cash and cash equivalents

 775,000

 80,000

 Cash and cash equivalents at beginning of year

 146,000

 66,000

 Cash and cash equivalents at end of year

 $
 921,000

 $
 146,000

 The cash flows related to discontinued operations have not been segregated, and are included in the Consolidated Statements of Cash Flows. The cash and equivalents amounts presented above differ from cash and equivalents in the Consolidated Balance Sheets due to cash included in "Current assets of discontinued operations."

 Supplemental disclosure of cash flow information:

 Cash payments for interest

 $
 551,000

 $
 375,000

 Accrued dividend and accretion on preferred stock

 $
 11,000

 $
 584,000

 Lease right-of-use assets and lease liability

 $
 -

 $
 747,000

 Conversion of preferred stock into common stock

 $
 1,500,000

 $
 6,745,000

 Conversion of notes and deposits into common stock

 $
 1,202,000

 $
 -

 Cash receipts for tax refund

 $
 -

 $
 202,000

 See
accompanying notes to consolidated financial statements

 F- 5

 Notes
to Consolidated Financial Statements of Yunhong Green CTI Ltd.

 Years
Ended December 31, 2023 and 2022

 1.
 Nature of Business

 Nature
of Operations

Green CTI Ltd. (formerly Yunhong CTI Ltd. and prior to that CTI Industries Corporation), its former subsidiaries - United Kingdom subsidiary
(CTI Balloons Limited), Mexican subsidiary (Flexo Universal, S. de R.L. de C.V.), and German subsidiary (CTI Europe GmbH); as well as
current (inactive) subsidiary CTI Supply, Inc. (collectively, the "Company") (i) design, manufacture and distribute metalized
and latex balloon products throughout the world and (ii) 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. Effective
in 2019, the Company determined that it was exiting CTI Balloons Limited and CTI Europe, and during 2021 sold its interest in Flexo Universal.
Accordingly, the operations of these entities were classified as discontinued operations in the financial statements.

 2.
 Summary of Significant Accounting Policies

 Principles
of Consolidation

 The
consolidated financial statements include the accounts of Yunhong Green CTI Ltd., and its wholly owned, inactive, subsidiary CTI Supply,
Inc. All significant intercompany accounts and transactions have been eliminated upon consolidation.

 Variable
Interest Entities

 The
determination of whether or not to consolidate a variable interest entity under U.S. GAAP requires a significant amount of judgment concerning
the degree of control over an entity by its holders of variable interest. To make these judgments, management has conducted an analysis
of the relationship of the holders of variable interest to each other, the design of the entity, the expected operations of the entity,
which holder of variable interests is most "closely associated" to the entity and which holder of variable interests is the
primary beneficiary required to consolidate the entity. Upon the occurrence of certain events, management reviews and reconsiders its
previous conclusion regarding the status of an entity as a variable interest entity.

 Foreign
Currency Translation

 There
are no foreign operations and substantially all activities occur in US Dollars.

 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
valuation allowances for doubtful accounts, inventory valuation, deferred tax assets, goodwill and intangible asset valuation, leasehold
assets and liabilities, Preferred Stock deemed dividends and beneficial conversion feature values, and assumptions used as inputs in
the Black-Scholes option-pricing model.

 Cash
and Cash Equivalents

 Cash
and cash equivalents include cash on hand, demand deposits and short-term investments with original maturities of three months or less.

 Accounts
Receivable

 Trade
receivables are carried at original invoice amount less an estimate for doubtful receivables based on a review of all outstanding amounts
on a monthly basis. Management determines the allowance for doubtful accounts by identifying troubled accounts, evaluating the individual
customer receivables through consideration of the customer's financial condition, credit history and current economic conditions
and use of historical experience applied to an aging of accounts. A trade receivable is considered to be past due if any portion of the
receivable balance is outstanding for a period over the customer's normal terms. Trade receivables are written off when deemed
uncollectible. Recoveries of trade receivables previously written off are recorded when received.

are stated at the lower of cost or net realizable value. Cost is determined using standard costs which approximates costing determined
on a first-in, first-out basis, to reflect the actual cost of production of inventories.

 Production
costs of work in process and finished goods include material, labor and overhead. Inventory is not recorded in excess of net realizable
value.

 F- 6

 Property,
Plant and Equipment

 Property
and equipment are stated at cost. Expenditures for maintenance and repairs are charged to operations as incurred. Depreciation is computed
using the straight-line method over the estimated useful lives of the related assets. Leasehold improvements are amortized on a straight-line
method over the lesser of the estimated useful life or the lease term. The estimated useful lives range as follows:

of Property Plant and Equipment

 (in years)

 Building

 25 - 30

 Machinery and equipment

 3 - 15

 Projects that prolong the life and increase efficiency of machinery

 3 - 5

 Light Machinery

 5 - 10

 Heavy Machinery

 10 - 15

 Office furniture and equipment

 5 - 8

 Intellectual Property

 9 - 15

 Leasehold improvements

 5 - 8

 Furniture and equipment at customer locations

 1 - 3

 Light
machinery consists of forklifts, scissor lifts, and other warehouse machinery. Heavy machinery consists of production equipment including
laminating, printing and converting equipment. Projects in process represent those costs capitalized in connection with construction
of new assets and/or improvements to existing assets including a factor for interest on funds committed to projects in process of $ 112,000
and $ 108,000 for the years ended December 31, 2023 and 2022, respectively. Upon completion, these costs are reclassified to the appropriate
asset class.

 Stock-Based
Compensation

 The
Company has stock-based incentive plans which may grant stock option, restricted stock and unrestricted stock awards. The Company recognizes
stock-based compensation expense based on the grant date fair value of the award and the related vesting terms. The fair value of stock-based
awards is determined using the Black-Scholes model, which incorporates assumptions regarding the risk-free interest rate, expected volatility,
expected option life, and dividend yield. See Note 14 for additional information.

 Fair
Value Measurements

 Current
professional accounting guidance applies to all assets and liabilities that are being measured and reported on a fair value basis. Fair
value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at the measurement date in the principal or most advantageous market. The requirements prescribe a fair value hierarchy
that has three levels of inputs, both observable and unobservable, with use of the lowest possible level of input to determine fair value.
A Level 1 input includes a quoted market price in an active market or the price of an identical asset or liability. Level 2 inputs are
market data other than Level 1 inputs that are observable either directly or indirectly including quoted market prices for similar assets
or liabilities, quoted market prices in an inactive market, and other observable information that can be corroborated by market data.
Level 3 inputs are unobservable and corroborated by little or no market data.

 The
carrying value amounts of the Company's cash and cash equivalents, accounts and notes receivable, accounts payable and other current
liabilities are reasonable estimates of their fair values due to the short-term nature of these instruments. The fair value of business
segments (as needed for purposes of determining indications of impairment to the carrying value of goodwill) is determined using an average
of valuations based on market multiples and discounted cash flows, and consideration of our market capitalization. See Note 5 for further
discussion.

 Valuation
of Long Lived Assets

 The
Company evaluates whether events or circumstances have occurred which indicate that the carrying amounts of long-lived assets (principally
property, plant and equipment) may be impaired or not recoverable. The significant factors that are considered that could trigger an
impairment review include: changes in business strategy, market conditions, or the manner of use of an asset; underperformance relative
to historical or expected future operating results; and negative industry or economic trends. In evaluating an asset for possible impairment,
management estimates that asset's future undiscounted cash flows and appraised values to measure whether the asset is recoverable.
The Company measures the impairment based on the projected discounted cash flows of the asset over its remaining life.

Financing Costs

financing costs are amortized over the term of the loan. Upon a refinancing, existing unamortized deferred financing costs are expensed.

 F- 7

 Income
Taxes

 The
Company accounts for income taxes using the liability method. As such, deferred income taxes reflect the net tax effects of temporary
differences between carrying amounts of assets and liabilities for financial reporting purposes and the amount used for income tax purposes.
Realization of deferred tax assets is dependent upon future earnings, the timing and amount of which are uncertain.

tax assets and liabilities are measured using enacted tax rates expected to be in effect when the anticipated reversal of these differences
is scheduled to occur. Deferred tax assets are reduced by a valuation allowance when management cannot determine, in its opinion, that
it is more likely than not that the Company will recover that recorded value of the deferred tax asset. The Company is subject to U.S.
Federal, state and local taxes as well as foreign taxes in Mexico (through October 2021). U.S. income tax expense and foreign withholding
taxes are provided on remittances of foreign earnings and on unremitted foreign earnings that are not indefinitely reinvested.

 We
utilize a two step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position for recognition
by determining if the weight of available evidence indicates that it is more likely than not the position will be sustained upon tax
authority examination, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax
benefit as the largest amount that is more than 50% likely of being realized upon ultimate settlement. See Note 10 for further discussion.

 Revenue
Recognition

 On
January 1, 2018, we adopted Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers using the
modified retrospective method. The adoption of ASC 606 did not have a material impact on our consolidated financial position or results
of operations, as our revenue arrangements generally consist of a single performance obligation to transfer promised goods at a fixed
price.

 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. In most cases, the Company has a single
product delivery performance obligation. Accrued product returns are estimated based on historical data and evaluation of current information.

 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.

 A
disaggregation of product net sales is presented in Note 16.

 Research
and Development

 The
Company conducts product development and research activities which include (i) creative product development and (ii) engineering. During
the years ended December 31, 2023 and 2022, research and development activities totaled approximately $ 200,000 in each period.

 Advertising
Costs

 The
Company expenses advertising costs as incurred.

 Note
3 – Liquidity and Going Concern

 The
Company's financial statements are prepared using account 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 December 31, 2023 of approximately $ 24 million. The accompanying financial statements
for the year ended December 31, 2023 have been prepared assuming the Company will continue as a going concern. The Company's cash
resources may be insufficient to meet its anticipated needs during the next twelve months. The Company may require additional funding
on acceptable terms to support it is planned future operations. Management's plans include executing on its business plan and raising
external funds to the extent needed. These factors are indicators that there is substantial doubt about the ability to continue as a
going concern for one year from the issuance of the accompanying consolidated financial statements. The accompanying 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. During September 2021, we entered into a new credit agreement with Line Financial. The new agreement with Line Financial
includes a revolving credit facility for up to $ 6 million and a term loan of $ 0.7 million, all supported by the majority of our assets.
This Agreement was extended during September 2023, until September 30, 2025, under substantially similar terms. We also made structural
changes to our business, removing the cash required to support subsidiaries that are no longer part of our group and other operating
improvements.

 We
have been in compliance with our new credit facility since its inceptions. As of December 31, 2023 we have drawn approximately $ 5.0 million
of the maximum $ 6.0 million revolving line of credit, which is available subject to the value of receivables and inventory that support
the line. Through December 31, 2022, the Company received approximately $ 160,000 in Employee Retention Tax Credits ("ERTC")
from the United States Government related to claims that were filed during 2021. $ 123,000 was listed as General and Administrative, while
the remainder was in Other Income. During October 2022 we had outstanding $ 1.2 million of additional ERTC claims that had not been processed.
We factored those claims with a third party for $ 0.9 million. During 2023, these claims were processed and paid, which was forwarded
to the third party. At that time, we recognized approximately $ 0.9 million of the related deferred income.

 F- 8

 4.
New Accounting Pronouncements

 Recent
Accounting Pronouncements

 Credit
Loss

 In
June 2016, the FASB issued authoritative guidance to replace the incurred loss impairment methodology under current GAAP with a methodology
that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform
credit loss estimates. For public entities, the guidance is effective for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years, which for the Company was the first quarter of fiscal 2021. The adoption did not have a material impact
on its consolidated financial statements.

 Income
Taxes

 In
December 2019, the FASB issued authoritative guidance that simplifies the accounting for income taxes as part of the overall initiative
to reduce complexity in accounting standards. Amendments include removal of certain exceptions to the general principles of Accounting
Standards Codification 740, Income Taxes. The amendments also include simplification in several other areas, such as recognition of deferred
tax assets on step-up in tax basis in goodwill and accounting for franchise tax that is partially based on income. For public entities,
the guidance is effective for fiscal years beginning after December 15, 2020, and interim periods within those fiscal years, which for
the Company was the first quarter of fiscal 2021. The adoption did not have a material impact on its consolidated financial statements.

 5.
 Fair Value Disclosures

 U.S.
GAAP clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants. U.S. GAAP also requires that a fair value measurement reflect the
assumptions market participants would use in pricing an asset or liability based upon the best information available.

 U.S.
GAAP establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy categorizes assets
and liabilities at fair value into one of three different levels depending on the observability of the inputs employed in the measurement.
The three levels are defined as follows:

 Level
 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 Level
 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and
 inputs are observable for the asset or liability, or unobservable but corroborated by market data, for substantially the full term
 of the financial instrument.

 Level
 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

 A
financial instrument's categorization within the valuation hierarchy is based upon the lowest level of the input that is significant
to the fair value measurement. The Company's assessment of the significance of a particular input to the fair value measurement
in its entirety requires judgment and considers factors specific to the asset or liability.

 F- 9

 6.
Major Customers

 For
the year ended December 31, 2023, the Company had two customers that accounted for approximately 46 % and 36 % of consolidated net sales
from continuing operations. For the year ended December 31, 2022, those same two customers accounted for approximately 36 % and 35 % of
consolidated net sales. At December 31, 2023 and December 31, 2022, the outstanding accounts receivable balance due from these customers
were $ 3.4 million and $ 0.1 million, respectively.

 7.

are stated at the lower of cost or net realizable value. Cost is determined using standard costs which approximate costing determined
on a first-in, first out basis. Standard costs are reviewed and adjusted periodically and at year end based on actual direct and indirect
production costs. On a periodic basis, the Company reviews its inventory for estimated obsolescence or unmarketable items, primarily
by reviewing future demand requirements and shelf life of the product.

of continuing operations are comprised of the following:

of Inventories

 2023

 2022

 Raw materials

 $
 1,156,000

 $
 1,457,000

 Work in Process

 2,511,000

 2,513,000

 Finished Goods

 4,124,000

 4,355,000

 Total inventories

 $
 7,791,000

 $
 8,325,000

 8.
 Notes Payable

 Long
term debt consists of:

of Long-term Debt Instruments

 2023

 2022

 2023

 2022

 Subordinated notes (officer) due December 2023

 $
 1,344,000

 $
 1,267,000

 Other Note

 -

 172,000

 Term Loan (2023 and 2022 are net of deferred finance costs of $ 0.1 million and $ 0.1 million, respectively)

 673,000

 543,000

 Line of Credit

 4,991,000

 2,878,000

 Total long-term debt

 7,008,000

 4,860,000

 Less current portion

 ( 6,475,000
)

 ( 3,166,000
)

 Total Long-term debt, net of current portion

 $
 533,000

 $
 1,694,000

 F- 10

 Line
of Credit and Term Loan

 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 $ 6 million (the "Maximum Revolver Amount")
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 Senior Facilities were extended on September 30, 2023 until September 30, 2025 on substantially similar
terms.

 Interest
on the Senior Facilities was set at the prime rate published from time to time published in the Wall Street Journal ( 8.5 % as of December
31, 2023), plus 1.95 % per annum, accruing daily and payable monthly. Interest shall be calculated on the basis of a 360-day year for
the actual number of days elapsed. The Term Loan Facility shall be repaid by the Company to Lender in 48 equal monthly installments of
principal and interest, each in the amount of $ 15,000, commencing on November 1, 2021, and continuing on the first day of each month
thereafter until the Term Loan Maturity Date (as defined in the Agreement). Also, the Company paid the Lender collateral monitoring fees
of 4.62 % of the eligible accounts receivable, inventory, and equipment supporting the Revolving Credit Facility and the Term Loan. In
addition, 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 the terms were modified to reduce the collateral monitoring fee to 2.77 % and added a provision that
barred the Company from repaying the facility prior to September 2023. This Term Loan was re-established effective with the September
30, 2023 renewal at the original values on September 30, 2021.

 The
Senior Facilities matured on September 30, 2023 and were extended by agreement between the parties until September 30, 2025. The facility
automatically extends for successive periods of one year each, unless the Company or the Lender gives the other party written notice
of termination not less than 90 days prior to the end of such term or renewal term, as applicable. If the Senior Facilities are renewed,
the Company shall pay the Lender a renewal fee of 1.25 % of the Maximum Revolver Amount and the Term Loan Amount upon each renewal on
the anniversary of the Closing Date. 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 Lender. With this September 30, 2023 renewal, the parties agreed changes in terms including:

 -

 Replace
 the asset monitoring fee on the Revolving Credit Facility with an increase in interest rate, to Prime plus 7.82 % per annum. This
 change was intended by the parties to be financially neutral while easier to administrate.

 -

 Reduce
 the interest rate on the Term Loan to Prime plus 1.45 % per annum, with lender making a one-time additional advance of $ 206,000 to
 reset the Term Loan to $ 731,000.

 -

 Reduce
 the renewal fee for this transaction to $ 50,000 from the formula described above.

 -

 Set
 the Term Loan asset monitoring fee to 0.385 % per month.

 The
Senior Facilities require that the Company maintain Tangible Net Worth of at least $ 4,000,000 or greater ("Minimum Tangible Net
Worth"). Minimum Tangible Net Worth may be adjusted downward by the Lender, from time to time, in its sole and absolute discretion,
based on the effect of non-cash charges and other factors on the calculation of Tangible Net Worth. Other debt subordinated to Lender
is not considered as a reduction of this calculation. The Company believes it was in compliance with this covenant since inception, including
through December 31, 2023.

 The
Senior Facilities contain certain affirmative and negative covenants that limit the ability of the Company, among other things and subject
to certain significant exceptions, to incur debt or liens, make investments, enter into certain mergers, consolidations, and acquisitions,
pay dividends and make other restricted payments, or make capital expenditures exceeding $ 1,000,000 in the aggregate in any fiscal year.

 As
of December 31, 2023 and 2022, the term loan balance amounted to $ 0.7 million and $ 0.5 million, respectively, which consisted of the
principal and interest payable balance and deferred financing costs. The balance of the Revolving Line of Credit as of December 31, 2023
and 2022 amounted to $ 5.0 million and $ 2.9 million, respectively.

 Subordinated
(Officer) Note

 As
of January 1, 2019, the Company had a note payable to John H. Schwan, former Director and former Chairman of the Board, for $ 1.6 million,
including accrued interest. This loan accrues interest, is due December 31, 2023, and is subordinate to the Senior Facilities. During
January 2019, Mr. Schwan converted $ 600,000 of the note into approximately 181,000 shares of our common stock at the then market rate
of $ 3.32 per share. As a result of the conversion, the loan balance decreased to $ 1.0 million. The loan and interest payable to Mr. Schwan
amounted to $ 1.3 million as of December 31, 2023 and 2022, respectively. No payments were made to Mr. Schwan during 2023 or 2022. Interest
expense related to this loan amounted to $ 19,000 and $ 18,000 for the three months ended December 31, 2023 and 2022, respectively, and
$ 78,000 and $ 74,000 for the twelve months ended December 31, 2023 and 2022, respectively.

 Pursuant
to an agreement between the parties, the Company paid $ 0.5 million of this balance on January 2, 2024, another $ 0.5 million on January
16, 2024, and the remainder later during 2024.

 Other
Note

 As
of December 31, 2022, the Company had a note payable to Alex Feng for $ 0.2 million. This loan accrued interest at a rate of 3 % and is
subordinated to the Senior Facilities. In accordance with the subordination agreement, payments may be made beginning April 2022 subject
to availability under the revolving line of credit, and the maturity date for this loan was March 2024. Along with certain deposits received
during 2022, this note was converted into common stock during February 2023.

 F- 11

 9.
 Income Taxes

 Tax
Reform act of 2017

 On
December 22, 2017, the Tax Cuts and Jobs Act was enacted into law and introduced significant changes to U.S. tax law. The Company reflected
the impacts of changes in tax law to the financial statements including the federal income tax rate reduction from 35 % to 21 %; the new
limitations on the tax deductibility of interest expense; the acceleration of business asset expensing; the repeal of the alternative
minimum tax ("AMT"); the limitation on the use of net operating losses generated in future years; and the Global Intangible
Low Taxed Income regime. On March 27, 2020, the CARES Act was enacted into law and introduced changes to U.S. tax law including revised
limitations on the tax deductibility of interest expense and the limitation on the use of net operating losses.

 Due
to an ownership change in the first quarter of 2020, the future utilization of certain post-change income tax attributes of Yunghong
CTI Ltd, including net operating loss carryovers, are anticipated to be limited for U.S. income tax purposes.

 The
provision (benefit) for income taxes consists of the following:

of Components of Income Tax Expense (Benefit)

 2023

 2022

 Year Ended December 31,

 2023

 2022

 Current:

 Federal

 $
 -

 $
 -

 State

 -

 -

 Foreign

 -

 -

 Total Current

 -

 -

 Deferred:

 Federal

 $
 -

 $
 -

 State

 -

 -

 Foreign

 -

 -

 Total Deferred

 -

 -

 Provision (Benefit) for income taxes

 -

 -

 Income
tax provision (benefit) related to continuing operations differ from the amounts computed by applying the statutory income tax rate of
 21 % to pretax loss as follows (in thousands):

of Income Tax Provision (Benefit) Related to Continuing Operations

 2023

 2022

 Year Ended December 31,

 2023

 2022

 U.S. Federal provision (benefit)

 At Statutory Rate

 $
 ( 49,000
)

 $
 ( 120,000
)

 State Taxes

 ( 71,000
)

 25,000

 Change in Valuation Allowance

 299,000

 50,000

 NOL Carryback Claim (CARES Act)

 -

 -

 Nondeductible Expenses

 -

 -

 Foreign Taxes

 -

 -

 Deconsolidation & Impairment

 -

 ( 32,000
)

 Other

 ( 179,000
)

 77,000

 Total

 $
 -

 $
 -

 F- 12

Tax Assets and Liabilities

income taxes reflect the net tax effects of loss and credit carryforwards and temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our deferred
tax assets for federal and state income taxes are as follows):

of Deferred Tax Assets and Liabilities

 2023

 2022

 Year Ended December 31,

 2023

 2022

 Deferred Tax Assets:

 Federal & State NOL Carryforward

 5,163,000

 3,241,000

 Foreign Tax Credit & Other Credits

 307,000

 307,000

 Capitalized R&D

 98,000

 55,000

 Reserves and Accruals

 147,000

 152,000

 Capital Loss Carryforward

 2,360,000

 2,378,000

 Unicap 263A Adjustment

 233,000

 233,000

 Other DTA

 ( 95,000
)

 ( 91,000
)

 Foreign NOL Carryforward

 2,000

 2,000

 Deferred Interest Expense

 -

 1,704,000

 Total Gross DTA

 8,215,000

 7,982,000

 Less: Val. Allowance

 ( 8,476,000
)

 ( 8,159,000
)

 Total Deferred Tax Assets

 ( 261,000
)

 ( 177,000
)

 Deferred Tax Liabilities:

 Fixed Assets & Intangibles

 261,000

 233,000

 Section 481(a) Adjustment

 -

 ( 56,000
)

 Total Gross DTL

 261,000

 177,000

 Net Deferred Tax Assets

 -

 -

 Realization
of our deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Due to the lack of
earnings history and in light of management's comments regarding going concern for most of 2019 through December 31, 2023, a valuation
allowance has been recorded to reduce the deferred tax assets to its net realizable value. The valuation allowance increased by $ 0.3
million and increased by $ 0.4 million during the years ended December 31, 2023 and December 31, 2022, respectively. The valuation allowance
includes no benefit related to stock based compensation and exercises for the years ended December 31, 2023 and 2022, respectively, prior
to the implementation of ASC 515 and 718, that will be credited to additional paid in capital when realized.

 Net
Operating Loss and Tax Credit Carryforwards

 As
of December 31, 2023, we had a net operating loss carryforward for federal income tax purposes of approximately $ 16.1 million, of which
$ 0.2 million is subject to expiration beginning 2037. We had a total state net operating loss carryforward of approximately $ 18.7 million,
with various expiration dates. Utlization of some of the federal and state net operating loss and credit carryforwards are subject to
annual limitations due to the "change in ownership" provisions of the Internal Revenue Code of 1986 and similar state provisions.
The annual limitations may result in the expiration of net operating losses and credits before utilization.

 10.
 Related Party Transactions

 Ms.
Jana M. Schwan is the Company's Chief Operating 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. His brother is Gary Schwan, one of the owners of Schwan Incorporated,
which provides building maintenance services to the Company. The Company made payments to Schwan Incorporated of approximately $ 1,000
and $ 1,000 during the years ended December 31, 2023 and 2022, respectively.

 As
discussed in Note 9, Mr. John H. Schwan was owed approximately $ 1.3 million and $ 1.2 million as of December 31, 2023 and 2022, respectively
in a note from the Company.

 F- 13

 11.
 Commitments

 Operating
Leases

 We
adopted ASC Topic 842 (Leases) on January 1, 2019 using the modified retrospective method. This standard requires us to record certain
operating lease liabilities and corresponding right-of-use assets on our balance sheet. We elected the package of practical expedients
available for expired or existing contracts, which allowed us to carryforward our historical assessments of whether contracts are (or
contain) leases, as well as lease classification tests and treatment of initial direct costs. We also elected to not separate lease components
from non-lease components for all fixed payments, and we exclude variable lease payments in the measurement of right-of-use assets and
lease obligations.

 Upon
adoption of ASC 842 we recorded a $ 2.8 million increase in other assets, a $ 1.1 million increase in current liabilities, and a $ 1.7 million
increase in non-current liabilities. We did not record any cumulative effect adjustments in opening retained earnings, and adoption of
ASC 842 had no impact on cash flows from operating, investing, or financing activities.

 We
determine if an arrangement is a lease at inception. Most of our operating leases do not provide an implicit rate of interest so we use
our incremental borrowing rate based on the information available at the commencement date to determine the present value of future payments.
We lease various assets in the course of ordinary business including warehouses and manufacturing facilities, as well as vehicles and
equipment used in our operations. Leases with an initial term of 12 months or less are not recorded on the balance sheet as we recognize
lease expense for these leases on a straight-line basis over the lease term. The depreciable life of assets and related improvements
are limited by the expected lease term, unless there is a reasonably certain expected transfer or title or purchase option. Some lease
agreements include renewal options at our sole discretion. Any guaranteed residual value is included in our lease liability.

 The
table below describes our lease position as of December 31, 2023 and 2022:

of Lease Positions

 Assets

 As of
2023

 As of
2022

 Operating lease right-of-use assets

 4,632,000

 4,805,000

 Accumulated amortization

 ( 1,268,000
)

 ( 923,000
)

 Net lease assets

 3,882,000

 Liabilities

 Current

 Operating

 522,000

 518,000

 Operating Current

 522,000

 518,000

 Noncurrent

 Operating

 2,842,000

 Operating Noncurrent

 2,842,000

 Total lease liabilities

 3,882,000

 Weighted average remaining term (years) – operating leases

 Weighted average discount rate – operating leases

 11.25
 %

 11.25
 %

the year ended December 31, 2023 and 2022, we recorded expenses related to

of Lease Expenses

 2023

 2022

 Year ended December 31

 2023

 2022

 Operating right-of-use lease asset amortization

 754,000

 746,000

 Financing lease asset amortization

 -

 -

 Related interest expense

 -

 -

 Total expense during twelve months ended December 31

 754,000

 746,000

 The
following table summarizes the maturities of our lease liabilities for all operating leases as of December 31, 2023

of Maturities of Lease Liabilities

 (in thousands)

 12/31/2023

 2024

 2025 and thereafter

 4,268

 Total lease payments

 5,246

 less: Imputed interest

 ( 1,882
)

 Present value of lease liabilities

 3,364

 F- 14

 12.
 Convertible Redeemable Preferred Stock

A Convertible Preferred Stock

 On
January 3, 2020, the Company entered into a stock purchase agreement (as amended on February 24, 2020 and April 13, 2020 (the "LF
Purchase Agreement")), pursuant to which the Company agreed to issue and sell, and LF International Pte. Ltd., a Singapore private
limited company ("LF International"), which is controlled by Company director, Chairman, President and Chief Executive Officer,
Mr. Yubao Li, agreed to purchase, up to 500,000 shares of the Company's newly created shares of Series A Preferred Stock ("Series
A Preferred"), with each share of Series A Preferred initially convertible into ten shares of the Company's common stock,
at a purchase price of $ 10.00 per share, for aggregate gross proceeds of $ 5,000,000 (the "LF International Offering"). As
permitted by the Purchase Agreement, the Company may, in its discretion issue up to an additional 200,000 shares of Series A Preferred
for a purchase price of $ 10.00 per share (the "Additional Shares Offering," and collectively with the LF International Offering,
the "Offering"). Approximately $ 1 million of Series A Preferred has been sold, including to an investor which converted an
account receivable of $ 478,000 owed to the investor by the Company in exchange for 48,200 shares of Series A Preferred. The Company completed
several closings with LF International from January 2020 through June 2020. The majority of the funds received reduced our bank debt.
We issued a total of 400,000 shares of common stock to LF International and, pursuant to the LF Purchase Agreement, changed our name
from CTI Industries Corporation to Yunhong CTI Ltd. LF International has the right to name three directors to serve on our Board. They
were Mr. Yubao Li, Ms. Wan Zhang and Ms. Yaping Zhang. Ms. Wan Zhang and Ms. Yaping Zhang retired from the Board in January 2022.

 The
issuance of the Series A Preferred generated a beneficial conversion feature (BCF), which arises when a debt or equity security is issued
with an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has
an effective strike price that is less than the market price of the underlying stock at the commitment date. The fair value of the common
stock into which the Series A Preferred was convertible exceeded the allocated purchase price fair value of the Series A Preferred Stock
at the closing dates by approximately $ 2.5 million as of the closing dates. We recognized this BCF by allocating the intrinsic value
of the conversion option, to additional paid-in capital, resulting in a discount on the Series A Preferred. As the Series A Preferred
is immediately convertible, the Company accreted the discount on the date of issuance. The accretion was recognized as dividend equivalents.
Holders of the Series A Preferred will be entitled to receive quarterly dividends at the annual rate of 8 % of the stated value ($ 10 per
share). Such dividends may be paid in cash or in shares of common stock at the Company's discretion. In the three and nine months
ended September 30, 2022, the Company accrued $ 67,000 and $ 267,000 of these dividends in each period, respectively. On September 1, 2022,
the investor converted Preferred Series A into 5 million shares of common stock and approximately 1.3 million shares of common stock
representing accrued dividends.

B Convertible Preferred Stock

 In
November 2020, we issued 170,000 shares of Series B Preferred for an aggregate purchase price of $ 1,500,000. The Series B Preferred have
an initial stated value of $ 10.00 per share and liquidation preference over common stock. The Series B Preferred is convertible into
shares of our common stock equal to the number of shares determined by dividing the sum of the stated value and any accrued and unpaid
dividends by the conversion price of $ 1.00. The Series B Preferred accrues dividends at a rate of 8 percent per annum, payable at our
election either in cash or shares of the Company's common stock. Initially, the Series B Preferred, in whole or part, was redeemable
at the option of the holder (but not mandatorily redeemable) at any time on or after November 30, 2021 for the stated value, plus any
accrued and unpaid dividends and thus was classified as mezzanine equity and initially recognized at fair value of $ 1.5 million (the
proceeds on the date of issuance). In March 2021, the terms of the Series B Preferred were modified to eliminate the ability of the holder
to redeem the Series B Preferred. As the Series B Preferred is no longer redeemable, the Series B Preferred is not classified as mezzanine
equity as of December 31, 2022 or December 31, 2021. As a result, the carrying value as of December 31, 2022 and 2021 amounted to $ 1,851,000
and $ 1,715,000, respectively. The December 31, 2022 balance consists of $ 1,500,000 original carrying value, $ 304,000 accrued dividends
and $ 47,000 accretion. On February 1, 2023, the investor converted Preferred Series B into approximately 1.9 million shares of common
stock.

C Convertible Preferred Stock

 In
January 2021 we entered into an agreement with a related party, LF International Pte. Ltd. which is controlled by Company director and
Chairman, Mr. Yubao Li, to purchase shares of Series C Preferred stock. We issued 170,000 shares of Series C Preferred for an aggregate
purchase price of $ 1,500,000. The Series C Preferred have an initial stated value of $ 10.00 per share and liquidation preference over
common stock. The Series C Preferred is convertible into shares of our common stock equal to the number of shares determined by dividing
the sum of the stated value and any accrued and unpaid dividends by the conversion price of $ 1.00. The Series C Preferred accrues dividends
at a rate of 8 percent per annum, payable at our election either in cash or shares of the Company's common stock. The issuance
of the Series C Preferred generated a beneficial conversion feature (BCF), which arises when a debt or equity security is issued with
an embedded conversion option that is beneficial to the investor or in the money at inception because the conversion option has an effective
strike price that is less than the market price of the underlying stock at the commitment date. The fair value of the common stock into
which the Series C Preferred was convertible exceeded the allocated purchase price of the Series C Preferred at the closing dates by
greater than the allocated purchase price. Therefore, the BCF was the purchase price of the Series C Preferred ($ 1.5 million) and was
allocated to Additional Paid-in Capital, resulting in a discount on the Series C Preferred Stock. As the Series C Preferred Stock is
immediately convertible, the Company accreted the discount on the date of issuance. The accretion to the carrying value of the Series
C Preferred is treated as a deemed dividend, recorded as a charge to Additional Paid in Capital and deducted in computing earnings per
share. The carrying value as of August 30, 2022 and December 31, 2021 amounted to $ 1,698,000 and $ 1,630,000, respectively. On September
1, 2022, the investor converted Series C into 1.7 million shares of common stock and accrued dividends in the amount of approximately
 0.3 million shares of common stock.

 F- 15

D Convertible Preferred Stock

 In
June 2021, the Company received $ 1.5 million from an unrelated third party as an advance on a proposed sale of Series D Redeemable Convertible
Preferred Stock. As of September 30, 2021, the Company was in the process of negotiating and finalizing the terms of the arrangement.
As the agreement was not finalized as of September 30, 2021, the $ 1.5 million advance was classified as Advance from Investor within
liabilities on the balance sheet at that time. As of December 31, 2021, the terms had been finalized, the investment was classified as
equity, similar to the prior Convertible Preferred issuances, above. The issuance of the Series D Preferred generated a beneficial conversion
feature (BCF), which arises when a debt or equity security is issued with an embedded conversion option that is beneficial to the investor
or in the money at inception because the conversion option has an effective strike price that is less than the market price of the underlying
stock at the commitment date. The fair value of the common stock into which the Series D Preferred was convertible exceeded the allocated
purchase price fair value of the Series D Preferred Stock at the closing dates by approximately $ 0.3 million as of the closing dates.
We recognized this BCF by allocating the intrinsic value of the conversion option, to additional paid-in capital, resulting in a discount
on the Series D Preferred. As the Series D Preferred is immediately convertible, the Company accreted the discount on the date of issuance.
The accretion was recognized as dividend equivalents. Holders of the Series D Preferred will be entitled to receive quarterly dividends
at the annual rate of 8 % of the stated value ($ 10 per share). Such dividends may be paid in cash or in shares of common stock at the
Company's discretion. In addition, 128,000 warrants to purchase the Company's common stock were issued with respect to this
transaction. These warrants are exercisable until December 1, 2024, at the lower of $ 1.75 per share or 85 % of the variable price based
on the ten day volume weighted average price ("VWAP") of the Company's common stock. The value of these warrants was
determined to be $ 230,000 and recorded as an allocation of paid in capital associated with this transaction. The carrying value as of
September 1, 2022 and December 31, 2021 amounted to $ 1,580,000 and $ 1,512,000, respectively. On September 1, 2022, the investor converted
Preferred Series D into 1.7 million shares of common stock and received accrued dividends of approximately 0.1 million shares of common
stock.

 Warrants

 A
summary of the Company's stock warrant activity is as follows:

 Summary
of the Company's Stock Warrant Activity

 Shares under
Option

 Weighted
Average
Price

 Balance at December 31, 2022

 128,000

 $
 1.75

 Granted

 -

 -

 Cancelled/Expired

 -

 -

 Exercised/Issued

 128,000

 1.75

 Outstanding at December 31, 2023

 -

 -

 Exercisable at December 31, 2023

 -

 $
 -

November 2023, the Company issued 675,183 shares of its common stock to retire all outstanding warrants, as well as a $ 317,000 deferred
liability. The warrants were converted in a cashless transaction based on the terms of the warrants. The Board of Directors determined
the conversion price of the deferred liability would be consistent with the approach listed above, 84 % of the volume weighted average
price during the relevant time period. Both of these items are fully resolved upon this transaction.

 13.
 Other Shareholders' Equity

 Common
Stock

2020, 400,000 shares of our common stock were issued to LF related to the acceleration of closings in our Series A Offering, and an additional
 200,000 shares were issued to Garden State Securities in its representation of the Company in the Series A Offering.

 F- 16

 Restricted
Stock

 In
2020, 15,000 shares of restricted stock vested to Mr. Hyland, former Chief Executive Officer, pursuant to the terms of the grant related
to his employment with the Company. There were no other shares of restricted stock outstanding during 2020 or 2021. During 2022, 250,000
shares of restricted stock were granted to the incoming Chief Executive Officer pursuant to an employment agreement. 25,000 of those
shares are to vest immediately and the remaining shares are schedule to vest upon the achievement of certain performance conditions.
Each of three independent directors received grants of 5,000 shares that were fully vested as of December 31, 2022. Additionally, the
Chief Operating Officer was granted 100,000 shares, 20,000 of which vested over 12 months while the remaining 80,000 had the same performance
conditions as the Chief Executive Officer. During each of 2023 and 2022, the performance condition related to 56,250 shares for the Chief
Executive Officer and 20,000 shares for the Chief Operating Officer was met, and these shares vested. As of December 31, 2023, performance
conditions related to 112,500 shares for the Chief Executive Officer and 40,000 shares for the Chief Operating Officer remain unvested.

 Stock
Options

 The
Compensation Committee ("Committee") administers the Company's stock-based plans. The exercise price of the stock options
shall be fixed by the Committee at whatever price the Committee may determine in good faith. Unless the Committee determines otherwise,
options generally had a 4 -year term with a 3 -year vesting schedule. Unless the Committee provides otherwise, options terminate upon the
termination of a participant's employment, except that the participant may exercise an option to the extent it was exercisable
on the date of termination and for a period of time after termination.

 In
2009, the shareholders of the Corporation approved, a 2009 Stock Incentive Plan ("2009 Plan"). The 2009 Plan and subsequent
awards categorized as inducement of employment authorized the issuance of up to 510,000 shares of stock or options to purchase stock
of the Company (including cancelled shares reissued under the plan.)

 On
June 8, 2018, our shareholders approved the 2018 Stock Incentive Plan ("2018 Plan"). The 2018 Plan authorized the issuance
of up to 300,000 shares of our common stock in the form of equity-based awards. Because no registration on Form S-8 was filed for these
additional shares within 12 months of approval by our shareholders, those additional shares are not available for issuance in the normal
course. On June 17, 2022, our shareholders approved of the issuance of 500,000 shares to this plan.

 The
Company, at the discretion of the board, may issue options in excess of the total available, if options related to that stock plan are
cancelled. In some cases, not all shares that are available to a stock plan are issued, as the Company is unable to issue options to
a previous plan when a new plan is in place.

 The
Company recognized share based compensation expense of approximately $ 20,000 and $ 160,000 in 2023 and 2022, respectively. As of December
31, 2023 and 2022, respectively, there was no unrecognized compensation expense related to non-vested stock option grants. There were
approximately 132,000 performance-based grants for which the underlying performance threshold had not been met as of December 31, 2023.

 Warrants

 In
connection with the Series A Offering, in 2020 the Company issued 792,660 warrants to purchase 792,660 shares of the Company's
common stock for $ 1 per share. During 2020, 597,500 warrants were exercised in cash-less exchange for 391,308 shares of the Company's
common stock. In January and February 2021, the remaining 195,160 warrants were exercised in a cash-less exchange for 103,104 shares
of the Company's common stock.

 The
Series D Offering also included warrants to purchase up to 128,572 shares of the Company's common stock at an exercise price of
the lower of $ 1.75 per share or 85 % of the lowest daily volume-weighted average price of the Common Stock during the 10 trading days
prior to the date of exercise. If unexercised, these warrants would have expired December 1, 2024. As noted above, the warrants were
exercised and converted into common shares during 2023, leaving no outstanding warrants as of December 31, 2023.

 The
Company has applied the Black-Scholes model to value stock-based awards. That model incorporates various assumptions in the valuation
of stock-based awards relating to the risk-free rate of interest to be applied, the estimated dividend yield and expected volatility
of the Company's Common Stock. The risk-free rate of interest is the U.S. Treasury yield curve for periods within the expected
term of the option at the time of grant. The expected volatility is based on historical volatility of the Company's Common Stock.

 The
valuation assumptions we have applied to determine the value of warrants granted in 2021 and 2020 were as follows:

 Historical
stock price volatility: The Company used the weekly closing price to calculate historical annual volatility.

 Risk-free
interest rate: The Company bases the risk-free interest rate on the rate payable on US treasury securities with a similar maturity in
effect at the time of the grant, which was 4.50 % and 3.80 %, during 2023 and 2022, respectively.

 Expected
life: The expected life of the warrants represents the period of time warrants were expected to be outstanding. The Company used an expected
life of 5 years for all warrants granted during 2023 and 2022.

 Dividend
yield: The estimate for dividend yield is 0 %, as the Company did not issue dividends during 2023 or 2022 and does not expect to do so
in the foreseeable future.

 Estimated
forfeitures: When estimating forfeitures, the Company considers historical terminations as well as anticipated retirements.

 F- 17

 A
summary of the Company's stock options, warrants and related information, is as follows:

 Summary
of the Company Stock Options and Warrants

 Options

 Weighted
Average
Price

 Warrants

 Weighted
Average
Price

 Balance at January 1, 2022

 -

 $
 -

 128,572

 $
 1.75

 Granted

 -

 Cancelled/Expired

 -

 Exercised/Issued

 -

 Balance at December 31, 2022

 -

 -

 128,572

 $
 1.75

 Granted

 -

 -

 Cancelled/Expired

 -

 Exercised/Issued

 -

 128,572

 $
 1.75

 Balance at December 31, 2023

 -

 -

 -

 $
 -

 Exercisable at December 31, 2023

 -

 $
 -

 As
there are no active stock options, there is no aggregate intrinsic value (the difference between the closing price of the Company's
common stock as of December 31, 2023 and 2022, respectively, and the exercise price, multiplied by the number of in-the-money options)
that would have been received by the option holders had all the holders exercised their options on December 31, 2023 and 2022, respectively.
The warrants have an intrinsic value of none and $ 230,000 as of December 31, 2023 and 2022, respectively.

 F- 18

 As
of December 31, 2023, the Company reserved no shares of its common stock for the exercise of warrants, and preferred stock.

 14.
 Earnings Per Share

 Basic
earnings per share is computed by dividing net loss attributable to Yunhong Green CTI Ltd. Common shareholders by the weighted average
number of shares of common stock outstanding during each period.

 Diluted
earnings per share is computed by dividing net loss attributable to Yunhong Green CTI Ltd. Common shareholders by the weighted average
number of shares of common stock and equivalents (stock options and warrants), unless anti-dilutive, during each period.

of Earnings Per Share, Basic and Diluted

 Consolidated earnings per share

 2023

 2022

 Loss from continuing operations

 $
)

 $
)

 Loss attributable to noncontrolling interest

 -

 -
)

 Deemed dividends on preferred stock and amortization of beneficial conversion feature

 ( 11,000
)

 ( 584,000
)

 Loss from continuing operations attributable to Yunhong Green CTI Ltd common shareholders

 $
 ( 246,000
)

 $
 ( 2,051,000
)

 (Gain)/loss attributable to noncontrolling interest

 -

 -

 Loss from discontinued operations attributable to Yunhong Green CTI Ltd common shareholders

 $
 -

 $
 -
)

 Basic and Diluted loss per common share:

 Continuing operations

 $
 ( 0.01
)

 $
 ( 0.22
)

 Discontinued operations

 -

 -

 Total

 $
 ( 0.01
)

 $
 ( 0.22
)

 Basic and Diluted weighted average number of shares and equivalent shares of common stock outstanding

 19,526,633

 9,301,888

 15.
 Product and Geographic Segment Data

 The
Company's operations consist of a single business segment which designs, manufactures, and distributes film products.

 F- 19

 The
following table provides a breakdown of product net sales from operations in each of the years indicated (in thousands):

of Segment Reporting Information by Product

 Twelve Months Ended

 December 31, 2023

 December 31, 2022

 $

 % of

 $

 % of

 Product Category

 (000) Omitted

 (000) Omitted

 Foil Balloons

 11,769,000

 %

 10,858,000

 %

 Film Products

 928,000

 %

 2,036,000

 %

 Other

 5,107,000

 %

 5,154,000

 %

 Total

 17,804,000

 %

 18,048,000

 %

 16.
 Contingencies

 In
the ordinary conduct of our business, we are from time to time subject to lawsuits, investigations and claims, including environmental
claims and employee-related matters. Although we cannot predict with certainty the ultimate resolution of lawsuits, investigations and
claims asserted against us, including civil penalties or other enforcement actions, we do not believe that any currently pending legal
proceeding or proceedings to which we are a party will have a material adverse effect on our business, financial condition or results
of operations.

 17.
 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.

 18.
 Subsequent Events

2023, we received $ 1.5 million of investor funds intended as an equity investment. An additional $ 0.5 million was received during January
2024. During the first quarter of 2024, per agreement between then parties, these investment deposit liabilities became Convertible Preferred
Series E and F in the amont of $ 1.3 million and $ 0.7 million, respectively.

 We
had a $ 1.3 million note
payable to John Schwan due on December 31, 2023. Pursuant to agreement between the parties, we repaid the note in three
installments: $ 0.5
million on January 2, 2024, an additional $ 0.5
million on January 16, 2024, and the remainder later during 2024.

 F- 20