10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

____________

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2018

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

CTI INDUSTRIES CORPORATION

(Exact name of Registrant as specified in its charter)

Illinois	36-2848943
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
22160 N. Pepper Road
Lake Barrington, Illinois	60010
(Address of principal executive offices)	(Zip Code)

(847) 382-1000

(Registrant’s telephone number, including area code)

Indicate 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 ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files). Yes ☐     No ☐ ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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. ☐

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

The number of shares outstanding of the Registrant’s common stock as of May 1, 2018 was 3,530,227.

INDEX

Part I – Financial Information
Item No. 1.	Financial Statements
	Condensed Consolidated Balance Sheets at March 31, 2018 (unaudited) and December 31, 2017	1
	Condensed Consolidated Statements of Comprehensive Income (unaudited) for the three months ended March 31, 2018 and March 31, 2017	2
	Condensed Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2018 and March 31, 2017	3
	Notes to Condensed Consolidated Financial Statements (unaudited)	4
Item No. 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13
Item No. 3	Quantitative and Qualitative Disclosures Regarding Market Risk	17
Item No. 4	Controls and Procedures	17
Part II – Other Information
Item No. 1	Legal Proceedings	17
Item No. 1A	Risk Factors	18
Item No. 2	Unregistered Sales of Equity Securities and Use of Proceeds	18
Item No. 3	Defaults Upon Senior Securities	18
Item No. 4	Submission of Matters to a Vote of Security Holders	18
Item No. 5	Other Information	18
Item No. 6	Exhibits	19
	Signatures	20
	Exhibit 31.1
	Exhibit 31.2
	Exhibit 32

PART 1. FINANCIAL INFORMATION

Item 1. Financial Statements

CTI Industries Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

	March 31, 2018			December 31, 2017
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents (VIE $65,000 and $51,000, respectively)	$	595,605		$	181,026
Accounts receivable, (less allowance for doubtful accounts of $102,000 and $114,000, respectively)		11,980,251			11,235,834
Inventories, net (VIE $465,000 and $498,000, respectively)		21,355,107			18,865,932
Prepaid expenses (VIE $174,000 and $80,000, respectively)		777,268			887,885
Other current assets		1,190,642			1,120,808
Total current assets		35,898,873			32,291,485
Property, plant and equipment:
Machinery and equipment		23,545,121			23,439,781
Building		3,367,082			3,367,082
Office furniture and equipment (VIE $281,000 and $268,000, respectively)		2,613,300			2,591,159
Intellectual property		752,044			752,044
Land		250,000			250,000
Leasehold improvements		415,610			402,963
Fixtures and equipment at customer locations		518,450			518,450
Projects under construction		123,271			121,241
		31,584,878			31,442,720
Less : accumulated depreciation and amortization (VIE $56,000 and $36,000, respectively)		(27,383,679	)		(26,886,139	)
Total property, plant and equipment, net		4,201,199			4,556,581
Other assets:
Goodwill (VIE $440,000 and $440,000, respectively)		1,473,176			1,473,176
Net deferred income tax asset (VIE $62,000 and $52,000, respectively)		1,373,000			1,102,467
Other assets		583,931			560,329
Total other assets		3,430,107			3,135,972
TOTAL ASSETS	$	43,530,179		$	39,984,038
LIABILITIES AND EQUITY
Current liabilities:
Checks written in excess of bank balance (VIE $12,000 and $16,000, respectively)	$	11,858		$	454,850
Trade payables (VIE $233,000 and $144,000, respectively)		7,196,038			5,414,497
Line of credit (VIE $320,000 and $338,000, respectively)		15,925,808			13,783,930
Notes payable - current portion		5,341,792			942,533
Notes payable affiliates - current portion		10,721			9,615
Capital Lease - current portion		731			7,562
Accrued liabilities (VIE $141,000 and $92,000, respectively)		2,435,558			2,047,893
Total current liabilities		30,922,506			22,660,880
Long-term liabilities:
Notes payable - affiliates		213,214			212,545
Notes payable, net of current portion (VIE $68,000 and $83,000, respectively)		137,554			4,951,581
Notes payable - officers, subordinated		1,526,910			1,507,362
Deferred gain (non current)		195,587			207,410
Deferred income tax liability		84,000
Total long-term debt, net of current portion		2,157,265			6,878,898
Total long-term liabilities		2,157,265			6,878,898
Equity:
CTI Industries Corporation stockholders' equity:
Preferred Stock -- no par value, 3,000,000 shares authorized, 0 shares issued and outstanding		-			-
Common stock - no par value, 15,000,000 shares authorized, 3,573,885 shares issued and 3,530,227 shares outstanding		13,898,494			13,898,494
Paid-in-capital		2,333,236			2,271,261
Accumulated earnings		238,873			720,223
Accumulated other comprehensive loss		(4,932,299	)		(5,365,364	)
Less: Treasury stock, 43,658 shares		(160,784	)		(160,784	)
Total CTI Industries Corporation stockholders' equity		11,377,520			11,363,830
Noncontrolling interest		(927,112	)		(919,570	)
Total Equity		10,450,408			10,444,260
TOTAL LIABILITIES AND EQUITY	$	43,530,179		$	39,984,038
	$	-

See accompanying notes to condensed consolidated unaudited financial statements

1

CTI Industries Corporation and Subsidiaries

Condensed Consolidated Statements of Comprehensive Income (Unaudited)

	For the Three Months Ended March 31,
	2018			2017
Net Sales	$	13,979,177		$	15,359,637
Cost of Sales		11,110,786			11,742,189
Gross profit		2,868,391			3,617,448
Operating expenses:
General and administrative		1,884,046			1,901,256
Selling		858,537			721,390
Advertising and marketing		296,880			556,409
Gain on sale of assets		(24,414	)		(69,300	)
Total operating expenses		3,015,049			3,109,755
Income from operations		(146,658	)		507,693
Other (expense) income:
Interest expense		(564,060	)		(377,211	)
Interest income		(345	)		4,346
Change in fair value of warrants		-			19,606
Foreign currency loss		31,028			(30,525	)
Total other expense, net		(533,377	)		(383,784	)
Net income before taxes		(680,035	)		123,909
Income tax expense		(209,484	)		75,637
Net income		(470,551	)		48,272
Less: Net (loss) income attributable to noncontrolling interest		(7,543	)		(10,197	)
Net income attributable to CTI Industries Corporation	$	(463,008	)	$	58,469
Other Comprehensive Income (Loss)
Foreign currency adjustment		433,065			311,313
Comprehensive Income (Loss)	$	(29,943	)	$	369,782
Basic income per common share	$	(0.13	)	$	0.02
Diluted income per common share	$	(0.13	)	$	0.02
Weighted average number of shares and equivalent shares of common stock outstanding:
Basic		3,530,227			3,591,947
Diluted		3,530,227			3,748,139

See accompanying notes to condensed consolidated unaudited financial statements

2

CTI Industries Corporation and Subsidiaries

Condensed Consolidated Statements of Cash Flows (Unaudited)

	For the Three Months Ended March 31,
	2018			2017
Cash flows from operating activities:
Net income	$	(470,551	)	$	48,272
Depreciation and amortization		376,920			381,854
Amortization of debt discount		61,975			47,025
Change in fair value of warrants		-			(19,606	)
Amortization of deferred gain on sale/leaseback		(28,486	)		(26,693	)
Provision for losses on accounts receivable		(17,781	)		1,827
Provision for losses on inventories		(35,503	)		20,099
Deferred income taxes		(133,982	)		8,124
Change in assets and liabilities:
Accounts receivable		(465,865	)		2,660,360
Inventories		(1,995,477	)		815,593
Prepaid expenses and other assets		109,567			13,083
Trade payables		1,572,804			(20,172	)
Accrued liabilities		127,038			(846,643	)
Net cash provided by operating activities		(899,341	)		3,083,123
Cash flows from investing activities:
Purchases of property, plant and equipment		63,533			(219,927	)
Net cash used in investing activities		63,533			(219,927	)
Cash flows from financing activities:
Change in checks written in excess of bank balance		(442,992	)		(629,530	)
Net change in revolving line of credit		2,123,582			(1,835,972	)
Repayment of long-term debt (related parties $0 and $2,000)		(432,942	)		(390,788	)
Cash paid for deferred financing fees		(24,568	)		-
Net cash used in financing activities		1,223,080			(2,856,290	)
Effect of exchange rate changes on cash		27,307			12,759
Net decrease in cash and cash equivalents		414,579			19,665
Cash and cash equivalents at beginning of period		181,026			563,043
Cash and cash equivalents at end of period	$	595,605		$	582,708
	$	-
Supplemental disclosure of cash flow information:
Cash payments for interest		408,001		$	311,768
Supplemental Disclosure of non-cash investing and financing activity
Property, Plant & Equipment acquisitions funded by liabilities	$	25,387		$	63,474

See accompanying notes to condensed consolidated unaudited financial statements

3

CTI Industries Corporation and Subsidiaries

Notes to Unaudited Condensed Consolidated Financial Statements

Note 1 - Basis of Presentation

The accompanying condensed (a) consolidated balance sheet as of December 31, 2017, which has been derived from audited consolidated financial statements, and (b) the unaudited interim condensed consolidated financial statements have been prepared and, in the opinion of management, contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the consolidated financial position and the consolidated statements of comprehensive income and consolidated cash flows for the periods presented in conformity with generally accepted accounting principles for interim consolidated financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by accounting principles generally accepted in the United States of America. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018. It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form 10-K for the fiscal year ended December 31, 2017.

Principles of consolidation and nature of operations:

The condensed consolidated financial statements include the accounts of CTI Industries Corporation and its wholly-owned subsidiaries, CTI Balloons Limited and CTI Supply, Inc., its majority-owned subsidiaries, Flexo Universal, S. de R.L. de C.V. and CTI Europe gmbH, as well as the accounts of Venture Leasing S. A. de R. L., Venture Leasing L.L.C and Clever Container Company, L.L.C. (the “Company”). The last three entities have been consolidated as variable interest entities. All significant intercompany transactions and accounts have been eliminated in consolidation. The Company (i) designs, manufactures and distributes balloon and related novelty (candy and party related) products throughout the world, (ii) operates 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, and (iii) distributes vacuum sealing products and home organization products in the United States.

Variable Interest Entities (“VIE’s”):

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. There are three entities that have been consolidated as variable interest entities.

4

Use of estimates:

In preparing condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenue and expenses during the reporting period in the condensed consolidated financial statements and accompanying notes. Actual results may differ from those estimates. The Company’s significant estimates include reserves for doubtful accounts, reserves for the lower of cost or market of inventory, reserves for deferred tax assets and recovery value of goodwill.

Earnings per share:

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period.

Diluted earnings per share is computed by dividing the net income by the weighted average number of shares of common stock and equivalents (stock options and warrants), unless anti-dilutive, during each period.

As of March 31, 2018 and 2017, shares to be issued upon the exercise of options and warrants aggregated 471,144 and 359,817, respectively. The number of shares included in the determination of earnings on a diluted basis for the three months ended March 31, 2018 and 2017 were none and 76,675, respectively, as the former would have been anti-dilutive.

Significant Accounting Policies:

The Company’s significant accounting policies are summarized in Note 2 of the Company’s consolidated financial statements for the year ended December 31, 2017. There were no significant changes to these accounting policies during the three months ended March 31, 2018, except for the adoption of Accounting Standards Codification (ASC) Topic 606, Revenue from Contracts with Customers.  On January 1, 2018, we adopted ASC 606 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.

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.

5

Recent Accounting Pronouncements:

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), aimed at making leasing activities more transparent and comparable. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including today’s operating leases. For public business entities, the standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after December 15, 2019, and interim periods within fiscal years beginning after December 15, 2020. Early application is permitted for all entities. While we are currently evaluating the potential impact of this new standard, we expect that our property, plant and equipment will increase significantly due to the addition of assets currently under lease, and the lease liabilities will correspondingly increase.

6

Note 2 - Debt

Until December 2017, we had in place a series of credit facility and related agreements with BMO Harris Bank, N.A. and BMO Private Equity (U.S.), (collectively, “BMO”), in the aggregate amount of approximately $17 million. During December 2017, we terminated those agreements and fully repaid all amounts owed BMO under those agreements, including associated fees and costs related to termination, as we entered in new financing agreements with PNC Bank, National Association (“PNC”). The “PNC Agreements” include a $6 million term loan and an $18 million revolving credit facility, with a termination date of December 2022.

Available credit under the Revolving Credit facility is determined by eligible receivables and inventory at CTI Industries (U.S.) and Flexo Universal (Mexico).

Certain terms of the PNC Agreements include:

● Restrictive Covenants: The Credit Agreement includes several restrictive covenants under which we are prohibited from, or restricted in our ability to:

○ Borrow money;

○ Pay dividends and make distributions;

○ Make certain investments;

○ Use assets as security in other transactions;

○ Create liens;

○ Enter into affiliate transactions;

○ Merge or consolidate; or

○ Transfer and sell assets.

● Financial Covenants: The Credit Agreement includes a series of financial covenants we are required to meet including:

○ We are required to maintain a "Leverage Ratio", which is defined as the ratio of (a) Funded Debt (other than the Shareholder Subordinated Loan) as of such date of determination to (b) EBITDA (as defined in the PNC Agreements) for the applicable period then ended. The highest values for this ratio allowed by the PNC Agreements are:

Fiscal Quarter Ratio
December 31, 2017	4.75	to	1.00
March 31, 2018	4.50	to	1.00
June 30, 2018	4.25	to	1.00
September 30, 2018	3.75	to	1.00
December 31, 2018	3.50	to	1.00
March 31, 2019	3.25	to	1.00
June 30, 2019	3.00	to	1.00
September 30, 2019 and thereafter	2.75	to	1.00

○ We are required to maintain a "Fixed Charge Coverage Ratio", which is defined as the ratio of (a) EBITDA for such fiscal period, minus Unfinanced Capital Expenditures made during such period, minus distributions (including tax distributions) and dividends made during such period, minus cash taxes paid during such period to (b) all Debt Payments made during such period. This ratio must not exceed 1.1 : 1.0 for any quarterly calculation.

7

The credit agreement provides for interest at varying rates in excess of the prime rate, depending on the level of senior debt to EBITDA over time. We also entered into a swap agreement with PNC Bank to fix the interest for $3 million over 3 years. This contract was made at market value upon December 2017 execution and accounted for as a hedge.

Failure to comply with these covenants might cause us to pay a higher rate of interest (by 2% per the Agreements), or other penalties up to and including the availability of the credit facility itself, and thus might negatively impact our ability to remain a going concern. We believe that we were in compliance as of December 31, 2017, but not in compliance as of March 31, 2018.  As a result, we have reclassified $4.4 million of noncurrent debt into current debt as of March 31, 2018.  The Company and its bank are currently discussing the appropriate actions going forward with respect to this credit facility.

On September 30, 2016, John H. Schwan advanced to the Company the sum of $530,000 and Mr. Stephen M. Merrick advanced the Company the sum of $370,000 to provide short-term working capital to the Company to fund the Company’s obligation to purchase and produce inventory for a substantial order for vacuum sealing systems to be delivered in November 2016.  In consideration of such advances, the Company issued Promissory Notes to Mr. Schwan and Mr. Merrick.  The principal balance of these notes were paid in December 2016 and January 2017.

Unrelated to the above, as of December 2017, Mr. Schwan was owed a total of $1,099,000, with additional accrued interest of $400,000, by the Company. As part of the December 2017 financing with PNC, 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. No payments were issued to Mr. Schwan during the three months ended March 31, 2018, with $27,000 of interest recorded as an expense.

Note 3 - Stock-Based Compensation; Changes in Equity

The Company has adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718 which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the condensed consolidated financial statements based on their grant-date fair values.

8

The Company has applied the Black-Scholes model to value stock-based awards and issued warrants related to notes payable. 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 our common stock. The risk-free rate of interest is the related U.S. Treasury yield curve for periods within the expected term of the option at the time of grant. The dividend yield on our common stock is estimated to be 0%, as the Company did not issue dividends during 2018 and 2017. The expected volatility is based on historical volatility of the Company’s common stock.

The Company’s net loss for the three months ended March 31, 2018 and 2017 includes approximately $62,000 and $5,000, respectively, of compensation costs related to share based payments. As of March 31, 2018, there is $302,000 of unrecognized compensation expense related to non-vested stock option grants and stock grants. We expect approximately $110,000 of additional stock-based compensation expense to be recognized over the remainder of 2018, $92,000 to be recognized during 2019, and $56,000 to be recognized during 2020.

On April 10, 2009, the Board of Directors approved for adoption, and on June 5, 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.) As of March 31, 2018, all underlying awards had been granted and options for 471,144 shares remain outstanding.

A summary of the Company’s stock option activity, which includes grants of restricted stock, non-qualified stock options, incentive stock options, warrants and related information, is as follows:

	Shares under Option			Weighted Average Exercise Price
Balance at December 31, 2017		476,144		$	3.97
Granted		-			-
Cancelled/Expired		-			-
Exercised/Issued		(5,000	)		-
Outstanding at March 31, 2018		471,144		$	4.01
Exercisable at March 31, 2018		103,463		$	5.38

The instruments above have an aggregate intrinsic value of $37,000, which represents the total pre-tax intrinsic value (the difference between the closing price of the Company’s common stock on the last trading day of the quarter ended March 31, 2018 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 March 31, 2018.

Note 4 - 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.

9

In July, 2017, God’s Little Gift, Inc. (d\b\a) Helium and Balloons Across America and Gary Page (“Claimants”) filed an action against the Company in the North Carolina State Court. This action was removed to the United States District Court in North Carolina. The Company filed an answer and motion to dismiss this action. The Court stayed the action based upon an arbitration clause in the agreement on which part of the action was based. On December 18, 2017, Claimants filed an arbitration claim against the Company before the American Arbitration Association in Chicago, Illinois. The Statement of Claim includes claims for alleged breach of two agreements among the parties, essentially for alleged failure by the Company to pay disputed commission amounts. Claimants also included counts for alleged unjust enrichment and tortious interference with contract. The Company has filed a response to the Statement of Claim denying all of the claims. The Company believes the claims are without merit and intends to defend all of the claims vigorously. The Company has not accrued any amounts in respect of this matter and cannot estimate the possible loss, if any, that the Company many incur with respect to it. The proceedings are at an early stage.

Note 5 - Other Comprehensive Income

In the three months ended March 31, 2018, the Company incurred other comprehensive income of approximately $433,000, all from foreign currency translation adjustments.

The following table sets forth the accumulated balance of other comprehensive income and each component.

	Foreign Currency Items			Total Accumulated Other Comprehensive Income
Beginning balance as of January 1, 2018	$	(5,365,364	)	$	(5,365,364	)
Current period change, net of tax		433,065			433,065
Ending Balance as of March 31, 2018		(4,932,299	)		(4,932,299	)

Note 6 - Inventories, Net

	March 31, 2018			December 31, 2017
Raw materials	$	3,060,291		$	2,632,415
Work in process		3,435,535			3,386,078
Finished goods		15,325,399			13,347,620
Allowance for excess quantities		(466,118	)		(500,181	)
Total inventories	$	21,355,107		$	18,865,932

10

Note 7 - Geographic Segment Data

The Company has determined that it operates primarily in one business segment that designs, manufactures and distributes film and film related products for use in packaging, storage and novelty balloon products. The Company operates in foreign and domestic regions. Information about the Company's operations by geographic area is as follows:

	Net Sales to Outside Customers
	For the Three Months Ended				Total Assets at
	March 31,				March 31,		December 31,
	2018		2017		2018		2017
United States	$	9,738,000	$	11,647,000	$	29,094,000	$	27,784,000
Europe		1,362,000		947,000		3,142,000		2,989,000
Mexico		2,186,000		2,023,000		9,844,000		8,288,000
United Kingdom		693,000		743,000		1,450,000		923,000
	$	13,979,000	$	15,360,000	$	43,530,000	$	39,984,000

Note 8 - Concentration of Credit Risk

Concentration of credit risk with respect to trade accounts receivable is generally limited due to the large number of entities comprising the Company's customer base. The Company performs ongoing credit evaluations and provides an allowance for potential credit losses against the portion of accounts receivable which is estimated to be uncollectible. Such losses have historically been within management's expectations. During the three months ended March 31, 2018 and 2017, there were two customers whose purchases represented more than 10% of the Company’s consolidated net sales, respectively. Sales to these customers for the three months ended March 31, 2018 and 2017 are as follows:

	Three Months Ended				Three Months Ended
	March 31, 2018				March 31, 2017
Customer	Net Sales		% of Net Sales		Net Sales		% of Net Sales
Customer A	$	4,450,000		31.8%	$	4,427,000		28.8%
Customer B	$	2,471,000		17.7%	$	2,609,000		17.0%

As of March 31, 2018, the total amounts owed to the Company by these customers were approximately $3,643,000 or 33.4%, and $2,657,000 or 24.3%, of the Company’s consolidated net accounts receivable, respectively. The amounts owed at March 31, 2017 by these customers were approximately $3,301,000 or 27.7%, and $2,657,000 or 22.3% of the Company’s consolidated net accounts receivable, respectively.

11

Note 9 - Related Party Transactions

Stephen M. Merrick, Chief Executive Officer of the Company, is of counsel to the law firm of Vanasco Genelly and Miller PC which provides legal services to the Company. Legal fees paid by the Company to this firm for the three months ended March 31, 2018 and 2017, respectively, were $72,000 and $26,000.

John H. Schwan, through an investment entity, and Stephen M. Merrick, Chief Executive Officer of the Company, also through an investment entity own, in aggregate, a 50% interest in Clever Container Company L.L.C., an Illinois limited liability company (“Clever Container”). During the three months ended March 31, 2018 and 2017, Clever Container purchased various products from the Company in the amount of $237,000 and $204,000, respectively. As of March 31, 2018 and 2017, the balance of accounts receivable from Clever Container to the Company were $1,102,000 and $711,000, respectively. The Company owns a 28.5% interest in Clever Container.

Note 10 - Derivative Instruments; Fair Value

The Company accounts for derivative instruments in accordance with U.S. GAAP, which requires that all derivative instruments be recognized on the balance sheet at fair value. We may enter into interest rate swaps to fix the interest rate on a portion of our variable interest rate debt to reduce the potential volatility in our interest expense that would otherwise result from changes in market interest rates. Our derivative instruments are recorded at fair value and are included in accrued liabilities of our consolidated balance sheet. Our accounting policies for these instruments are based on whether they meet our criteria for designation as hedging transactions, which include the instrument’s effectiveness, risk reduction and, in most cases, a one-to-one matching of the derivative instrument to our underlying transaction. As of March 31, 2018 and December 31, 2017, we had one derivative instrument accounted for as a hedge, compared to no such instrument as of March 31, 2017. Gains and losses from changes in fair values of derivatives that are not designated as hedges for accounting purposes are recognized in the consolidated statement of operations. We have no such derivative financial instruments as of December 31, 2017. Changes in fair value for the respective periods were recognized in the consolidated statement of operations.

The interest rate swap we entered into December 14, 2017 had a three year term (ending December 14, 2020) and a notional amount of $3 million. The Company purchased a 2.25% fixed rate in exchange for the variable rate on a portion of the notes payable under the PNC Agreements, which was 1.47% at time of execution. The fair value of the swap was insignificant as of March 31, 2018 and December 31, 2017.

12

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

This quarterly report 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 quarterly report on Form 10-Q. We disclaim any intent or obligation to update any forward-looking statements after the date of this quarterly report to conform such statements to actual results or to changes in our opinions or expectations.

Overview

We produce film products for novelty, packaging and container applications. These products include foil balloons, latex balloons and related products, films for packaging and custom product applications, and flexible containers for packaging and consumer storage applications. We produce all of our film products for packaging, container applications and most of our foil balloons at our plant in Lake Barrington, Illinois. We produce all of our latex balloons and latex products at our facility in Guadalajara, Mexico. Substantially all of our film products for packaging and custom product applications are sold to customers in the United States. We market and sell our novelty items and flexible containers for consumer use in the United States, Mexico, Latin America, and Europe. We also market and sell vacuum sealing machines and home organizing, container products, Candy Blossoms and party goods.

As of 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 we expect 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.  We recognize 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.

We provide 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.

13

Results of Operations

Net Sales. For the three months ended March 31, 2018, net sales were $13,979,000 compared to net sales of $15,360,000 for the same period of 2017, a decrease of 9%. We experienced short term order flow issues with two of our largest customers during January and February 2018 but had our largest sales month in our history in March (excluding only Black Friday promotional sales in November 2016).  Sales in April and May have continued at strong levels and we expect that sales for all of 2018 will exceed sales in 2017.  For the quarters ended March 31, 2018 and 2017, net sales by product category were as follows:

	Three Months Ended
	March 31, 2018					March 31, 2017
	$		% of			$		% of
Product Category	(000) Omitted		Net Sales			(000) Omitted		Net Sales
Foil Balloons		7,766		56	%		8,891		58	%
Latex Balloons		2,149		15	%		2,105		14	%
Vacuum Sealing Products		1,589		11	%		1,708		11	%
Film Products		438		3	%		838		5	%
Other Sales		2,037		15	%		1,818		12	%
Total		13,979		100	%		15,360		100	%

Foil Balloons. During the three months ended March 31, 2018, revenues from the sale of foil balloons decreased by 12.7% compared to the prior year period from $8,891,000 to $7,766,000.  Sales to our largest balloon customer increased from $4,427,000 in the first quarter of 2017 to $4,450,000 in the first quarter of 2018.  

Latex Balloons. During the three months ended March 31, 2018, revenues from the sale of latex balloons increased by 2.1% compared to the prior year period, from $2,105,000 to $2,149,000.

Vacuum Sealing Products. During the three months ended March 31, 2018, revenues from the sale of pouches and vacuum sealing machines decreased by 7% compared to the prior year, from $1,708,000 to $1,589,000.

Films. During the three months ended March 31, 2018, revenues from the sale of laminated film products decreased by 47.7% compared to the prior year period from $838,000 to $438,000.

Other Revenues. During the three months ended March 31, 2018, revenues from the sale of various other products increased by 10% to $2,037,000 compared to revenues from other products in the same period in 2017 of $1,818,000. The revenues from the sale of other products during the first quarter of 2018 include (i) sales of a line of “Candy Blossoms” and “Candy Loons” consisting of candy and small inflated balloons sold in small containers in the amount of $578,000, (ii) the sale of accessories and supply items related to balloon products, (iii) sales by Clever Container Company, L.L.C. which engages in the direct sale of container and organizing products through a network of independent distributors in the amount of $1,117,000 and (iv) sales of party goods in Mexico by Flexo Universal in the amount of $127,000.

14

Sales to a limited number of customers continue to represent a large percentage of our net sales. The table below illustrates the impact on sales of our top three and ten customers for the three months ended March 31, 2018 and 2017.

	Three Months Ended March 31,
	% of Sales
	2018			2017
Top 3 Customers		54.1	%		51.1	%
Top 10 Customers		69.6	%		67.0	%

During the three months ended March 31, 2018, there were two customers whose purchases represented more than 10% of the Company’s consolidated net sales. Sales to these customers for the three months ended March 31, 2018 were $4,450,000 or 31.8%, and $2,471,000 or 17.7%, of consolidated net sales, respectively. Sales to these customers for the three months ended March 31, 2017 were $4,427,000 or 28.8%, and $2,609,000 or 17%, of consolidated net sales, respectively. The amounts owed at March 31, 2018 by these customers were $3,643,000 or 33.4%, and $2,657,000 or 24.3%, of the Company’s consolidated net accounts receivable, respectively. As of March 31, 2017, the total amounts owed to the Company by these customers were $3,301,000 or 27.7%, and $2,657,000 or 22.3% of the Company’s consolidated net accounts receivable, respectively.

Cost of Sales. During the three months ended March 31, 2018, the cost of sales was $11,111,000, a 5.4% decrease from $11,742,000 for the three months ended March 31, 2017. The reduction in cost of sales was largely due to lower sales volume, net of related inefficiencies.

General and Administrative. During the three months ended March 31, 2018, general and administrative expenses were $1,884,000, a decrease of 1% compared to $1,901,000 for the same period in 2017.

Selling, Advertising and Marketing. During the three months ended March 31, 2018, selling, advertising and marketing expenses were $1,155,000, a 9.6% decrease compared to $1,278,000 for the same period in 2017.

Other Income (Expense). During the three months ended March 31, 2018, the Company incurred interest expense of $564,000, compared to interest expense during the same period of 2017 in the amount of $353,000.

For the three months ended March 31, 2018, the Company had a foreign currency transaction gain of $31,000 compared to a foreign currency transaction loss of $31,000 during the same period of 2017.

15

Financial Condition, Liquidity and Capital Resources

Cash Flow Items.

Operating Activities. During the three months ended March 31, 2018, net cash used in operations was $899,000, compared to net cash provided by operations during the three months ended March 31, 2017 of $3,083,000.

Significant changes in working capital items during the three months ended March 31, 2018 included:

● An increase in accounts receivable of $466,000 compared to a decrease in accounts receivable of $2,660,000 in the same period of 2017. Sales volume increased substantially during March 2018, which resulted in increased accounts receivable as of March 31, 2018.

● An increase in inventory of $1,995,000 compared to a decrease in inventory of $816,000 in 2017.

● An increase in trade payables of $1,573,000 compared to a decrease in trade payables of $20,000 in 2017.

● An increase in accrued liabilities of $127,000 compared to a decrease in accrued liabilities of $847,000 in 2017.

Investing Activity. During the three months ended March 31, 2018, cash provided by investing activity was $64,000, compared to cash used in investing activity for the same period of 2017 in the amount of $220,000.

Financing Activities. During the three months ended March 31, 2018, cash provided by financing activities was $1,223,000 compared to cash used in financing activities for the same period of 2017 in the amount of $2,856,000. Financing activity consisted principally of changes in the balances of revolving and long term debt.

Liquidity and Capital Resources.

At March 31, 2018, the Company had cash balances of $596,000 compared to cash balances of $583,000 for the same period of 2017.

Also at March 31, 2018, the Company had a working capital balance of $4,976,000 compared to a working capital balance of $9,631,000 on December 31, 2017.

As of March 31, 2018, the Company was not in compliance with two financial covenants under its credit facility. For this reason, $4.4 million of long term debt was reclassified as current debt as of March 31, 2018.  The Company and its bank are currently discussing the appropriate actions going forward with respect to this credit facility.  The Company expects to have sufficient capital to fund its operations through 2018 and beyond.

16

Seasonality

In the foil balloon product line, sales have historically been seasonal with approximately 40% occurring in the period from December through March of the succeeding year and 24% being generated in the period July through October in recent years. Vacuum sealing product sales are also seasonal; approximately 60% of sales in this product line occur in the period from July through December.

Critical Accounting Policies

Please see pages 23-26 of our Annual Report on Form 10-K for the year ended December 31, 2017 for a description of policies that are critical to our business operations and the understanding of our results of operations. The impact and any associated risks related to these policies on our business operations is discussed throughout Management’s Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. No material changes to such information have occurred during the three months ended March 31, 2018.

Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk

Not applicable.

Item 4. Controls and Procedures

As required by Rule 13a-15(b) under the Exchange Act, we conducted an evaluation, under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2018, the end of the period covered by this report. Based upon that evaluation, the Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2018, to ensure that the information required to be disclosed by us in the reports that we file or submit under Security Exchange Act of 1934, as amended, (a) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (b) is accumulated and communicated to our management, including officers, as appropriate, to allow for timely decisions regarding required disclosure. There were no material changes in our internal control over financial reporting during the three months ended March 31, 2018 that have materially affected or are reasonably likely to materially affect our internal controls over financial reporting.

Part II. OTHER INFORMATION

Item 1. 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.

17

In July, 2017, God’s Little Gift, Inc. (d\b\a) Helium and Balloons Across America and Gary Page (“Claimants”) filed an action against the Company in the North Carolina State Court. This action was removed to the United States District Court in North Carolina. The Company filed an answer and motion to dismiss this action. The Court stayed the action based upon an arbitration clause in the agreement on which part of the action was based. On December 18, 2017, Claimants filed an arbitration claim against the Company before the American Arbitration Association in Chicago, Illinois. The Statement of Claim includes claims for alleged breach of two agreements among the parties, essentially for alleged failure by the Company to pay disputed commission amounts. Claimants also included counts for alleged unjust enrichment and tortious interference with contract. The Company has filed a response to the Statement of Claim denying all of the claims. The Company believes the claims are without merit and intends to defend all of the claims vigorously. The Company has not accrued any amounts in respect of this matter and cannot estimate the possible loss, if any, that the Company many incur with respect to it. The proceedings are at an early stage.

Item 1A. Risk Factors

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Not applicable.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

Item 5.      Other Information

The Certifications of the Chief Executive Officer and the Chief Financial Officer of the Company Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 are attached as Exhibits to this Report on Form 10-Q.

18

Item 6. Exhibits

The following are being filed as exhibits to this report:

Exhibit Number	Description
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 CTI Industries Corporation (Incorporated by reference to Exhibit 3.2, contained in Registrant’s Form 8-K filed on March 17, 2017).
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	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).
101	Interactive Data Files, including the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements.

19

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: May 15, 2018	CTI INDUSTRIES CORPORATION
	By:	/s/ Stephen M. Merrick
		Stephen M. Merrick
		Chief Executive Officer
	By:	/s/ Jeffrey S. Hyland
		Jeffrey S. Hyland
		President
	By:	/s/ Frank J. Cesario
		Frank J. Cesario
		Chief Financial Officer

20

Exhibit Index

Exhibit Number	Description
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 CTI Industries Corporation (Incorporated by reference to Exhibit 3.2, contained in Registrant’s Form 8-K filed on March 17, 2017).
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	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).
101	Interactive Data Files, including the following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, formatted in XBRL: (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Income, (iii) the Consolidated Statements of Cash Flows, and (iv) the Notes to Consolidated Financial Statements.

21

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Stephen M. Merrick, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of CTI Industries Corporation.

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the condensed consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 15, 2018 /s/ Stephen M. Merrick Stephen M. Merrick Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Frank J. Cesario, certify that:

1.     I have reviewed this quarterly report on Form 10-Q of CTI Industries Corporation.

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the condensed consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 15, 2018 By: /s/ Frank J. Cesario    Frank J. Cesario    Chief Financial Officer

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of CTI Industries Corporation (the “Company”) for the quarterly period ended March 31, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Stephen M. Merrick, as Chief Executive Officer of the Company, and Frank J. Cesario, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)           The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)           The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Stephen M. Merrick

Stephen M. Merrick

Chief Executive Officer

Date: May 15, 2018

/s/ Frank J. Cesario 

Frank J. Cesario

Chief Financial Officer

Date: May 15, 2018

The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, and is not being “filed” as part of the Form 10-Q or as a separate disclosure document for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to liability under that section. This certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act except to the extent that this Exhibit 32 is expressly and specifically incorporated by reference in any such filing.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2018	May 01, 2018
Document Information [Line Items]
Entity Registrant Name	CTI INDUSTRIES CORP
Entity Central Index Key	0001042187
Trading Symbol	ctib
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Common Stock, Shares Outstanding (in shares)		3,525,227
Document Type	10-Q
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Amendment Flag	false

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents (VIE $65,000 and $51,000, respectively)	$ 595,605	$ 181,026
Accounts receivable, (less allowance for doubtful accounts of $102,000 and $114,000, respectively)	11,980,251	11,235,834
Inventories, net (VIE $465,000 and $498,000, respectively)	21,355,107	18,865,932
Prepaid expenses (VIE $174,000 and $80,000, respectively)	777,268	887,885
Other current assets	1,190,642	1,120,808
Total current assets	35,898,873	32,291,485
Property, plant and equipment:
Machinery and equipment	23,545,121	23,439,781
Building	3,367,082	3,367,082
Office furniture and equipment (VIE $281,000 and $268,000, respectively)	2,613,300	2,591,159
Intellectual property	752,044	752,044
Land	250,000	250,000
Leasehold improvements	415,610	402,963
Fixtures and equipment at customer locations	518,450	518,450
Projects under construction	123,271	121,241
Property, Plant and Equipment, Gross	31,584,878	31,442,720
Less : accumulated depreciation and amortization (VIE $56,000 and $36,000, respectively)	(27,383,679)	(26,886,139)
Total property, plant and equipment, net	4,201,199	4,556,581
Other assets:
Goodwill (VIE $440,000 and $440,000, respectively)	1,473,176	1,473,176
Net deferred income tax asset	1,373,000	1,102,467
Other assets	583,931	560,329
Total other assets	3,430,107	3,135,972
TOTAL ASSETS	43,530,179	39,984,038
Current liabilities:
Checks written in excess of bank balance (VIE $12,000 and $16,000, respectively)	11,858	454,850
Trade payables (VIE $233,000 and $144,000, respectively)	7,196,038	5,414,497
Line of credit (VIE $320,000 and $338,000, respectively)	15,925,808	13,783,930
Notes payable - current portion	5,341,792	942,533
Notes payable affiliates - current portion	10,721	9,615
Capital Lease - current portion	731	7,562
Accrued liabilities (VIE $141,000 and $92,000, respectively)	2,435,558	2,047,893
Total current liabilities	30,922,506	22,660,880
Long-term liabilities:
Notes payable - affiliates	213,214	212,545
Notes payable, net of current portion (VIE $68,000 and $83,000, respectively)	137,554	4,951,581
Notes payable - officers, subordinated	1,526,910	1,507,362
Deferred gain (non current)	195,587	207,410
Deferred income tax liability	84,000
Total long-term debt, net of current portion	2,157,265	6,878,898
Total long-term liabilities	2,157,265	6,878,898
CTI Industries Corporation stockholders' equity:
Preferred Stock -- no par value, 3,000,000 shares authorized, 0 shares issued and outstanding
Common stock - no par value, 15,000,000 shares authorized, 3,573,885 shares issued and 3,530,227 shares outstanding	13,898,494	13,898,494
Paid-in-capital	2,333,236	2,271,261
Accumulated earnings	238,873	720,223
Accumulated other comprehensive loss	(4,932,299)	(5,365,364)
Less: Treasury stock, 43,658 shares	(160,784)	(160,784)
Total CTI Industries Corporation stockholders' equity	11,377,520	11,363,830
Noncontrolling interest	(927,112)	(919,570)
Total Equity	10,450,408	10,444,260
TOTAL LIABILITIES AND EQUITY	$ 43,530,179	$ 39,984,038

XML

Condensed Consolidated Balance Sheets (Current Period Unaudited) (Parentheticals) - USD ($) $ / shares in Thousands	Mar. 31, 2018	Dec. 31, 2017
Cash and cash equivalents	$ 595,605	$ 181,026
Allowance for doubtful accounts	102,000	114,000
Inventories, net	21,355,107	18,865,932
Prepaid expenses	777,268	887,885
Office furniture and equipment	2,613,300	2,591,159
Goodwill	1,473,176	1,473,176
Net deferred income tax asset	1,373,000	1,102,467
Checks written in excess of bank balance	11,858	454,850
Trade payables	7,196,038	5,414,497
Line of credit	15,925,808	13,783,930
Accrued liabilities	$ 2,435,558	$ 2,047,893
Preferred Stock, Par value (in dollars per share)	$ 0	$ 0
Preferred Stock, shares authorized (in shares)	3,000,000	3,000,000
Preferred Stock, shares issued (in shares)	0	0
Preferred Stock, shares outstanding (in shares)	0	0
Common stock, no par value (in dollars per share)	$ 0	$ 0
Common stock, shares authorized (in shares)	15,000,000	15,000,000
Common stock, shares issued (in shares)	3,573,885	3,573,885
Common stock, shares outstanding (in shares)	3,530,227	3,530,227
Treasury stock, shares (in shares)	43,658	43,658
Variable Interest Entity, Primary Beneficiary, Aggregated Disclosure [Member]
Cash and cash equivalents	$ 65,000	$ 51,000
Inventories, net	465,000	498,000
Prepaid expenses	174,000	80,000
Office furniture and equipment	281,000	268,000
Accumulated depreciation and amortization	56,000	36,000
Goodwill	440,000	440,000
Net deferred income tax asset	62,000	52,000
Checks written in excess of bank balance	12,000	16,000
Trade payables	233,000	144,000
Line of credit	320,000	338,000
Accrued liabilities	$ 141,000	$ 92,000

XML

Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net Sales	$ 13,979,177	$ 15,359,637
Cost of Sales	11,110,786	11,742,189
Gross profit	2,868,391	3,617,448
Operating expenses:
General and administrative	1,884,046	1,901,256
Selling	858,537	721,390
Advertising and marketing	296,880	556,409
Gain on sale of assets	(24,414)	(69,300)
Total operating expenses	3,015,049	3,109,755
Income from operations	(146,658)	507,693
Other (expense) income:
Interest expense	(564,060)	(377,211)
Interest income	(345)	4,346
Change in fair value of warrants		19,606
Foreign currency loss	31,028	(30,525)
Total other expense, net	(533,377)	(383,784)
Net income before taxes	(680,035)	123,909
Income tax expense	(209,484)	75,637
Net income	(470,551)	48,272
Less: Net (loss) income attributable to noncontrolling interest	(7,543)	(10,197)
Net income attributable to CTI Industries Corporation	(463,008)	58,469
Other Comprehensive Income (Loss)
Foreign currency adjustment	433,065	311,313
Comprehensive Income (Loss)	$ (29,943)	$ 369,782
Basic income per common share (in dollars per share)	$ (0.13)	$ 0.02
Diluted income per common share (in dollars per share)	$ (0.13)	$ 0.02
Weighted average number of shares and equivalent shares of common stock outstanding:
Basic (in shares)	3,530,227	3,591,947
Diluted (in shares)	3,530,227	3,748,139

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ (470,551)	$ 48,272
Depreciation and amortization	376,920	381,854
Amortization of debt discount	61,975	47,025
Change in fair value of warrants		(19,606)
Amortization of deferred gain on sale/leaseback	(28,486)	(26,693)
Provision for losses on accounts receivable	(17,781)	1,827
Provision for losses on inventories	(35,503)	20,099
Deferred income taxes	(133,982)	8,124
Change in assets and liabilities:
Accounts receivable	(465,865)	2,660,360
Inventories	(1,995,477)	815,593
Prepaid expenses and other assets	109,567	13,083
Trade payables	1,572,804	(20,172)
Accrued liabilities	127,038	(846,643)
Net cash provided by operating activities	(899,341)	3,083,123
Cash flows from investing activities:
Purchases of property, plant and equipment	63,533	(219,927)
Net cash used in investing activities	63,533	(219,927)
Cash flows from financing activities:
Change in checks written in excess of bank balance	(442,992)	(629,530)
Net change in revolving line of credit	2,123,582	(1,835,972)
Repayment of long-term debt (related parties $0 and $2,000)	(432,942)	(390,788)
Cash paid for deferred financing fees	(24,568)
Net cash used in financing activities	1,223,080	(2,856,290)
Effect of exchange rate changes on cash	27,307	12,759
Net decrease in cash and cash equivalents	414,579	19,665
Cash and cash equivalents at beginning of period	181,026	563,043
Cash and cash equivalents at end of period	595,605	582,708
Supplemental disclosure of cash flow information:
Cash payments for interest	408,001	311,768
Supplemental Disclosure of non-cash investing and financing activity
Property, Plant & Equipment acquisitions funded by liabilities	$ 25,387	$ 63,474

XML

Condensed Consolidated Statements of Cash Flows (Unaudited) (Parentheticals) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Repayment of related party debt	$ 0	$ 2,000

XML

Note 1 - Basis of Presentation

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Business Description and Basis of Presentation [Text Block]

Note

1

- Basis of Presentation

The accompanying condensed (a) consolidated balance sheet as of

December 31, 2017,

which has been derived from audited consolidated financial statements, and (b) the unaudited interim condensed consolidated financial statements have been prepared and, in the opinion of management, contain all the adjustments (consisting of those of a normal recurring nature) considered necessary to present fairly the consolidated financial position and the consolidated statements of comprehensive income and consolidated cash flows for the periods presented in conformity with generally accepted accounting principles for interim consolidated financial information and the instructions to Form

10

-Q and Article

8

of Regulation S-

X.

Accordingly, they do

not

include all the information and footnotes required by accounting principles generally accepted in the United States of America. Operating results for the

three

months ended

March 31, 2018

are

not

necessarily indicative of the results that

may

be expected for the fiscal year ending

December 31, 2018.

It is suggested that these condensed consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's annual report on Form

10

-K for the fiscal year ended

December 31, 2017.

Principles of consolidation and nature of operations:

The condensed consolidated financial statements include the accounts of CTI Industries Corporation and its wholly-owned subsidiaries, CTI Balloons Limited and CTI Supply, Inc., its majority-owned subsidiaries, Flexo Universal, S. de R.L. de C.V. and CTI Europe gmbH, as well as the accounts of Venture Leasing S. A. de R. L., Venture Leasing L.L.C and Clever Container Company, L.L.C. (the “Company”). The last

three

entities have been consolidated as variable interest entities. All significant intercompany transactions and accounts have been eliminated in consolidation. The Company (i) designs, manufactures and distributes balloon and related novelty (candy and party related) products throughout the world, (ii) operates 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, and (iii) distributes vacuum sealing products and home organization products in the United States.

Variable Interest Entities (“VIE’s”):

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. There are

three

entities that have been consolidated as variable interest entities.

Use of estimates:

In preparing condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenue and expenses during the reporting period in the condensed consolidated financial statements and accompanying notes. Actual results

may

differ from those estimates. The Company’s significant estimates include reserves for doubtful accounts, reserves for the lower of cost or market of inventory, reserves for deferred tax assets and recovery value of goodwill.

Earnings per share:

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period.

Diluted earnings per share is computed by dividing the net income by the weighted average number of shares of common stock and equivalents (stock options and warrants), unless anti-dilutive, during each period.

As of

March 31, 2018

and

2017,

shares to be issued upon the exercise of options and warrants aggregated

471,144

and

359,817,

respectively. The number of shares included in the determination of earnings on a diluted basis for the

three

months ended

March 31, 2018

and

2017

were

none

and

76,675,

respectively, as the former would have been anti-dilutive.

Significant Accounting Policies:

The Company’s significant accounting policies are summarized in Note

2

of the Company’s consolidated financial statements for the year ended

December 31, 2017.

There were

no

significant changes to these accounting policies during the

three

months ended

March 31, 2018,

except for the adoption of Accounting Standards Codification (ASC) Topic

606,

Revenue from Contracts with Customers.  

On

January 1, 2018,

we adopted ASC

606

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.

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.

Recent Accounting Pronouncements:

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases

(

Topic

842

), aimed at making leasing activities more transparent and comparable. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including today’s operating leases. For public business entities, the standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Early application is permitted for all entities. While we are currently evaluating the potential impact of this new standard, we expect that our property, plant and equipment will increase significantly due to the addition of assets currently under lease, and the lease liabilities will correspondingly increase.

XML

Note 2 - Debt

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Debt and Capital Leases Disclosures [Text Block]

Note

2

- Debt

Until

December 2017,

we had in place a series of credit facility and related agreements with BMO Harris Bank, N.A. and BMO Private Equity (U.S.), (collectively, “BMO”), in the aggregate amount of approximately

$17

million. During

December 2017,

we terminated those agreements and fully repaid all amounts owed BMO under those agreements, including associated fees and costs related to termination, as we entered in new financing agreements with PNC Bank, National Association (“PNC”). The “PNC Agreements” include a

$6

million term loan and an

$18

million revolving credit facility, with a termination date of

December 2022.

Available credit under the Revolving Credit facility is determined by eligible receivables and inventory at CTI Industries (U.S.) and Flexo Universal (Mexico).

Certain terms of the PNC Agreements include:

● Restrictive Covenants : The Credit Agreement includes several restrictive covenants under which we are prohibited from, or restricted in our ability to:

○ Borrow money;

○ Pay dividends and make distributions;

○ Make certain investments;

○ Use assets as security in other transactions;

○ Create liens;

○ Enter into affiliate transactions;

○ Merge or consolidate; or

○ Transfer and sell assets.

● Financial Covenants : The Credit Agreement includes a series of financial covenants we are required to meet including:

○ We are required to maintain a "Leverage Ratio", which is defined as the ratio of (a) Funded Debt (other than the Shareholder Subordinated Loan) as of such date of determination to (b) EBITDA (as defined in the PNC Agreements) for the applicable period then ended. The highest values for this ratio allowed by the PNC Agreements are:

Fiscal Quarter Ratio
December 31, 2017	4.75	to	1.00
March 31, 2018	4.50	to	1.00
June 30, 2018	4.25	to	1.00
September 30, 2018	3.75	to	1.00
December 31, 2018	3.50	to	1.00
March 31, 2019	3.25	to	1.00
June 30, 2019	3.00	to	1.00
September 30, 2019 and thereafter	2.75	to	1.00

○ We are required to maintain a "Fixed Charge Coverage Ratio", which is defined as the ratio of (a) EBITDA for such fiscal period, minus Unfinanced Capital Expenditures made during such period, minus distributions (including tax distributions) and dividends made during such period, minus cash taxes paid during such period to (b) all Debt Payments made during such period. This ratio must not exceed 1.1 : 1.0 for any quarterly calculation.

The credit agreement provides for interest at varying rates in excess of the prime rate, depending on the level of senior debt to EBITDA over time. We also entered into a swap agreement with PNC Bank to fix the interest for

$3

million over

3

years. This contract was made at market value upon

December 2017

execution and accounted for as a hedge.

Failure to comply with these covenants might cause us to pay a higher rate of interest (by

2%

per the Agreements), or other penalties up to and including the availability of the credit facility itself, and thus might negatively impact our ability to remain a going concern. We believe that we were in compliance as of

December 31, 2017,

but

not

in compliance as of

March 31, 2018.  As a result, we have reclassified

$4.4

million of noncurrent debt into current debt as of March 31, 2018.  

The Company and its bank are currently discussing the appropriate actions going forward with respect to this credit facility.

On

September 30, 2016,

John H. Schwan advanced to the Company the sum of

$530,000

and Mr. Stephen M. Merrick advanced the Company the sum of

$370,000

to provide short-term working capital to the Company to fund the Company’s obligation to purchase and produce inventory for a substantial order for vacuum sealing systems to be delivered in

November 2016. 

In consideration of such advances, the Company issued Promissory Notes to Mr. Schwan and Mr. Merrick.  The principal balance of these notes were paid in

December 2016

and

January 2017.

Unrelated to the above, as of

December 2017,

Mr. Schwan was owed a total of

$1,099,000,

with additional accrued interest of

$400,000,

by the Company. As part of the

December 2017

financing with PNC, 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.

No

payments were issued to Mr. Schwan during the

three

months ended

March 31, 2018,

with

$27,000

of interest recorded as an expense.

XML

Note 3 - Stock-based Compensation; Changes in Equity

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Stockholders' Equity Note Disclosure [Text Block]

Note

3

- Stock-Based Compensation; Changes in Equity

The Company has adopted Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic

718

which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the condensed consolidated financial statements based on their grant-date fair values.

The Company has applied the Black-Scholes model to value stock-based awards and issued warrants related to notes payable. 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 our common stock. The risk-free rate of interest is the related U.S. Treasury yield curve for periods within the expected term of the option at the time of grant. The dividend yield on our common stock is estimated to be

0%,

as the Company did

not

issue dividends during

2018

and

2017.

The expected volatility is based on historical volatility of the Company’s common stock.

The Company’s net loss for the

three

months ended

March 31, 2018

and

2017

includes approximately

$62,000

and

$5,000,

respectively, of compensation costs related to share based payments. As of

March 31, 2018,

there is

$302,000

of unrecognized compensation expense related to non-vested stock option grants and stock grants. We expect approximately

$110,000

of additional stock-based compensation expense to be recognized over the remainder of

2018,

$92,000

to be recognized during

2019,

and

$56,000

to be recognized during

2020.

On

April 10, 2009,

the Board of Directors approved for adoption, and on

June 5, 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.) As of

March 31, 2018,

all underlying awards had been granted and options for

471,144

shares remain outstanding.

A summary of the Company’s stock option activity, which includes grants of restricted stock, non-qualified stock options, incentive stock options, warrants and related information, is as follows:

	Shares under Option			Weighted Average Exercise Price
Balance at December 31, 2017		476,144		$	3.97
Granted		-			-
Cancelled/Expired		-			-
Exercised/Issued		(5,000	)		-
Outstanding at March 31, 2018		471,144		$	4.01
Exercisable at March 31, 2018		103,463		$	5.38

The instruments above have an aggregate intrinsic value of

$37,000,

which represents the total pre-tax intrinsic value (the difference between the closing price of the Company’s common stock on the last trading day of the quarter ended

March 31, 2018

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

March 31, 2018.

XML

Note 4 - Legal Proceedings

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Contingencies Disclosure [Text Block]

Note

4

- 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.

In

July, 2017,

God’s Little Gift, Inc. (d\b\a) Helium and Balloons Across America and Gary Page (“Claimants”) filed an action against the Company in the North Carolina State Court. This action was removed to the United States District Court in North Carolina. The Company filed an answer and motion to dismiss this action. The Court stayed the action based upon an arbitration clause in the agreement on which part of the action was based. On

December 18, 2017,

Claimants filed an arbitration claim against the Company before the American Arbitration Association in Chicago, Illinois. The Statement of Claim includes claims for alleged breach of

two

agreements among the parties, essentially for alleged failure by the Company to pay disputed commission amounts. Claimants also included counts for alleged unjust enrichment and tortious interference with contract. The Company has filed a response to the Statement of Claim denying all of the claims. The Company believes the claims are without merit and intends to defend all of the claims vigorously. The Company has

not

accrued any amounts in respect of this matter and cannot estimate the possible loss, if any, that the Company many incur with respect to it. The proceedings are at an early stage.

XML

Note 5 - Other Comprehensive Income

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Comprehensive Income (Loss) Note [Text Block]

Note

5

- Other Comprehensive Income

In the

three

months ended

March 31, 2018,

the Company incurred other comprehensive income of approximately

$433,000,

all from foreign currency translation adjustments.

The following table sets forth the accumulated balance of other comprehensive income and each component.

	Foreign Currency Items			Total Accumulated Other Comprehensive Income
Beginning balance as of January 1, 2018	$	(5,365,364	)	$	(5,365,364	)
Current period change, net of tax		433,065			433,065
Ending Balance as of March 31, 2018		(4,932,299	)		(4,932,299	)

XML

Note 6 - Inventories, Net

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Inventory Disclosure [Text Block]

Note

6

-

Inventories, Net

	March 31, 201 8			December 31, 2017
Raw materials	$	3,060,291		$	2,632,415
Work in process		3,435,535			3,386,078
Finished goods		15,325,399			13,347,620
Allowance for excess quantities		(466,118	)		(500,181	)
Total inventories	$	21,355,107		$	18,865,932

XML

Note 7 - Geographic Segment Data

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Segment Reporting Disclosure [Text Block]

Note

7

- Geographic Segment Data

The Company has determined that it operates primarily in

one

business segment that designs, manufactures and distributes film and film related products for use in packaging, storage and novelty balloon products. The Company operates in foreign and domestic regions. Information about the Company's operations by geographic area is as follows:

	Net Sales to Outside Customers
	For the Three Months Ended				Total Assets at
	March 31,				March 31,		December 31,
	2018		2017		2018		2017
United States	$	9,738,000	$	11,647,000	$	29,094,000	$	27,784,000
Europe		1,362,000		947,000		3,142,000		2,989,000
Mexico		2,186,000		2,023,000		9,844,000		8,288,000
United Kingdom		693,000		743,000		1,450,000		923,000
	$	13,979,000	$	15,360,000	$	43,530,000	$	39,984,000

XML

Note 8 - Concentration of Credit Risk

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Concentration Risk Disclosure [Text Block]

Note

8

- Concentration of Credit Risk

Concentration of credit risk with respect to trade accounts receivable is generally limited due to the large number of entities comprising the Company's customer base. The Company performs ongoing credit evaluations and provides an allowance for potential credit losses against the portion of accounts receivable which is estimated to be uncollectible. Such losses have historically been within management's expectations. During the

three

months ended

March 31, 2018

and

2017,

there were

two

customers whose purchases represented more than

10%

of the Company’s consolidated net sales, respectively. Sales to these customers for the

three

months ended

March 31, 2018

and

2017

are as follows:

	Three Months Ended				Three Months Ended
	March 31, 2018				March 31, 2017
Customer	Net Sales		% of Net Sales		Net Sales		% of Net Sales
Customer A	$	4,450,000		31.8%	$	4,427,000		28.8%
Customer B	$	2,471,000		17.7%	$	2,609,000		17.0%

As of

March 31, 2018,

the total amounts owed to the Company by these customers were approximately

$3,643,000

or

33.4%,

and

$2,657,000

or

24.3%,

of the Company’s consolidated net accounts receivable, respectively. The amounts owed at

March 31, 2017

by these customers were approximately

$3,301,000

or

27.7%,

and

$2,657,000

or

22.3%

of the Company’s consolidated net accounts receivable, respectively.

XML

Note 9 - Related Party Transactions

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Related Party Transactions Disclosure [Text Block]

Note

9

-

Related Party Transactions

Stephen M. Merrick, Chief Executive Officer of the Company, is of counsel to the law firm of Vanasco Genelly and Miller PC which provides legal services to the Company. Legal fees paid by the Company to this firm for the

three

months ended

March 31, 2018

and

2017,

respectively, were

$72,000

and

$26,000.

John H. Schwan, through an investment entity, and Stephen M. Merrick, Chief Executive Officer of the Company, also through an investment entity own, in aggregate, a

50%

interest in Clever Container Company L.L.C., an Illinois limited liability company (“Clever Container”). During the

three

months ended

March 31, 2018

and

2017,

Clever Container purchased various products from the Company in the amount of

$237,000

and

$204,000,

respectively. As of

March 31, 2018

and

2017,

the balance of accounts receivable from Clever Container to the Company were

$1,102,000

and

$711,000,

respectively. The Company owns a

28.5%

interest in Clever Container.

XML

Note 10 - Derivative Instruments; Fair Value

3 Months Ended

Mar. 31, 2018

Notes to Financial Statements

Derivatives and Fair Value [Text Block]

Note

10

-

Derivative Instruments; Fair Value

The Company accounts for derivative instruments in accordance with U.S. GAAP, which requires that all derivative instruments be recognized on the balance sheet at fair value. We

may

enter into interest rate swaps to fix the interest rate on a portion of our variable interest rate debt to reduce the potential volatility in our interest expense that would otherwise result from changes in market interest rates. Our derivative instruments are recorded at fair value and are included in accrued liabilities of our consolidated balance sheet. Our accounting policies for these instruments are based on whether they meet our criteria for designation as hedging transactions, which include the instrument’s effectiveness, risk reduction and, in most cases, a

one

-to-

one

matching of the derivative instrument to our underlying transaction. As of

March 31, 2018

and

December 31, 2017,

we had

one

derivative instrument accounted for as a hedge, compared to

no

such instrument as of

March 31, 2017.

Gains and losses from changes in fair values of derivatives that are

not

designated as hedges for accounting purposes are recognized in the consolidated statement of operations. We have

no

such derivative financial instruments as of

December 31, 2017.

Changes in fair value for the respective periods were recognized in the consolidated statement of operations.

The interest rate swap we entered into

December 14, 2017

had a

three

year term (ending

December 14, 2020)

and a notional amount of

$3

million. The Company purchased a

2.25%

fixed rate in exchange for the variable rate on a portion of the notes payable under the PNC Agreements, which was

1.47%

at time of execution. The fair value of the swap was insignificant as of

March 31, 2018

and

December 31, 2017.

XML

Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2018

Accounting Policies [Abstract]

Consolidation, Policy [Policy Text Block]

Principles of consolidation and nature of operations:

The condensed consolidated financial statements include the accounts of CTI Industries Corporation and its wholly-owned subsidiaries, CTI Balloons Limited and CTI Supply, Inc., its majority-owned subsidiaries, Flexo Universal, S. de R.L. de C.V. and CTI Europe gmbH, as well as the accounts of Venture Leasing S. A. de R. L., Venture Leasing L.L.C and Clever Container Company, L.L.C. (the “Company”). The last

three

entities have been consolidated as variable interest entities. All significant intercompany transactions and accounts have been eliminated in consolidation. The Company (i) designs, manufactures and distributes balloon and related novelty (candy and party related) products throughout the world, (ii) operates 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, and (iii) distributes vacuum sealing products and home organization products in the United States.

Consolidation, Variable Interest Entity, Policy [Policy Text Block]

Variable Interest Entities (“VIE’s”):

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. There are

three

entities that have been consolidated as variable interest entities.

Use of Estimates, Policy [Policy Text Block]

Use of estimates:

In preparing condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amount of revenue and expenses during the reporting period in the condensed consolidated financial statements and accompanying notes. Actual results

may

differ from those estimates. The Company’s significant estimates include reserves for doubtful accounts, reserves for the lower of cost or market of inventory, reserves for deferred tax assets and recovery value of goodwill.

Earnings Per Share, Policy [Policy Text Block]

Earnings per share:

Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during each period.

Diluted earnings per share is computed by dividing the net income by the weighted average number of shares of common stock and equivalents (stock options and warrants), unless anti-dilutive, during each period.

As of

March 31, 2018

and

2017,

shares to be issued upon the exercise of options and warrants aggregated

471,144

and

359,817,

respectively. The number of shares included in the determination of earnings on a diluted basis for the

three

months ended

March 31, 2018

and

2017

were

none

and

76,675,

respectively, as the former would have been anti-dilutive.

New Accounting Pronouncements, Policy [Policy Text Block]

Significant Accounting Policies:

The Company’s significant accounting policies are summarized in Note

2

of the Company’s consolidated financial statements for the year ended

December 31, 2017.

There were

no

significant changes to these accounting policies during the

three

months ended

March 31, 2018,

except for the adoption of Accounting Standards Codification (ASC) Topic

606,

Revenue from Contracts with Customers.  

On

January 1, 2018,

we adopted ASC

606

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.

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.

Recent Accounting Pronouncements:

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases

(

Topic

842

), aimed at making leasing activities more transparent and comparable. The new standard requires substantially all leases be recognized by lessees on their balance sheet as a right-of-use asset and corresponding lease liability, including today’s operating leases. For public business entities, the standard is effective for fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. For all other entities, the standard is effective for fiscal years beginning after

December 15, 2019,

and interim periods within fiscal years beginning after

December 15, 2020.

Early application is permitted for all entities. While we are currently evaluating the potential impact of this new standard, we expect that our property, plant and equipment will increase significantly due to the addition of assets currently under lease, and the lease liabilities will correspondingly increase.

XML

Note 2 - Debt (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Leverage Ratios [Table Text Block]

Fiscal Quarter Ratio
December 31, 2017	4.75	to	1.00
March 31, 2018	4.50	to	1.00
June 30, 2018	4.25	to	1.00
September 30, 2018	3.75	to	1.00
December 31, 2018	3.50	to	1.00
March 31, 2019	3.25	to	1.00
June 30, 2019	3.00	to	1.00
September 30, 2019 and thereafter	2.75	to	1.00

XML

Note 3 - Stock-based Compensation; Changes in Equity (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Share-based Compensation, Activity [Table Text Block]

	Shares under Option			Weighted Average Exercise Price
Balance at December 31, 2017		476,144		$	3.97
Granted		-			-
Cancelled/Expired		-			-
Exercised/Issued		(5,000	)		-
Outstanding at March 31, 2018		471,144		$	4.01
Exercisable at March 31, 2018		103,463		$	5.38

XML

Note 5 - Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

	Foreign Currency Items			Total Accumulated Other Comprehensive Income
Beginning balance as of January 1, 2018	$	(5,365,364	)	$	(5,365,364	)
Current period change, net of tax		433,065			433,065
Ending Balance as of March 31, 2018		(4,932,299	)		(4,932,299	)

XML

Note 6 - Inventories, Net (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Inventory, Current [Table Text Block]

	March 31, 201 8			December 31, 2017
Raw materials	$	3,060,291		$	2,632,415
Work in process		3,435,535			3,386,078
Finished goods		15,325,399			13,347,620
Allowance for excess quantities		(466,118	)		(500,181	)
Total inventories	$	21,355,107		$	18,865,932

XML

Note 7 - Geographic Segment Data (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedule of Segment Reporting Information, by Segment [Table Text Block]

	Net Sales to Outside Customers
	For the Three Months Ended				Total Assets at
	March 31,				March 31,		December 31,
	2018		2017		2018		2017
United States	$	9,738,000	$	11,647,000	$	29,094,000	$	27,784,000
Europe		1,362,000		947,000		3,142,000		2,989,000
Mexico		2,186,000		2,023,000		9,844,000		8,288,000
United Kingdom		693,000		743,000		1,450,000		923,000
	$	13,979,000	$	15,360,000	$	43,530,000	$	39,984,000

XML

Note 8 - Concentration of Credit Risk (Tables)

3 Months Ended

Mar. 31, 2018

Notes Tables

Schedules of Concentration of Risk, by Risk Factor [Table Text Block]

	Three Months Ended				Three Months Ended
	March 31, 2018				March 31, 2017
Customer	Net Sales		% of Net Sales		Net Sales		% of Net Sales
Customer A	$	4,450,000		31.8%	$	4,427,000		28.8%
Customer B	$	2,471,000		17.7%	$	2,609,000		17.0%

XML

Note 1 - Basis of Presentation (Details Textual) - shares	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount	0	76,675
Employee Stock Options and Warrants [Member]
Common Stock, Capital Shares Reserved for Future Issuance	471,144	359,817

XML

Note 2 - Debt (Details Textual)			3 Months Ended		12 Months Ended
	Dec. 14, 2017 USD ($)	Sep. 30, 2016 USD ($)	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)	Dec. 31, 2017 USD ($)	Nov. 30, 2017 USD ($)
Potential Percent Increase in Interest Rates Contingent on Covenant Compliance					2.00%
Reclassification of Noncurrent Debt to Current Debt			$ 4,400,000
Interest Expense, Total			564,060	$ 377,211
PNC [Member] | Interest Rate Swap [Member] | Designated as Hedging Instrument [Member]
Derivative Liability, Notional Amount	$ 3,000,000
Derivative, Term of Contract	3 years
Maximum [Member]
Fixed Charge Coverage Ratio					1.1
Promissory Note [Member] | John H Schwan [Member]
Proceeds from Related Party Debt		$ 530,000
Due to Related Parties, Total					$ 1,099,000
Interest Payable					400,000
Interest Expense, Total			$ 27,000
BMO [Member]
Long-term Debt, Total						$ 17,000,000
PNC [Member] | PNC Agreements [Member] | Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity					18,000,000
PNC [Member] | PNC Agreements [Member] | Term Loan [Member]
Long-term Debt, Total					$ 6,000,000

XML

Note 2 - Debt - Leverage Ratios (Details)	3 Months Ended							12 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2017
Leverage ratio							4.5	4.75
Scenario, Forecast [Member]
Leverage ratio	2.75	3	3.25	3.5	3.75	4.25

XML

Note 3 - Stock-based Compensation; Changes in Equity (Details Textual) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017	Apr. 10, 2009
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate	0.00%
Dividends, Common Stock, Cash	$ 0		$ 0
Allocated Share-based Compensation Expense, Total	62,000	$ 5,000
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Total	302,000
Expected Recognized Compensation Expenses, Remainder of the Fiscal Year	110,000
Expected Recognized Compensation Expenses in Year Two	92,000
Expected Recognized Compensation Expenses in Year Three	$ 56,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	471,144		476,144
Stock Incentive Plan 2009 [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized				510,000
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Number, Ending Balance	471,144
Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value	$ 37,000

XML

Note 3 - Stock-based Compensation; Changes in Equity - Option Activity (Details)	3 Months Ended
	Mar. 31, 2018 $ / shares shares
Outstanding, beginning of period (in shares) | shares	476,144
Outstanding, beginning of period (in dollars per share) | $ / shares	$ 3.97
Granted (in shares) | shares
Granted (in dollars per share) | $ / shares
Cancelled/Expired (in shares) | shares
Cancelled/Expired (in dollars per share) | $ / shares
Exercised/Issued (in shares) | shares	(5,000)
Exercised/Issued (in dollars per share) | $ / shares
Outstanding at the end of period (in shares) | shares	471,144
Outstanding at the end of period (in dollars per share) | $ / shares	$ 4.01
Exercisable at the end of period (in shares) | shares	103,463
Exercisable at the end of period (in dollars per share) | $ / shares	$ 5.38

XML

Note 5 - Other Comprehensive Income (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax, Total	$ 433,065	$ 311,313

XML

Note 5 - Other Comprehensive Income - Accumulated Other Comprehensive Loss Balances (Details)	3 Months Ended
	Mar. 31, 2018 USD ($)
Balance	$ 10,444,260
Balance	10,450,408
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]
Balance	(5,365,364)
Accumulated Other Comprehensive Loss, Current period change	433,065
Balance	(4,932,299)
AOCI Attributable to Parent [Member]
Balance	(5,365,364)
Accumulated Other Comprehensive Loss, Current period change	433,065
Balance	$ (4,932,299)

XML

Note 6 - Inventories, Net - Inventories (Details) - USD ($)	Mar. 31, 2018	Dec. 31, 2017
Raw materials	$ 3,060,291	$ 2,632,415
Work in process	3,435,535	3,386,078
Finished goods	15,325,399	13,347,620
Allowance for excess quantities	(466,118)	(500,181)
Total inventories	$ 21,355,107	$ 18,865,932

XML

Note 7 - Geographic Segment Data (Details Textual)	3 Months Ended
	Mar. 31, 2018
Number of Operating Segments	1

XML

Note 7 - Geographic Segment Data - Financial Information by Geographic Area (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017	Dec. 31, 2017
Sales to outside customers	$ 13,979,177	$ 15,359,637
Total Assets	43,530,179	39,984,000	$ 39,984,038
UNITED STATES
Sales to outside customers	9,738,000	11,647,000
Total Assets	29,094,000	27,784,000
Europe [Member]
Sales to outside customers	1,362,000	947,000
Total Assets	3,142,000	2,989,000
MEXICO
Sales to outside customers	2,186,000	2,023,000
Total Assets	9,844,000	8,288,000
UNITED KINGDOM
Sales to outside customers	693,000	743,000
Total Assets	$ 1,450,000	$ 923,000

XML

Note 8 - Concentration of Credit Risk (Details Textual)	3 Months Ended
	Mar. 31, 2018 USD ($)	Mar. 31, 2017 USD ($)
Customer One [Member]
Accounts Receivable, Gross	$ 3,643,000	$ 3,301,000
Customer Two [Member]
Accounts Receivable, Gross	$ 2,657,000	$ 2,657,000
Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Number of Major Customers	2	2
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer One [Member]
Concentration Risk, Percentage	31.80%	28.80%
Customer Concentration Risk [Member] | Sales Revenue, Net [Member] | Customer Two [Member]
Concentration Risk, Percentage	17.70%	17.00%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer One [Member]
Concentration Risk, Percentage	33.40%	27.70%
Customer Concentration Risk [Member] | Accounts Receivable [Member] | Customer Two [Member]
Concentration Risk, Percentage	24.30%	22.30%

XML

Note 8 - Concentration of Credit Risk (Details) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Net Sales	$ 13,979,177	$ 15,359,637
Customer One [Member]
Net Sales	$ 4,450,000	$ 4,427,000
Customer One [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Percent of net sales	31.80%	28.80%
Customer Two [Member]
Net Sales	$ 2,471,000	$ 2,609,000
Customer Two [Member] | Customer Concentration Risk [Member] | Sales Revenue, Net [Member]
Percent of net sales	17.70%	17.00%

XML

Note 9 - Related Party Transactions (Details Textual) - USD ($)	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Legal Fees	$ 72,000	$ 26,000
Clever Container [Member]
Noncontrolling Interest, Ownership Percentage by Parent	28.50%
Clever Container [Member]
Revenue from Related Parties	$ 237,000	204,000
Accounts Receivable, Related Parties	$ 1,102,000	$ 711,000

XML

Note 10 - Derivative Instruments; Fair Value (Details Textual) - PNC [Member] - Interest Rate Swap [Member] - Designated as Hedging Instrument [Member]	Dec. 14, 2017 USD ($)
Derivative Liability, Notional Amount	$ 3,000,000
Derivative, Fixed Interest Rate	2.25%
Derivative, Variable Interest Rate	1.47%