| CTI Industries Corporation | |||
| Ticker: | CTIB | 22160 North Pepper Road | |
| Exchange: | NASDAQ-Small Cap Market | Barrington, IL 60010 | |
| Industry: | Manufacturing (SIC Code 3949) | (847) 382-1000 | |
| # of Employees: | 146 | ||
| Type of Shares: | Common Shares | Filing Date: | 7/24/97 | |
| U.S. Shares: | 1,500,000 | Offer Date: | 11/4/97 | |
| Non-U.S. Shares: | 0 | Filing Price: | $4.50 | |
| Primary Shares: | 1,500,000 | Offer Price: | $4.00 | |
| Secondary Shares: | 0 | Gross Spread: | $0.40 | |
| Offering Amount: | $6,750,000 | Selling: | ||
| Expenses: | - | Reallowance: | ||
| Shares Out After: | 3,442,436 |
| Manager | Tier | Phone |
| Joseph Stevens & Company, L.P. | Lead Manager | (212) 361-3020 |
| Issuer's Law Firm: | Fishman & Merrick |
| Bank's Law Firm: | Orrick, Herrington & Sutcliffe |
| Auditor: | Coopers & Lybrand |
| Registrar/Transfer Agent: | Continental Stock Transfer & Trust Co |
Dollar amounts in U.S. millions except for per share data | |||||
| 6 Month Ending Financials | |||||
| Full Year Audited Income | Latest Unaudited Income | Prior Unaudited Income | Balance Sheet | ||
| 10/31/96 | 4/30/97 | 4/30/96 | 4/30/97 | ||
| Revenue: | $13.91 | $8.74 | $7.88 | Assets: | $11.52 |
| Net Income: | -$0.26 | $0.33 | -$0.08 | Curr Assets: | $7.69 |
| EPS: | -$0.20 | $0.26 | -$0.06 | Liabilities: | $10.56 |
| Prior EPS: | -$2.14 | -$0.91 | $1.28 | Curr Liabilities: | $7.20 |
| Cash Flow/Oper: | $0.84 | $1.16 | -$0.76 | Equity: | $0.96 |
| Cash Flow/Fin: | -$0.34 | -$0.37 | -$0.24 | Cash: | $0.00 |
| Cash Flow/Inv: | -$0.44 | -$0.37 | Working Cap: | $0.49 | |
| Business Description |
| The company manufactures and sells mylar ballons and believes it is the third largest manufacturer of mylar ballons in the world. The company also sells latex ballons, novelty and "message" items, such as mugs and banners, and toy products. The Company's balloons and related products are sold throughout the United States and in 30 foreign countries through a wide variety of retail outlets including grocery, general merchandise and drugstore chains, such as Eckerd Drug Stores and the Safeway and Winn Dixie grocery chains, card and gift shops, such as Hallmark and Factory Card Outlet stores, and party goods stores, such as Party City, as well as through florists and balloon decorators. The Company estimates the worldwide wholesale market for latex and mylar balloons to be in excess of $570 million. During fiscal 1996, the Company manufactured and sold over 15 million mylar balloons.To meet the needs of the mylar balloon market, the Company has developed sophisticated film products and techniques which have other applications. The Company's expertise in multi-color printing, with water-based ink in particular, has enabled the Company to expand its business to include the production of film wrappers for consumables. The Company produces, laminates and prints films for food packaging companies and manufactures custom film products for other commercial uses. |
| Competition |
| The balloon and novelty industry is highly competitive, with numerous competitors. There are presently seven major manufacturers of mylar balloons whose products are sold in the United States including Anagram International, Inc., M&D; Balloons, Inc., Pioneer Balloon, Convertidora International, Classic Balloon and Betallic. Several companies, including American Greetings, Amscan and Flowers, Inc., market and sell mylar balloons designed by them and manufactured by others for them. There are at least seven manufacturers of latex balloons whose products are sold in the United States including Globus Occidental, Pioneer Balloon, National Latex, Maple City, Tilco and P&TF.; The market for film packaging and custom products is fragmented, and competition in this area is difficult to gauge. However, there are numerous participants in this market and the Company can expect to experience intense quality and price competition. Many of these Companies offer products and services which are the same or similar to those offered by the Company and the Company's ability to compete depends on many factors within and outside its control. There are a number of well-established competitors in each of the Company's product lines, several of which possess substantially greater financial, marketing and technical resources and established, extensive, direct and indirect channels of distribution for their products and services. As a result, such competitors may be able to respond more quickly to new developments and changes in customer requirements, or devote greater resources to the development, promotion and sale of their products and services than the Company. Competitive pressures include, among other things, price competition, new designs and product development and copyright licensing. |
| Business Plan |
| The company's objective is to become a dominant participant in the worldwide mylar and latex balloon industry. To achieve this objective, the company is pursuing a business strategy that includes the following principal elements: (I) Strengthen and Expand Marketing Efforts, (ii) Increase Production Capability, (iii) Secure Supply, (iv) Expand Balloon Design and Product Development and (v) Develop Alternative Sales Channels. |
| Use of Proceeds |
| The proceeds from the proposed offering will be used to repay bank indebtedness, sales and marketing programs, improvements to plant and equipment, loans to Mexican supplier, investments in a Mexican joint venture, product development and character and image licenses and for working capital and for general corporate purposes. |
| Name of Shareholder | % Owned Before | % Owned After |
| Stephen M. Merrick | 23.55% | 14.88% |
| John H. Schwan | 22.57% | 14.29% |
| John C. Davis | 21.52% | 13.30% |
| Chicago, IL 60610 | 13.03% | 7.98% |
| Howard W. Schwan | 11.70% | 7.29% |
| Philip W. Colburn | 10.82% | 6.63% |
| Officer Name | Title | Age |
| John H. Schwan | Chairman and Director | 53 |
| Stephen M. Merrick | Chief Executive Officer, Secretay, Chief Financial Officer and Director | 55 |
| John C. Davis | Executive Vice President and Director | 64 |
| Sharon Konny | Manager of Finance and Administration | 39 |
| Howard W. Schwan | President | 43 |
| Brent Anderson | Vice President of Manufacturing | 31 |
| Additional Underwriter Compensation |
| Warrant to purchase 133,333 shares/units at a nominal price. |
| $48,000.00 consulting agreement for 2 year(s). |
| # of Units: | 1,333,333 | |||
| Unit Ticker: | CTINU | Unit Price: | $4.50 | |
| Warrant Ticker: | CTINW | Warrant Price: | ||
| Warrant Exercise Date: | Warrant Exercise Price: | $6.75 | ||
| Warrant Expiration Date: | ||||
| Warrant Detachable: | Yes | Warrant Detach Date: | ||
| Warrant Callable: | No |
| Unit Composition: 1 Common Share + 1 Warrant |
| Warrant Entitlement: 1 Common Share |