On January 28, 2023, Yunhong CTI Ltd. (the “Company” or “YCTI”) entered into an Exclusive Distribution Agreement (the “Agreement”) with Kunshan Fair Craft Product Co. Ltd. (“FAIR”) to facilitate the sale and market development of balloons with biodegradable features in the United States. Each of FAIR and YCTI is in the business of manufacturing and selling balloons, and each is working with materials designed to offer biodegradable and compostable features to balloons.

YCTI will be FAIR's exclusive distributor of its product offering in the United States for the term of the Agreement. The Agreement has an initial term commencing on January 28, 2023 and ending on January 31, 2024, and is subject to automatic renewal for successive one-year terms unless either party elects to terminate the term at least 30 days prior to the end of the then-current term. The Agreement does not restrict the Company's own independent development of similar products.