NextPlat(NXPL) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) Q1 2025 unaudited financials report total assets of $35.2 million, a net loss of $1.34 million, and $2.1 million net cash used in operations Condensed Consolidated Balance Sheets Total assets decreased to $35.2 million by March 31, 2025, driven by reduced cash, with total equity declining to $25.5 million | Balance Sheet Highlights (In thousands) | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $30,475 | $31,480 | | Cash | $17,737 | $19,960 | | Total Assets | $35,204 | $36,478 | | Total Current Liabilities | $8,424 | $8,210 | | Total Liabilities | $9,753 | $9,680 | | Total Equity | $25,451 | $26,798 | Condensed Consolidated Statements of Comprehensive Loss Q1 2025 net revenue decreased 17% to $14.5 million, but reduced operating expenses led to a smaller net loss of $1.34 million | Income Statement (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue, net | $14,525 | $17,493 | | Gross profit | $3,463 | $4,863 | | Total operating expenses | $4,948 | $6,705 | | Net loss | $(1,343) | $(1,701) | | Basic and diluted loss per share | $(0.05) | $(0.08) | - The decrease in operating expenses was largely due to a significant reduction in intangible asset amortization, which fell from $698,000 in Q1 2024 to just $26,000 in Q1 2025[17] Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $2.1 million in Q1 2025, with the cash balance ending at $17.7 million | Cash Flow Summary (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(2,059) | $(2,685) | | Net cash used in investing activities | $(22) | $(63) | | Net cash used in financing activities | $(134) | $(1) | | Net decrease in cash | $(2,223) | $(2,781) | | Cash end of period | $17,737 | $23,526 | Notes to Condensed Consolidated Financial Statements Notes detail company structure, accounting policies, and financial components, highlighting the Outfitter Satellite acquisition, segment performance, and ongoing litigation - The company operates through two main business segments: e-Commerce Operations (including satellite communication services) and Healthcare Operations (pharmacy and related services)[25][26][29] - On April 1, 2024, NextPlat acquired 100% of Outfitter Satellite, Inc. to expand its Satellite Industry services in the U.S.[28] | Revenue by Category (In thousands) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | e-Commerce revenue | $3,006 | $2,865 | | Pharmacy prescription revenue | $10,090 | $11,324 | | Pharmacy 340B contract revenue | $1,429 | $3,304 | | Total Revenues, net | $14,525 | $17,493 | - The company is involved in several legal proceedings, including a class action lawsuit concerning the Progressive Care merger and an EEOC claim from a former employee, which it is vigorously defending[85][86] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 17% revenue decrease to Healthcare segment declines, operating expenses fell by $1.8 million, and current cash is sufficient for 12 months Results of Operations Q1 2025 total revenue decreased 17% to $14.5 million due to Healthcare segment declines, while operating expenses fell 26%, reducing net loss | Financial Summary (In thousands) | Q1 2025 | Q1 2024 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Revenue, net | $14,525 | $17,493 | $(2,968) | (17)% | | Gross profit | $3,463 | $4,863 | $(1,400) | (29)% | | Operating expenses | $4,948 | $6,705 | $(1,757) | (26)% | | Net loss | $(1,343) | $(1,701) | $358 | (21)% | - The decrease in revenue was primarily due to a decline in the Healthcare segment, with pharmacy prescription revenue falling by $1.2 million and 340B contract revenue decreasing by $1.9 million[123][124] - The significant drop in operating expenses was mainly due to a $0.7 million decrease in intangible asset amortization and a $0.4 million reduction in professional fees[130][132] Liquidity and Capital Resources As of March 31, 2025, the company held $17.7 million in cash and $22.1 million in working capital, deemed sufficient for the next 12 months, with ongoing cost-reduction efforts - The company's cash balance was approximately $17.7 million as of March 31, 2025[137] - Management asserts that existing cash resources are sufficient to support planned operations for at least the next 12 months[138] - Cost reduction measures are being implemented to improve efficiency and preserve liquidity, and management is exploring strategic alternatives, including a possible sale or merger of a portion of the business[137] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, NextPlat Corp is exempt from providing quantitative and qualitative disclosures about market risk - The company is exempt from this disclosure requirement due to its status as a smaller reporting company[144] Item 4. Controls and Procedures As of March 31, 2025, disclosure controls and procedures were deemed ineffective due to a material weakness in inventory valuation, with remediation efforts ongoing for Q2 2025 completion - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025[145] - A material weakness related to controls over the valuation of inventories was identified in fiscal 2024 and is still being remediated[146] - Remediation efforts are underway, including implementing new policies and enhancing management review of inventory valuation, with completion anticipated by the end of Q2 2025[146] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in several legal proceedings, including an EEOC claim, a class action suit related to a merger, and an employment contract dispute, all being vigorously defended - A former employee of subsidiary Pharmco LLC filed a lawsuit asserting claims under EEOC regulations on March 17, 2025[150] - A class action suit was filed by Alan Jay Weisberg, former CEO of Progressive Care Inc., alleging breach of fiduciary duty and insufficient consideration in the October 1, 2024 merger[151] - The company is also in an arbitration dispute with a former employee over an alleged breach of an employment contract, where the company has filed a counterclaim[153] Item 1A. Risk Factors The U.S./China tariff environment poses a significant risk, leading the company to pause certain e-Commerce initiatives like the 'Florida Sunshine' brand launch in China due to reduced competitiveness - The ongoing U.S./China tariff environment poses a significant risk to the company's business, financial condition, and profitability[157] - The company plans to pause the introduction of its Florida Sunshine brand of vitamins in China due to the adverse impact of tariffs on competitiveness[158] - Sales of products manufactured by OPKO Health Europe in China will continue as they are not produced in the U.S. and thus not subject to the additional tariffs[159] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No unregistered sales of equity securities or use of proceeds were reported during the period - None reported for the quarter[161] Item 3. Defaults Upon Senior Securities No defaults upon senior securities were reported during the period - None reported for the quarter[162] Item 4. Mine Safety Disclosures This item is not applicable to the company's operations - Not applicable[163] Item 5. Other Information No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during Q1 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the quarter[164] Item 6. Exhibits This section lists exhibits filed with Form 10-Q, including Sarbanes-Oxley Act certifications and Inline XBRL data files - Lists required certifications under Sections 302 and 906 of the Sarbanes-Oxley Act and XBRL financial data files as exhibits[165]