Part I. FINANCIAL INFORMATION Item 1. Consolidated Condensed Financial Statements (unaudited) Unaudited Q1 2025 financials show significant cash decline, increased working capital deficit, and a $2.02 million net loss, raising substantial doubt about going concern Consolidated Condensed Balance Sheets As of March 31, 2025, total assets decreased to $9.8 million due to cash drop, leading to a $15.4 million stockholders' deficit and $16.0 million working capital deficit Balance Sheet Summary (As of March 31, 2025 vs. Dec 31, 2024) | Metric | March 31, 2025 (Unaudited) ($) | December 31, 2024 ($) | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $17,652 | $420,131 | | Total Current Assets | $3,494,025 | $5,165,638 | | Total Assets | $9,826,866 | $11,311,819 | | Liabilities & Stockholders' Deficit | | | | Total Current Liabilities | $19,461,040 | $19,766,817 | | Total Liabilities | $25,235,074 | $25,650,969 | | Total Stockholders' Deficit | $(15,408,208) | $(14,339,150) | Consolidated Condensed Statements of Operations and Comprehensive Loss Q1 2025 revenue fell to $1.11 million from $2.20 million in Q1 2024, but net loss slightly improved to $2.02 million from $2.31 million due to absence of a $1.0 million non-cash finance expense Statement of Operations Summary (For the three months ended March 31) | Metric | 2025 (Unaudited) ($) | 2024 (Unaudited) ($) | | :--- | :--- | :--- | | Revenue | $1,106,819 | $2,204,720 | | Gross Profit | $175,300 | $312,317 | | Loss from Operations | $(1,161,094) | $(1,002,717) | | Net Loss | $(2,019,811) | $(2,306,806) | | Loss Per Share (Basic and Diluted) | $(0.43) | $(2.99) | Consolidated Condensed Statements of Cash Flows Q1 2025 net cash used in operating activities was $0.59 million, with $0.49 million provided by financing, resulting in cash and cash equivalents of just $17,652 at period end Cash Flow Summary (For the three months ended March 31) | Metric | 2025 (Unaudited) ($) | 2024 (Unaudited) ($) | | :--- | :--- | :--- | | Net cash used in operating activities | $(594,171) | $(773,422) | | Net cash used in investing activities | $(300,000) | $(40,000) | | Net cash provided by financing activities | $491,297 | $891,734 | | Cash and cash equivalents, end of period | $17,652 | $300,122 | Notes to Financial Statements Notes detail the March 2024 reverse recapitalization, business as an agriculture technology provider, and significant accounting policies, highlighting substantial doubt about going concern due to recurring losses and negative cash flows - The company completed a reverse recapitalization merger on March 11, 2024, with Lakeshore Acquisition II Corp., resulting in Nature's Miracle, Inc. (NMI) stockholders owning 84.7% of the combined company. For accounting purposes, NMI is treated as the acquirer2527 - Management has determined that recurring losses, negative operating cash flow ($594,171 for Q1 2025), and a working capital deficit of $15.9 million raise substantial doubt about the company's ability to continue as a going concern3941 - The company is involved in several legal proceedings, including a contract dispute with supplier Megaphoton over $6.9 million and a lawsuit from customer Growterra alleging breach of contract and fraud204206 - Subsequent to the quarter's end, the company secured additional financing through a $2 million convertible note agreement with a related party and a $20 million equity line of credit with GHS Investments213214 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 49.8% Q1 2025 revenue decline to cash constraints, reiterating significant liquidity challenges and going concern uncertainty, while exploring new ventures Results of Operations Q1 2025 revenue decreased by 49.8% to $1.1 million due to inventory limits, while gross margin improved to 15.8% from 14.2% due to higher-margin product sales, and net loss decreased to $2.0 million Q1 2025 vs Q1 2024 Performance | Metric | Q1 2025 ($) | Q1 2024 ($) | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $1,106,819 | $2,204,720 | (49.8)% | | Gross Profit | $175,300 | $312,317 | (43.9)% | | Gross Margin | 15.8% | 14.2% | +1.6 ppt | | Loss from Operation | $(1,161,094) | $(1,002,717) | +15.8% | | Net Loss | $(2,019,811) | $(2,306,806) | (12.4)% | - The decline in revenue was due to cash constraints restricting inventory purchases, leading to the company mainly selling existing inventory on hand233 - The increase in gross margin was driven by higher sales of new, higher-margin products, specifically grow media products, which saw sales increase from $34,373 to $255,920 year-over-year236 Liquidity and Capital Resources The company faces severe liquidity constraints with only $17,652 cash and a $15.9 million working capital deficit, raising substantial doubt about its ability to continue as a going concern - As of March 31, 2025, the company had only $17,652 in cash and a working capital deficit of approximately $15.9 million246 - Management has concluded that recurring losses and negative cash flows raise substantial doubt about the company's ability to continue as a going concern248 - Net cash used in operating activities was approximately $0.6 million for Q1 2025. Net cash provided by financing activities was approximately $0.5 million, primarily from the exercise of warrants252255 Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, the registrant is not required to provide quantitative and qualitative disclosures about market risk277 Item 4. Controls and Procedures Management concluded disclosure controls and procedures were not effective as of March 31, 2025, due to material weaknesses including lack of effective risk assessment and inadequate segregation of duties - The CEO and CFO concluded that disclosure controls and procedures were not effective as of March 31, 2025279 - Identified material weaknesses include lack of effective risk assessment, insufficient human resources in accounting leading to poor segregation of duties, and inadequate controls over revenue recognition and income tax279 - No changes were made to the internal control over financial reporting during the quarter that have materially affected, or are likely to materially affect, these controls281 Part II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in several legal disputes, including a $2.5 million lawsuit from Beverly Hills View, Inc. and a complaint from Growterra, LLC alleging breach of contract and fraud - Beverly Hills View, Inc. sued the company's subsidiary for $2.5 million, alleging unsuitable lighting products for cannabis cultivation. The company has countersued for non-payment284 - Growterra, LLC filed a complaint alleging breach of contract, fraud, and misappropriation of trade secrets. The company is negotiating and expects to defend itself successfully285 Item 1A. Risk Factors As a smaller reporting company, Nature's Miracle Holding Inc. is not required to provide risk factor information, reporting no material changes from previous disclosures - The company is electing scaled disclosure as a smaller reporting company and is not required to provide risk factor information. No material changes from previous disclosures were reported287 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities or issuer purchases of its equity securities for the quarter - The company reported no unregistered sales of equity securities or issuer purchases of its equity securities for the quarter288 Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities during the period - None289 Item 5. Other Information The company reported no other information for this item - None291 Item 6. Exhibits This section provides an index of exhibits filed with the Form 10-Q, including various agreements and required certifications from the CEO and CFO
Nature's Miracle Holding Inc.(NMHI) - 2025 Q1 - Quarterly Report