NextPlat(NXPL) - 2025 Q2 - Quarterly Report

FORM 10-Q Filing Information Registrant Information NEXTPLAT CORP (NXPL) filed its quarterly report for the period ended June 30, 2025. The company is a Nevada corporation, classified as a non-accelerated filer and a smaller reporting company, with 25,963,051 shares of common stock outstanding as of the latest practicable date - NEXTPLAT CORP (NXPL) filed its quarterly report for the period ended June 30, 2025[2] Classification Status | Classification | Status | | :------------- | :----- | | Large accelerated filer | ☐ | | Accelerated filer | ☐ | | Non-accelerated filer | ☒ | | Smaller reporting company | ☒ | | Emerging growth company | ☐ | - Common Stock, $0.0001 par value: 25,963,051 shares outstanding[6] SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS Forward-Looking Statements Disclaimer This report contains forward-looking statements based on current expectations, estimates, and forecasts, which involve risks, assumptions, and uncertainties. Readers are cautioned not to place undue reliance on these statements, and the company undertakes no obligation to update them - This quarterly report contains forward-looking statements based on current expectations, estimates, forecasts, and projections about future performance, business, beliefs, and management's assumptions[10] - These statements are not guarantees of future performance and involve risks, assumptions, and uncertainties, including those described in the Annual Report on Form 10-K for the year ended December 31, 2024[10] - The company undertakes no obligation to update publicly any forward-looking statements after the date they are made, except as required by law[10] PART I. FINANCIAL INFORMATION ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) This section presents the unaudited condensed consolidated financial statements for NextPlat Corp, including balance sheets, statements of comprehensive loss, changes in equity, and cash flows, along with detailed notes explaining the company's organization, accounting policies, revenue recognition, and other financial details CONDENSED CONSOLIDATED BALANCE SHEETS Condensed Consolidated Balance Sheets (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Total Assets | $31,033 | $36,478 | | Total Current Assets | $26,855 | $31,480 | | Total Liabilities | $7,425 | $9,680 | | Total Current Liabilities | $6,208 | $8,210 | | Total Equity | $23,608 | $26,798 | - Total assets decreased by $5,445 thousand (14.9%) from December 31, 2024, to June 30, 2025[15] - Total liabilities decreased by $2,255 thousand (23.3%) from December 31, 2024, to June 30, 2025[15] CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenue, net | $13,240 | $16,989 | $27,765 | $34,482 | | Gross profit | $2,883 | $5,858 | $6,346 | $10,720 | | Total operating expenses | $4,712 | $16,754 | $9,660 | $23,457 | | Net loss attributable to NextPlat Corp | $(1,789) | $(5,311) | $(3,132) | $(6,791) | | Basic and diluted loss per share | $(0.07) | $(0.28) | $(0.12) | $(0.36) | - Net revenue decreased by $3,749 thousand (22.1%) for the three months ended June 30, 2025, and by $6,717 thousand (19.5%) for the six months ended June 30, 2025, compared to the prior year periods[17] - Net loss attributable to NextPlat Corp significantly improved, decreasing by $3,522 thousand (66.3%) for the three months and $3,659 thousand (53.9%) for the six months ended June 30, 2025, primarily due to a substantial reduction in operating expenses, especially impairment loss[17] CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Equity Attributable to NextPlat Corp Stockholders (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :----------------------------------- | :------------ | :---------------- | | Balance at Period End | $23,494 | $26,684 | | Stock-based compensation | $11 | $0 | | Net loss | $(3,132) | $(48,950) (Accumulated Deficit) | | Comprehensive loss (foreign currency) | $(69) | $(66) | - Total equity decreased from $26,798 thousand at December 31, 2024, to $23,608 thousand at June 30, 2025, primarily due to net loss and comprehensive loss[18] CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(3,100) | $(379) | | Net cash provided by (used in) investing activities | $98 | $(981) | | Net cash used in financing activities | $(261) | $(34) | | Net decrease in cash | $(3,325) | $(1,430) | | Cash end of period | $16,635 | $24,877 | - Net cash used in operating activities increased significantly from $(379) thousand in H1 2024 to $(3,100) thousand in H1 2025[21] - Net cash provided by investing activities turned positive in H1 2025 ($98 thousand) compared to H1 2024 ($(981) thousand), mainly due to the absence of a major acquisition like Outfitter Satellite[21] NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization and Nature of Operations NextPlat Corp operates in two main segments: e-Commerce Operations (satellite communication services, equipment sales, and e-Commerce platforms) and Healthcare Operations (pharmacy services, TPA, and data management). The company expanded its e-Commerce segment with the acquisition of Outfitter Satellite, Inc. in April 2024 - NextPlat operates in e-Commerce (satellite communication services, equipment sales, e-Commerce platforms) and Healthcare (pharmacy services, TPA, data management)[24][25][28] - Acquired 100% of Outfitter Satellite, Inc. on April 1, 2024, to expand Satellite Industry services in the U.S.[27] - Healthcare segment includes Progressive Care, LLC and its pharmacy subsidiaries (Pharmco 901, Pharmco 1002, Pharmco 1103/1204) and ClearMetrX Inc. (personalized healthcare services and technology)[28] Note 2. Basis of Presentation and Principles of Consolidation The financial statements are unaudited and prepared in accordance with GAAP and SEC rules. The company retrospectively adopted ASU 2024-03 for expense disaggregation and ASU 2023-09 for income tax disclosures, effective January 1, 2025. Significant events include the Progressive Care merger (October 2024) and the Outfitter Satellite acquisition (April 2024) - Financial statements are unaudited, prepared in accordance with GAAP and SEC rules, and include all adjustments necessary for fair presentation[35] - Retrospectively adopted ASU 2024-03 (expense disaggregation) and adopted ASU 2023-09 (income tax disclosure) effective January 1, 2025[39][51][52] - Progressive Care Inc. merged into a wholly owned subsidiary of NextPlat on October 1, 2024, and Outfitter Satellite, Inc. was acquired on April 1, 2024[41][43] Note 3. Summary of Significant Accounting Policies The company's significant accounting policies remain consistent with its 2024 Form 10-K, with selected disclosures on cash management (FDIC insurance, ICS agreement) and foreign currency translation (GBP functional currency for GTC). Recent accounting pronouncements, ASU 2024-03 and ASU 2023-09, were early adopted effective January 1, 2025, primarily impacting presentation - No material changes to significant accounting policies for the six months ended June 30, 2025, compared to the 2024 Form 10-K[47] - Cash management includes FDIC insurance up to $250,000 and an Insured Cash Sweep Service (ICS) agreement to mitigate credit risk for amounts exceeding this limit[48] - GTC's functional currency is Great British Pound (GBP); assets and liabilities are translated at balance sheet date rates, equity at historical rates, and P&L at average rates, with adjustments reported in accumulated other comprehensive loss[49] - Early adopted ASU 2024-03 (expense disaggregation) and ASU 2023-09 (income tax disclosure) effective January 1, 2025, with no impact on financial condition, results of operations, or cash flows[51][52] Note 4. Fair Value The company uses a fair value hierarchy (Level 1, 2, 3) to measure financial instruments. Cash, accounts receivable, and accounts payable approximate fair value due to their short-term nature. Notes payable and lease liabilities approximate fair value due to variable interest rates or implicit rates in leases (Level 2 inputs) - Fair value is defined as the price received from selling an asset or paid to transfer a liability in an orderly transaction between market participants[58] - Cash, accounts receivable, and accounts payable approximate fair value due to their short-term nature[60] - Notes payable and lease liabilities approximate fair value due to variable interest rates or implicit rates in leases, classified as Level 2 inputs[60] Note 5. Revenue Total net revenue decreased by 22% for the three months and 19% for the six months ended June 30, 2025, compared to the prior year. This was driven by a significant decline in Healthcare Operations revenue, partially offset by growth in e-Commerce revenue Net Revenues by Major Categories (in thousands) | Revenue Category | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | e-Commerce revenue | $4,120 | $3,512 | $7,126 | $6,377 | | Pharmacy prescription and other revenue | $8,173 | $10,521 | $18,263 | $21,845 | | Pharmacy 340B contract revenue | $947 | $2,956 | $2,376 | $6,260 | | Total Revenues, net | $13,240 | $16,989 | $27,765 | $34,482 | - e-Commerce revenue increased by $0.6 million (17.3%) for the three months and $0.7 million (11.7%) for the six months ended June 30, 2025, compared to the prior year[61] - Healthcare Operations revenue (prescription and 340B) decreased by $4.3 million (32.1%) for the three months and $7.4 million (26.3%) for the six months ended June 30, 2025, compared to the prior year[61] Note 6. Earnings (Loss) per Share The company reported basic and diluted loss per share of $(0.07) for the three months and $(0.12) for the six months ended June 30, 2025, a significant improvement from $(0.28) and $(0.36) in the prior year periods, respectively. Potentially dilutive securities were anti-dilutive due to net losses Basic and Diluted Loss Per Share (in thousands, except per share data) | Metric | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | Net loss attributable to NextPlat Corp | $(1,789) | $(5,311) | $(3,132) | $(6,791) | | Basic and diluted loss per share | $(0.07) | $(0.28) | $(0.12) | $(0.36) | | Weighted average common shares outstanding | 25,963 | 18,824 | 25,963 | 18,774 | - Basic and diluted loss per share improved significantly due to reduced net losses and an increase in weighted average common shares outstanding[64] - Potentially dilutive common shares were excluded from diluted EPS calculation as they would be anti-dilutive due to net losses[63] Note 7. Accounts Receivable, net Net accounts receivable decreased to $3,153 thousand at June 30, 2025, from $4,895 thousand at December 31, 2024. The allowance for credit losses decreased by $0.1 million for the six months ended June 30, 2025 Accounts Receivable, net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Gross accounts receivable – trade | $3,185 | $5,036 | | Less: allowance for credit losses | $(32) | $(141) | | Accounts receivable, net | $3,153 | $4,895 | - The allowance for credit losses was decreased by $0.1 million for the six months ended June 30, 2025, reflecting revised estimates based on current economic conditions[65] Note 8. Receivables - Other, net Other receivables, net, increased to $854 thousand at June 30, 2025, from $732 thousand at December 31, 2024, primarily due to an increase in receivables from customers Receivables - Other, net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Performance bonuses | $582 | $588 | | Customers | $222 | $115 | | Other | $50 | $29 | | Receivables - other, net | $854 | $732 | Note 9. Inventory, net Net inventory increased to $5,215 thousand at June 30, 2025, from $4,881 thousand at December 31, 2024, with finished goods increasing and a slight increase in the reserve for obsolete inventory Inventory, net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Finished goods | $5,674 | $5,320 | | Less reserve for obsolete inventory | $(459) | $(439) | | Inventory, net | $5,215 | $4,881 | Note 10. Property and Equipment, net Net property and equipment decreased to $2,839 thousand at June 30, 2025, from $3,407 thousand at December 31, 2024, primarily due to accumulated depreciation. Depreciation expense for the six months ended June 30, 2025, was $0.3 million Property and Equipment, net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Property and equipment gross | $6,248 | $6,667 | | Less: accumulated depreciation | $(3,409) | $(3,260) | | Property and equipment, net | $2,839 | $3,407 | - Depreciation expense was approximately $0.3 million for the six months ended June 30, 2025, down from $0.4 million in the prior year[69] Note 11. Intangible Assets, net Net intangible assets decreased to $473 thousand at June 30, 2025, from $524 thousand at December 31, 2024. Amortization expense for the six months ended June 30, 2025, was significantly lower at $0.1 million compared to $1.4 million in the prior year, as Healthcare Operations' intangible assets were fully impaired in 2024 Intangible Assets, net (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | Customer contracts | $311 | $353 | | Trade names | $162 | $171 | | Total intangible assets | $473 | $524 | - Amortization expense for intangible assets was approximately $0.1 million for the six months ended June 30, 2025, a significant decrease from $1.4 million in the prior year[71] - The decrease in amortization is due to Healthcare Operations' intangible assets being fully impaired throughout 2024; current intangible assets are related to e-Commerce Operations from the Outfitter acquisition[138][158] Note 12. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses decreased to $5,213 thousand at June 30, 2025, from $7,230 thousand at December 31, 2024, primarily driven by a reduction in accounts payable Accounts Payable and Accrued Expenses (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Accounts payable | $4,636 | $6,596 | | Accrued wages and payroll liabilities | $208 | $269 | | Accrued other liabilities | $285 | $269 | | Customer deposits payable | $84 | $96 | | Total | $5,213 | $7,230 | Note 13. Notes Payable Total notes payable decreased to $1,156 thousand at June 30, 2025, from $1,412 thousand at December 31, 2024. This includes a mortgage note, an uncollateralized note, and collateralized notes, with a significant portion due in 2028 Notes Payable (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :---------------- | | Mortgage note payable - commercial bank | $1,004 | $1,050 | | Note payable - uncollateralized | $25 | $25 | | Notes payable - collateralized | $122 | $234 | | Insurance premiums financing | $5 | $103 | | Subtotal | $1,156 | $1,412 | | Less: current portion | $(213) | $(380) | | Long-term portion | $943 | $1,032 | - The mortgage note payable bears a fixed interest rate of 4.75% and matures on December 14, 2028[75] Principal Outstanding Repayment Schedule (in thousands) | Year | Amount | | :------------------------ | :----- | | 2025 (remaining six months) | $122 | | 2026 | $157 | | 2027 | $124 | | 2028 | $753 | | 2029 | — | | Total | $1,156 | Note 14. Equity Stock-based compensation expense decreased significantly to $11 thousand for the six months ended June 30, 2025, from $1.1 million in the prior year, due to non-recurring grants fully vested. The company has 50,000,000 authorized common shares, with 25,963,051 issued and outstanding - Stock-based compensation expense was approximately $11,000 for the six months ended June 30, 2025, a significant decrease from $1.1 million in the prior year, attributed to non-recurring grants fully vested[81] - The company has 50,000,000 authorized shares of common stock ($0.0001 par value), with 25,963,051 shares issued and outstanding as of June 30, 2025, and December 31, 2024[83] - Common stock (NXPL) and warrants (NXPLW) are traded on the Nasdaq Capital Market[84] Note 15. Related Party Transactions Related party payables to Interim CEO David Phipps decreased to $1 thousand at June 30, 2025, from $18 thousand at December 31, 2024. The company also employed and paid wages to relatives of Mr. Phipps and former COO Dr. Pamela Roberts, and to Lauren Sturges Fernandez, spouse of the late CEO - Accounts payable due to related party (Interim CEO David Phipps) decreased from approximately $18,000 at December 31, 2024, to $1,000 at June 30, 2025[85] - The company employed and paid wages to one employee related to Mr. Phipps and two employees related to Dr. Pamela Roberts (former COO of Progressive Care) during the six months ended June 30, 2025[86] - Lauren Sturges Fernandez, spouse of the late CEO, was employed as Chief of Staff and Special Assistant to the Chairman of the Board[86] Note 16. Commitments and Contingencies The company is involved in several legal proceedings, including an EEOC lawsuit against Pharmco LLC, a class action suit by a former Progressive Care CEO regarding the merger, and an arbitration claim by Progressive Care against a former employee. Management believes these claims lack merit and is vigorously defending them, with no accruals recorded - A former employee of Pharmco LLC filed an EEOC lawsuit on March 17, 2025; the company is vigorously defending and cannot estimate potential loss[88] - Alan Jay Weisberg, former CEO of Progressive Care, filed a class action suit on October 28, 2024, alleging breach of fiduciary duty related to the Progressive Care merger; management believes the claim is not meritorious and is defending against it[89][90] - Progressive Care was notified of a potential claim by a former employee on June 17, 2024, and has filed for arbitration, believing it will prevail on the merits[91] Note 17. Reportable Segments NextPlat operates two reportable segments: e-Commerce Operations and Healthcare Operations. The segments are managed separately due to different business strategies, with financial performance reviewed by the Interim CEO and CFO. Both segments experienced a decline in gross profit margins for the six months ended June 30, 2025, compared to the prior year - The company has two reportable segments: e-Commerce Operations (e-commerce platform, satellite communication services) and Healthcare Operations (prescription pharmaceuticals, TPA, data management)[94] Segment Net Loss (in thousands) | Segment | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------- | :----------------------------- | :----------------------------- | :----------------------------- | :----------------------------- | | e-Commerce Operations | $(499) | $(1,467) | $(1,504) | $(2,796) | | Healthcare Operations | $(1,290) | $(9,276) | $(1,628) | $(9,647) | | Total Net Loss | $(1,789) | $(10,743) | $(3,132) | $(12,443) | - Gross profit margins for Healthcare Operations decreased to 19.9% (3 months) and 22.1% (6 months) in 2025 from 35.2% and 31.3% in 2024, respectively, due to decreased prescription volume and drug price increases outpacing reimbursement[124][143] - Gross profit margins for e-Commerce Operations decreased to 25.9% (3 months) and 25.2% (6 months) in 2025 from 31.6% and 30.0% in 2024, respectively, due to new airtime costs and temporary rate reductions[124][143] Note 18. Concentrations e-Commerce Operations had Amazon as a significant customer (31.1% of revenue in H1 2025) and key suppliers including Iridium Satellite, Garmin, and Globalstar. Geographically, Europe and North America were the largest revenue contributors. Healthcare Operations had a high supplier concentration (96.9% from one vendor in H1 2025) and relied on three significant PBMs for reimbursements - Amazon accounted for 31.1% of e-Commerce Operations revenue for the six months ended June 30, 2025[103] e-Commerce Operations Key Suppliers (Purchases in thousands) | Supplier | 6 Months Ended June 30, 2025 Amount | % of Total Purchases | | :--------------- | :-------------------------------- | :------------------- | | Iridium Satellite | $1,388 | 23.8% | | Garmin | $839 | 14.4% | | Globalstar | $619 | 10.6% | e-Commerce Operations Geographic Revenue (in thousands) | Region | 6 Months Ended June 30, 2025 Amount | % of Total | | :-------------- | :-------------------------------- | :--------- | | Europe | $3,499 | 49.1% | | North America | $2,339 | 32.8% | | Asia and Pacific | $1,032 | 14.5% | - Healthcare Operations had 96.9% of total vendor purchases from one significant vendor for the six months ended June 30, 2025[107] Healthcare Operations PBM Reimbursement Concentrations (6 Months Ended June 30, 2025) | PBM | % of Reimbursements | | :-- | :------------------ | | A | 28% | | B | 17% | | C | 15% | ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on NextPlat's financial condition and results of operations for the three and six months ended June 30, 2025, compared to the prior year. It covers business overview, critical accounting policies, detailed analysis of revenue, expenses, net loss, and liquidity, highlighting key drivers of changes Overview NextPlat's e-Commerce segment focuses on satellite communication services and e-Commerce platforms, expanding with the Outfitter Satellite acquisition. The Healthcare segment provides pharmacy services for complex chronic diseases, TPA, and data management. US-China tariffs have not materially impacted e-Commerce but pose a risk to future projects in China - e-Commerce Operations historically provided Satellite Industry communication services and equipment sales, now expanding with a state-of-the-art e-Commerce platform[113] - Acquisition of Outfitter Satellite, Inc. on April 1, 2024, expanded satellite-based connectivity solutions in the U.S.[114] - Healthcare Operations include five pharmacies providing prescription medications, TPA, data management, and services for 340B covered entities, focusing on complex chronic diseases[116][117][118][119][120] - US-China tariffs did not materially impact e-Commerce in H1 2025, but starting Q2 2025, certain imported goods became subject to tariffs, affecting costs and pricing strategies. Future projects in China, like Florida Sunshine vitamins, may be impacted[115] Critical Accounting Policies and Estimates The company's critical accounting policies and estimates remain consistent with those disclosed in its 2024 Form 10-K, with recent accounting pronouncements (ASU 2024-03 and ASU 2023-09) adopted primarily affecting presentation - No material changes to critical accounting policies and estimates from the 2024 Form 10-K[122] - Most recently adopted accounting pronouncements (ASU 2024-03 and ASU 2023-09) are described in Note 3 and primarily relate to presentation[122] Results of Operations for the three months ended June 30, 2025 compared to the three months ended June 30, 2024 For the three months ended June 30, 2025, net revenue decreased by 22.1% to $13.2 million, primarily due to a $4.4 million decrease in Healthcare Operations, partially offset by a $0.6 million increase in e-Commerce. Gross profit margins declined to 21.8% from 34.5%. Net loss attributable to NextPlat Corp significantly improved by 66% to $(1.8) million, driven by a $12.0 million reduction in operating expenses, mainly due to the absence of impairment losses Key Financial Highlights (Three Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :----------------------------------- | :----- | :----- | :------- | :------- | | Revenue, net | $13,240 | $16,989 | $(3,749) | (22)% | | Gross profit | $2,883 | $5,858 | $(2,975) | (51)% | | Operating expenses | $4,712 | $16,754 | $(12,042) | (72)% | | Net loss attributable to NextPlat Corp | $(1,789) | $(5,311) | $3,522 | (66)% | - Decrease in revenue primarily from Healthcare Operations ($4.4 million decrease), partially offset by e-Commerce Operations ($0.6 million increase)[123] - Gross profit margins decreased from 34.5% in Q2 2024 to 21.8% in Q2 2025, due to declines in both segments, including drug price increases outpacing reimbursement and new airtime costs[124] - Operating expenses decreased by $12.0 million (71.9%), mainly due to no impairment loss in Q2 2025 (compared to $9.8 million in Q2 2024) and reduced intangible asset amortization[131][134][138] Results of Operations for the six months ended June 30, 2025 compared to the six months ended June 30, 2024 For the six months ended June 30, 2025, net revenue decreased by 19.5% to $27.8 million, primarily due to a $7.5 million decrease in Healthcare Operations, partially offset by a $0.8 million increase in e-Commerce. Gross profit margins declined to 22.9% from 31.1%. Net loss attributable to NextPlat Corp significantly improved by 54% to $(3.1) million, driven by a $13.8 million reduction in operating expenses, mainly due to the absence of impairment losses Key Financial Highlights (Six Months Ended June 30, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :----------------------------------- | :----- | :----- | :------- | :------- | | Revenue, net | $27,765 | $34,482 | $(6,717) | (19)% | | Gross profit | $6,346 | $10,720 | $(4,374) | (41)% | | Operating expenses | $9,660 | $23,457 | $(13,797) | (59)% | | Net loss attributable to NextPlat Corp | $(3,132) | $(6,791) | $3,659 | (54)% | - Decrease in revenue primarily from Healthcare Operations ($7.5 million decrease), partially offset by e-Commerce Operations ($0.8 million increase)[142] - Gross profit margins decreased from 31.1% in H1 2024 to 22.9% in H1 2025, due to declines in both segments, including decreased pharmacy prescriptions and new airtime costs[143] - Operating expenses decreased by $13.8 million (58.8%), mainly due to no impairment loss in H1 2025 (compared to $9.9 million in H1 2024) and reduced intangible asset amortization[151][154][158] Liquidity and Capital Resources As of June 30, 2025, NextPlat had $16.6 million in cash and $20.7 million in working capital. The company is implementing cost reduction measures and exploring strategic alternatives to improve operational efficiency and preserve liquidity. Management believes existing cash resources are sufficient for the next 12 months - As of June 30, 2025, the company had a cash balance of approximately $16.6 million and working capital of approximately $20.7 million[162] - Management is implementing cost reduction measures, including optimizing delivery processes and renegotiating vendor agreements, and exploring strategic alternatives to diversify business operations[162] - Management believes existing financial resources are sufficient to support planned operations for at least the next 12 months[163] Cash Flow Summary (Six Months Ended June 30, in thousands) | Cash Flow Activity | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Operating activities | $(3,100) | $(379) | | Investing activities | $98 | $(981) | | Financing activities | $(261) | $(34) | | Effect of exchange rate on cash | $(62) | $(36) | | Change in cash | $(3,325) | $(1,430) | | Cash at end of period | $16,635 | $24,877 | Off-Balance Sheet Arrangements The company has not entered into any off-balance sheet arrangements, financial guarantees, or derivative contracts indexed to its shares - The company has not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties[168] - No derivative contracts indexed to company shares or retained/contingent interest in assets transferred to unconsolidated entities[168] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, NextPlat Corp is not required to provide quantitative and qualitative disclosures about market risk - As a smaller reporting company, NextPlat Corp is not required to provide quantitative and qualitative disclosures about market risk[169] ITEM 4. CONTROLS AND PROCEDURES As of June 30, 2025, the company's disclosure controls and procedures were deemed ineffective due to a material weakness related to inventory valuation identified in fiscal 2024. However, this material weakness has been remediated through the implementation of expanded internal controls for comprehensive net realizable value assessments - As of June 30, 2025, disclosure controls and procedures were not effective to provide reasonable assurance that required information is recorded, processed, summarized, and reported timely[170] - A material weakness related to inventory valuation controls was identified in fiscal 2024[171] - The material weakness was remediated by implementing formalized policies and procedures for comprehensive net realizable value (NRV) assessments, establishing senior management oversight, and enhancing accuracy of pricing and cost data[171] - No other material changes in internal control over financial reporting occurred during the quarter, except for the remediation efforts[173] PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS NextPlat is involved in three legal proceedings: an EEOC lawsuit against Pharmco LLC, a class action suit by a former Progressive Care CEO regarding the merger, and an arbitration claim by Progressive Care against a former employee. Management is vigorously defending these claims and does not believe they are meritorious - A former employee of Pharmco LLC filed an EEOC lawsuit on March 17, 2025; the company is vigorously defending and cannot estimate potential loss[175] - Alan Jay Weisberg, former CEO of Progressive Care, filed a class action suit on October 28, 2024, alleging breach of fiduciary duty related to the Progressive Care merger; management believes the claim is not meritorious and is defending against it[176][177] - Progressive Care was notified of a potential claim by a former employee on June 17, 2024, and has filed for arbitration, believing it will prevail on the merits[178] ITEM 1A. RISK FACTORS Beyond the risks outlined in the 2024 Form 10-K, a new material risk factor is the persistent US-China tariff environment, which could adversely impact the company's business, financial prospects, and profitability, particularly affecting e-Commerce initiatives targeting the Chinese market - The persistent US-China tariff environment is a new material risk factor that could adversely impact the company's business, financial prospects, results of operations, and financial condition[182] - The company has paused certain e-Commerce development program initiatives aimed at the Chinese market, such as the Florida Sunshine brand of vitamins, due to increased tariffs making them uncompetitive[183] - The company continues to sell OPKO Health Europe products in China, as they are not subject to additional tariffs[184] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS There were no unregistered sales of equity securities or use of proceeds to report - No unregistered sales of equity securities and use of proceeds to report[186] ITEM 3. DEFAULTS UPON SENIOR SECURITIES There were no defaults upon senior securities to report - No defaults upon senior securities to report[187] ITEM 4. MINE SAFETY DISCLOSURES Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[188] ITEM 5. OTHER INFORMATION On August 12, 2025, two directors, Louis Cusimano and Elizabeth Alcaine, resigned. On August 13, 2025, Lauren Sturges Fernandez, spouse of the late CEO, was unanimously elected to the Board, effective immediately, with an annual cash compensation of $48,000. No Rule 10b5-1 trading arrangements were adopted or terminated during the quarter - Louis Cusimano and Elizabeth Alcaine resigned from the Board of Directors, effective September 1, 2025, for personal reasons[189] - Lauren Sturges Fernandez, spouse of the late CEO, was unanimously elected to the Board on August 13, 2025, to fill one of the vacancies[190] - Mrs. Sturges Fernandez's compensation consists of annual cash compensation of $48,000 for her board service[192] - No director or officer adopted or terminated any Rule 10b5-1 trading arrangement during the three months ended June 30, 2025[195] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including the Director Agreement for Lauren Sturges Fernandez, certifications from the Principal Executive and Financial Officers, and Inline XBRL documents - Exhibit 10.1: Director Agreement, dated August 13, 2025, between NextPlat Corp and Lauren Sturges Fernandez[197] - Exhibits 31.1 and 31.2: Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002[197] - Exhibit 32.1: Certifications of Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002[197] - Exhibits 101 and 104: Inline XBRL Instance Document and Cover Page Interactive Data File[197] SIGNATURES The report was signed on August 13, 2025, by David Phipps, Interim Chief Executive Officer, and Cecile Munnik, Chief Financial Officer - The report was signed on August 13, 2025[200] - Signed by David Phipps, Interim Chief Executive Officer (Principal Executive Officer)[200] - Signed by Cecile Munnik, Chief Financial Officer (Principal Financial and Accounting Officer)[200]