Nature's Miracle Holding Inc.(NMHI) - 2025 Q2 - Quarterly Report

Cover Page Information This section provides essential filing details and securities information for Nature's Miracle Holding Inc.'s Quarterly Report on Form 10-Q Filing Details This report is Nature's Miracle Holding Inc.'s Quarterly Report (Form 10-Q) for the period ended June 30, 2025, with the company identified as a non-accelerated filer, a smaller reporting company, and an emerging growth company - The company has filed all reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934 and has been subject to such filing requirements for the past 90 days[4] Filing Status | Indicator | Status | | :--- | :--- | | Large Accelerated Filer | No | | Accelerated Filer | No | | Non-Accelerated Filer | Yes | | Smaller Reporting Company | Yes | | Emerging Growth Company | Yes | Securities Information As of August 14, 2025, the company had 12,522,601 shares of common stock issued and outstanding, with its securities suspended from Nasdaq and now trading on the OTC market Securities Trading Information | Category | Ticker Symbol | | :--- | :--- | | Common Stock, par value $0.0001 per share | NMHI* | | Warrants, exercise price $11.50/share | NMHIW* | - As of August 14, 2025, the total number of common shares issued and outstanding was 12,522,601[7] - Nature's Miracle Holding Inc.'s securities have been suspended from trading on the Nasdaq Stock Market and are currently trading on the OTC market[3] PART I. FINANCIAL INFORMATION This section presents the company's unaudited consolidated condensed financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and cash flow statements, along with detailed notes Item 1. Consolidated Condensed Financial Statements (unaudited) This section presents Nature's Miracle Holding Inc. and its subsidiaries' unaudited consolidated condensed financial statements, including balance sheets, statements of operations and comprehensive loss, statements of stockholders' equity, and cash flow statements, along with detailed notes Consolidated Condensed Balance Sheets As of June 30, 2025, total assets decreased to $9,057,124 from $11,311,819 on December 31, 2024, while total liabilities slightly increased and the stockholders' deficit expanded Consolidated Condensed Balance Sheets (in USD) | Indicator | June 30, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $9,511 | $420,131 | | Accounts receivable, net | $1,443,204 | $1,829,044 | | Inventory, net | $703,001 | $1,778,583 | | Total current assets | $2,840,813 | $5,165,638 | | Deposits | $777,720 | $428,633 | | Property and equipment, net | $4,167,111 | $4,246,832 | | Total Assets | $9,057,124 | $11,311,819 | | Liabilities | | | | Short-term loans | $2,497,007 | $2,668,604 | | Accounts payable | $9,275,023 | $10,389,978 | | Total current liabilities | $20,364,549 | $19,766,817 | | Long-term debt, net | $5,518,413 | $5,678,550 | | Total Liabilities | $26,027,572 | $25,650,969 | | Stockholders' Deficit | | | | Accumulated deficit | $(28,525,437) | $(24,734,689) | | Total Stockholders' Deficit | $(16,970,448) | $(14,339,150) | Consolidated Condensed Statements of Operations and Comprehensive Loss For the three and six months ended June 30, 2025, the company experienced significant declines in revenue and gross profit, leading to a sustained net loss, with a notable increase in interest expense and a decrease in other non-cash financial expenses Operations and Comprehensive Loss Overview (in USD) | Indicator | 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 | $484,009 | $3,404,967 | $1,590,828 | $5,609,687 | | Cost of sales | $455,051 | $2,952,747 | $1,386,570 | $4,845,150 | | Gross profit | $28,958 | $452,220 | $204,258 | $764,537 | | Operating expenses | $1,181,609 | $1,736,891 | $2,518,003 | $3,051,925 | | Operating loss | $(1,152,651) | $(1,284,671) | $(2,313,745) | $(2,287,388) | | Interest expense, net | $(606,326) | $(486,586) | $(1,503,343) | $(788,975) | | Non-cash financial expenses | $- | $- | $- | $(1,000,000) | | Net loss | $(1,770,937) | $(1,768,319) | $(3,790,748) | $(4,075,125) | | Basic and diluted loss per share | $(0.29) | $(2.01) | $(0.72) | $(4.93) | Consolidated Condensed Statements of Stockholders' Equity As of June 30, 2025, the stockholders' deficit increased to $(16,970,448), primarily due to net loss and stock-based compensation, partially offset by warrant exercises and convertible note conversions Stockholders' Equity Changes Overview (in USD) | Indicator | Balance December 31, 2024 | Balance March 31, 2025 | Balance June 30, 2025 | | :--- | :--- | :--- | :--- | | Common shares outstanding | 2,445,364 | 4,935,826 | 7,512,769 | | Common stock amount | $246 | $495 | $753 | | Additional paid-in capital | $10,396,274 | $11,346,384 | $11,554,958 | | Accumulated deficit | $(24,734,689) | $(26,754,500) | $(28,525,437) | | Accumulated other comprehensive loss | $(981) | $(587) | $(722) | | Total Stockholders' Deficit | $(14,339,150) | $(15,408,208) | $(16,970,448) | - As of June 30, 2025, stock-based compensation expense was $60,957, warrant exercises increased additional paid-in capital by $865,239, and convertible note conversions increased additional paid-in capital by $147,617[20] Consolidated Condensed Statements of Cash Flows For the six months ended June 30, 2025, net cash used in operating activities decreased, net cash used in investing activities increased, and net cash provided by financing activities decreased, resulting in a significant decline in cash and cash equivalents to $9,511 at period-end Cash Flow Overview (in USD) | Cash Flow Activities | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(909,024) | $(1,742,515) | | Net cash used in investing activities | $(721,000) | $(40,000) | | Net cash provided by financing activities | $1,219,144 | $1,591,323 | | Effect of exchange rate changes | $260 | $(36) | | Net change in cash | $(410,620) | $(191,228) | | Cash and cash equivalents at beginning of period | $420,131 | $221,760 | | Cash and cash equivalents at end of period | $9,511 | $30,532 | - In the first half of 2025, net cash used in operating activities decreased, primarily due to a reduction in accounts receivable and an increase in accounts payable and accrued liabilities, partially offset by a decrease in inventory[22] - In the first half of 2025, net cash used in investing activities significantly increased, primarily for investment deposits in Future Tech[22] - In the first half of 2025, net cash provided by financing activities decreased, primarily from warrant exercises and convertible note borrowings, but was offset by short-term loan repayments[22] Notes to Financial Statements This section provides detailed notes to the consolidated condensed financial statements, covering the company's business nature, reorganization, going concern assumption, significant accounting policies, various asset and liability items, related party transactions, equity changes, concentration of risk, leases, commitments and contingencies, and subsequent events Note 1 — Nature of business and organization Nature's Miracle Holding Inc. is an agricultural technology company focused on the greenhouse and cultivation industry, providing products to indoor growers in North American controlled environment agriculture (CEA), formed through a series of mergers and reorganizations, and underwent a 1-for-30 reverse stock split in November 2024 - The company is an evolving agricultural technology company focused on the greenhouse and cultivation industry, providing products to indoor growers in North American controlled environment agriculture (CEA)[30] - On March 11, 2024, Lakeshore merged with the company, which then merged with Nature's Miracle, Inc. (NMI), resulting in NMI shareholders owning 84.7% of the company and the company becoming a 100% owner of NMI, with this merger treated as a reverse recapitalization[26][28] - On November 18, 2024, the company filed an amendment to its certificate of incorporation to effect a 1-for-30 reverse stock split, effective November 21, 2024[39] - The company has formed NM Data, Inc., focusing on data center and Bitcoin mining operations, and NM Rebate, Inc., focusing on energy rebate solutions and LED light supply[38] Note 2 — Going concern The company has incurred continuous losses and negative operating cash flows since 2022, with a cash balance of only $9,500, a working capital deficit of approximately $17.5 million, and an accumulated deficit exceeding $28.5 million as of June 30, 2025, raising substantial doubt about its ability to continue as a going concern for the next year Liquidity Status (in USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $9,500 | $400,000 | | Working capital deficit | $(17,500,000) | $(14,600,000) | | Accumulated deficit | $(28,525,437) | $(24,734,689) | | Net cash used in operating activities (six months ended June 30, 2025) | $(909,024) | $(1,742,515) | - The company has incurred continuous losses and negative operating cash flows since 2022, and management believes these conditions raise substantial doubt about its ability to continue as a going concern for the next year[43] - The company plans to supplement its capital through a $20 million equity line of credit (ELOC) program, convertible note financing, and financial support from related parties and shareholders[44][45][46][50] Note 3 — Basis of presentation and summary of significant accounting policies This note outlines the basis of financial statement presentation, prepared in accordance with U.S. GAAP and SEC interim reporting rules, and details the company's specific accounting policies for consolidation, estimates, cash and cash equivalents, accounts receivable, inventory, cost method investments, deposits, property and equipment, deferred offering costs, fair value measurements, revenue recognition, cost of sales, segment reporting, leases, income taxes, equity compensation, warrants, convertible notes, commitments and contingencies, related party transactions, loss per share, and recently issued accounting pronouncements - The financial statements are prepared in accordance with U.S. GAAP and SEC interim reporting rules, including all necessary normal recurring adjustments[49] - The company primarily recognizes revenue from providing CEA hardware products, mainly grow lights and related products, and since Q1 2024, indoor grow containers, to growers in the North American controlled environment agriculture (CEA) industry[72] Product Revenue Breakdown (in USD) | Product Category | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Grow lights | $382,673 | $3,350,684 | $1,233,572 | $5,377,250 | | Indoor grow containers | $- | $- | $- | $143,781 | | Grow media and other | $101,336 | $54,283 | $357,256 | $88,656 | | Total Revenue | $484,009 | $3,404,967 | $1,590,828 | $5,609,687 | - The company has adopted ASU 2024-04 to prospectively account for induced conversions of convertible debt instruments effective January 1, 2025, and is evaluating the disclosure impact of ASU 2023-09 and ASU 2024-03[100][101][102] Note 4 — Variable interest entity The company consolidates Upland 858 LLC (Upland) as a variable interest entity (VIE) because it holds control over Upland's operations, significant economic influence, and bears the risk of its losses - The company does not directly own equity in Upland but consolidates its financial statements as a variable interest entity (VIE) under ASC 810 due to its control over Upland's operations, significant economic influence, and exposure to its losses[104][105] Upland VIE Balance Sheet (as of June 30, 2025, in USD) | Indicator | Amount | | :--- | :--- | | Cash | $16,506 | | Property and equipment, net | $4,091,652 | | Total Assets | $4,108,158 | | Current portion of long-term debt | $85,380 | | Long-term debt, net | $2,644,568 | | Accrued expenses | $151 | | Intercompany payable to Visiontech | $1,383,113 | | Total Liabilities | $4,113,212 | Upland VIE Operating Results (as of June 30, 2025, in USD) | Indicator | Three Months | Six Months | | :--- | :--- | :--- | | Revenue | $83,211 | $166,421 | | Selling, general, and administrative expenses | $54,480 | $84,066 | | Interest expense | $24,822 | $49,294 | | Income tax | $- | $1,700 | | Net loss | $3,909 | $31,361 | Note 5 — Reverse recapitalization On March 11, 2024, the company completed mergers with Lakeshore and NMI, accounted for as a reverse recapitalization with NMI as the accounting acquirer, resulting in NMI shareholders holding 84.7% of the company's voting power and a significant impact on the company's financial position, including approximately $2.83 million in net liabilities recorded to accumulated deficit - On March 11, 2024, Lakeshore merged with the company, which then merged with NMI, resulting in NMI shareholders owning 84.7% of the company, with this transaction accounted for as a reverse recapitalization where Lakeshore was deemed the accounting acquiree[108] Common Stock Issued After Reverse Recapitalization (shares) | Category | Common Shares Outstanding | | :--- | :--- | | Lakeshore shares outstanding prior to reverse recapitalization | 74,717 | | Shares issued for private rights | 1,172 | | Lakeshore public shares and rights conversion | 26,337 | | Shares issued to service providers | 26,718 | | Shares issued for commitment fees | 5,114 | | Bonus shares issued to investors | 5,533 | | NMI shares converted to company common stock | 742,416 | | Total Shares Outstanding | 882,006 | - This reverse recapitalization generated approximately $1.1 million in net cash from financing activities and resulted in approximately $2.83 million in net liabilities being recorded to the company's accumulated deficit[109][110] Note 6 — Accounts receivable, net As of June 30, 2025, net accounts receivable decreased to $1,443,204 from $1,829,044 on December 31, 2024, with related party net accounts receivable also declining from $976,449 to $580,225, and a significant increase in the allowance for credit losses reflecting higher estimated credit risk Accounts Receivable, Net Breakdown (in USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Accounts receivable | $2,503,283 | $2,744,118 | | Less: Allowance for credit losses | $(1,060,079) | $(915,074) | | Subtotal Accounts Receivable, Net | $1,443,204 | $1,829,044 | | Related party accounts receivable | $730,998 | $1,092,960 | | Less: Related party allowance for credit losses | $(150,773) | $(116,511) | | Subtotal Related Party Accounts Receivable, Net | $580,225 | $976,449 | | Total Accounts Receivable, Net | $2,023,429 | $2,805,493 | Allowance for Credit Losses Changes (in USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Beginning balance | $1,031,585 | $669,974 | | Additions | $179,267 | $408,569 | | Write-offs | $- | $(46,958) | | Ending Balance | $1,210,852 | $1,031,585 | - For the three and six months ended June 30, 2025, the allowance for credit losses increased by 1,000.3% to $155,984 and 635.0% to $179,267, respectively, primarily due to increased estimated credit risk associated with outstanding accounts receivable[111][112] Note 7 — Cost method investment The company accounts for its 10% equity investment in Iluminar Lighting LLC using the cost method, with the investment amount remaining at $1,000,000 as of June 30, 2025, and December 31, 2024, and no impairment recognized Cost Method Investment (in USD) | Investment Item | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Iluminar 10% equity investment | $1,000,000 | $1,000,000 | | Total | $1,000,000 | $1,000,000 | - This investment originated from the conversion of $1,000,000 in accounts receivable into a 10% equity stake in Iluminar on April 11, 2023, with no impairment indicators identified as of June 30, 2025[114] Note 8 — Property and equipment, net As of June 30, 2025, net property and equipment totaled $4,167,111, slightly lower than $4,246,832 on December 31, 2024, primarily due to an increase in accumulated depreciation Property and Equipment, Net Breakdown (in USD) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Trucks and automobiles | $285,099 | $285,099 | | Machinery and equipment | $67,847 | $67,847 | | Buildings | $3,465,230 | $3,465,230 | | Land | $930,000 | $930,000 | | Subtotal | $4,748,176 | $4,748,176 | | Less: Accumulated depreciation | $(581,065) | $(501,344) | | Total | $4,167,111 | $4,246,832 | - For the three and six months ended June 30, 2025, depreciation expense was $39,861 and $79,721, respectively[116] Note 9 — Loans payable As of June 30, 2025, total short-term loans amounted to $2,497,007 and long-term debt totaled $5,518,413, with short-term loans primarily comprising accounts receivable factoring agreements and third-party loans, showing an increased proportion of high-interest factoring loans, while long-term debt included vehicle loans, construction loans, and secured commercial loans Short-Term Loans Breakdown (in USD) | Lender | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Factor H | $651,978 | $685,172 | | Factor I | $128,634 | $207,921 | | Factor J | $40,623 | $28,838 | | Factor K | $68,820 | $66,404 | | Factor L | $138,563 | $- | | Jie Zhang | $100,000 | $100,000 | | Peng Zhang | $560,000 | $560,000 | | RedOne Investment Limited | $230,000 | $230,000 | | Agile Capital Funding, LLC | $404,022 | $480,798 | | ClassicPlan Premium Financing, Inc. | $2,502 | $9,471 | | Maximcash Solutions LLC | $171,865 | $300,000 | | Total Short-Term Loans | $2,497,007 | $2,668,604 | - For the three and six months ended June 30, 2025, interest expense on short-term loans was $327,994 and $980,715, respectively, significantly higher than the prior year due to an increased proportion of high-interest factoring loans and higher overall loan balances[124][125] Long-Term Debt Breakdown (in USD) | Category | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Vehicle loans | $62,400 | $80,238 | | Construction loans | $2,729,947 | $2,771,645 | | Secured commercial loans | $3,059,859 | $3,127,742 | | Total Long-Term Debt | $5,852,206 | $5,979,625 | - For the three and six months ended June 30, 2025, interest expense on long-term loans was $151,340 and $304,333, respectively[132][133] Note 10 — Convertible notes The company entered into a series of convertible note agreements with various investors, typically bearing annual interest rates of 12%-14% and convertible into common stock under specific conditions, with some notes converted to equity but others reverting to debt due to the company's failure to timely complete registration - On July 3, 2024, the company entered into four convertible note agreements totaling $410,000 at a 12% annual interest rate, originally due in six months, but due to failure to timely register, investors elected to reinstate the debt and extend maturities to June and September 2025[135] - On August 13, 2024, the company entered into a $181,700 promissory note with Diagonal at a 12% annual interest rate, due June 15, 2025, convertible into common stock at a 25% discount to market price upon default, with a balance of $0 as of June 30, 2025[137] - On March 26, 2025, the company entered into a $111,111 face value convertible note with Black Ice Advisors, LLC at a 10% annual interest rate, convertible into common stock at a 35% discount to the lowest trading price, with a balance of $9,924 as of June 30, 2025[143] - For the three and six months ended June 30, 2025, interest expense related to convertible notes was $117,404 and $202,661, respectively[146] Note 11 — Related party transactions The company engages in various related party transactions, including purchases, sales, advances, deferred revenue, other payables, and short-term loans, involving entities or individuals controlled by company shareholders and management, such as Iluminar, Uninet Global Inc., NMCayman, Zhiyi (Jonathan) Zhang, and Tie (James) Li - As of June 30, 2025, related party accounts payable to Iluminar was $366,437, and related party net accounts receivable from Iluminar was $580,225[148][149] - As of June 30, 2025, total related party short-term loans amounted to $130,755, primarily from Zhiyi Zhang, Tie Li, and NMCayman[157] - On April 11, 2025, the company entered into a convertible promissory note agreement with Big Lake Capital, LLC, a related party controlled by Chairman and CEO Tie Li, providing up to $2,000,000 in financing, with an initial tranche of $600,000, and a note balance of $652,800 as of June 30, 2025[161] - For the three and six months ended June 30, 2025, interest expense on related party short-term loans was $2,608 and $5,187, respectively[160] Note 12 — Income taxes As of June 30, 2025, the company's deferred tax assets are fully offset by a valuation allowance, resulting in an effective tax rate near 0%, primarily due to historical losses and uncertainty regarding future taxable income - As of June 30, 2025, and December 31, 2024, the company's deferred tax assets are fully offset by a valuation allowance[162] - For the three and six months ended June 30, 2025, the effective tax rates were 0.00% and (0.05)%, respectively, differing from the federal and state statutory rate of 21.0% primarily due to the valuation allowance on deferred tax assets arising from operating losses[162] Note 13 — Equity The company's capital structure includes common and preferred stock, having undergone a reverse recapitalization and reverse stock split, with equity changes primarily driven by stock-based compensation, warrant exercises, debt-to-equity conversions, and public offerings, resulting in 831,260 warrants outstanding as of June 30, 2025 - The company is authorized to issue 101,000,000 shares, comprising 100,000,000 shares of common stock and 1,000,000 shares of preferred stock[163] - On November 18, 2024, the company effected a 1-for-30 reverse stock split, with all share and per-share data retroactively adjusted[166] - The company granted stock-based compensation to employees and consultants under its 2024 Incentive Plan, with expenses of $60,957 and $145,893 for the three and six months ended June 30, 2025, respectively[167][179] Summary of Warrant Activity (in USD and shares) | Indicator | December 31, 2024 | March 31, 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Warrants outstanding | 1,631,025 | 831,260 | 831,260 | | Common shares issuable | 1,631,025 | 831,260 | 831,260 | | Weighted-average exercise price ($) | $28.21 | $52.09 | $52.09 | | Remaining contractual term (years) | 3.94 | 4.47 | 4.22 | | Warrants exercised (March 31, 2025) | - | (1,839,023) | - | Note 14 — Concentration of risk The company faces credit risk in cash and accounts receivable, mitigated by customer credit assessment and continuous monitoring, and also has customer and supplier concentration risks, with some key customers and suppliers being related parties - The company faces credit risk in cash and accounts receivable, mitigated by assessing customer credit and continuous monitoring, with $0 in bank deposits exceeding FDIC insurance limits as of June 30, 2025[207][208] Major Customer Revenue and Accounts Receivable Concentration (as of June 30, 2025) | Customer | Three Months Ended June 30, 2025 (Revenue %) | Six Months Ended June 30, 2025 (Revenue %) | June 30, 2025 (Accounts Receivable %) | | :--- | :--- | :--- | :--- | | Customer A | <10% | <10% | 31% | | Customer C | 15% | 34% | <10% | | Customer K | <10% | <10% | 11% | | Customer L | <10% | 10% | <10% | | Iluminar (Related Party) | 16% | <10% | 29% | Major Supplier Purchases and Accounts Payable Concentration (as of June 30, 2025) | Supplier | Three Months Ended June 30, 2025 (Purchases %) | Six Months Ended June 30, 2025 (Purchases %) | June 30, 2025 (Accounts Payable %) | | :--- | :--- | :--- | :--- | | Supplier A | <10% | <10% | 11% | | Supplier E | <10% | 54% | <10% | | Supplier F | 100% | <10% | <10% | | Iluminar (Related Party) | <10% | 42% | <10% | | Megaphoton Inc. (Related Party) | <10% | <10% | 54% | Note 15 — Lease The company accounts for leases under ASC 842, recognizing right-of-use assets and lease liabilities, with operating lease right-of-use assets of $271,480 and total operating lease liabilities of $272,864 as of June 30, 2025, and a weighted-average remaining lease term of approximately 2.25 years Lease-Related Assets and Liabilities (in USD) | Indicator | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $271,480 | $470,716 | | Lease liabilities – current portion | $128,254 | $262,380 | | Lease liabilities – non-current portion | $144,610 | $205,602 | | Total Operating Lease Liabilities | $272,864 | $467,982 | - As of June 30, 2025, the weighted-average remaining operating lease term for existing leases is approximately 2.25 years, with a weighted-average discount rate of approximately 7.34%[218] Lease Liability Maturities (as of June 30, 2025, in USD) | Twelve Months Ended June 30 | Lease Payments | | :--- | :--- | | 2026 | $143,664 | | 2027 | $119,304 | | 2028 | $28,834 | | 2029 | $4,806 | | Less: Estimated interest/present value discount | $(23,744) | | Present Value of Lease Liabilities | $272,864 | Note 16 — Commitment and Contingencies The company faces multiple legal proceedings and claims, including cases related to Megaphoton, former CFO Vien Le, Growterra, and Beverly Hills View, Inc., has invested in Future Tech, and received a Nasdaq delisting notice for non-compliance with listing rules - The company is facing a breach of contract lawsuit from Megaphoton, claiming $6,857,167, and has filed a counterclaim[222] - The company also faces lawsuits from former CFO Vien Le for wrongful termination and untimely wage payments, and from Growterra for breach of contract, fraud, and trade secret misappropriation[223][224] - On November 22, 2024, NM Data entered into an investment agreement to acquire a 51% equity interest in Future Tech for $3 million to develop data centers and vertical farming facilities, with $700,000 paid as of the report date[226] - On January 13, 2025, the company received a Nasdaq notice that its securities were suspended from trading on January 15, 2025, and delisted due to non-compliance with minimum stockholders' equity rules[227] Note 17 — Segment information The company operates as a single operating segment focused on indoor agricultural technology, providing products to indoor growers, with the Chief Operating Decision Maker (CODM) allocating resources and assessing performance based on overall operating results - The company operates as a single operating segment, focusing on indoor agricultural technology and providing products to indoor growers[228] Single Operating Segment Revenue and Expense Categories (in USD) | Indicator | 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 | $484,009 | $3,404,967 | $1,590,828 | $5,609,687 | | Cost of sales | $455,051 | $2,952,747 | $1,386,570 | $4,845,150 | | Total operating expenses | $1,181,609 | $1,736,891 | $2,518,003 | $3,051,925 | | Interest expense, net | $606,326 | $486,586 | $1,503,343 | $788,975 | | Net loss | $(1,770,937) | $(1,768,319) | $(3,790,748) | $(4,075,125) | Note 18 — Subsequent events Subsequent to the reporting period, the company continued to raise funds through convertible note issuances and reached settlement agreements with multiple lenders to resolve overdue debts, while executive and related party salaries, wages, and debts were converted into common stock, and the equity financing agreement was amended to increase purchase amounts - On July 10, 2025, the company entered into a $120,000 convertible redeemable note with Lender 1 at a 6% annual interest rate, convertible at 60% of the lowest trading price during the 15 days prior to conversion[231] - On July 24, 2025, the company entered into debt-to-equity agreements with Tie (James) Li, Zhiyi (Jonathan) Zhang, George Yutuc, and Peng Zhang to convert unpaid salaries, wages, and debts into the company's common stock[234] - On July 25, 2025, the company amended its Equity Purchase Financing Agreement (Amended EPFA) with GHS Investments, LLC, increasing the maximum amount per purchase from $500,000 to $2,000,000[238] - The company reached multiple settlement agreements with lenders including Factor K, Factor I, Factor L, and MaximCash Solutions LLC to resolve overdue loans and legal disputes[232][241][242][246] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section discusses the company's financial condition and results of operations for the period ended June 30, 2025, including business overview, industry trends, operating results, liquidity and capital resources, and critical accounting policies and estimates, highlighting declining revenue, continuous losses, and liquidity pressures, with ongoing efforts to secure various financing options to maintain going concern Overview Nature's Miracle Holding Inc. is an agricultural technology company providing CEA products like LED lights to North American indoor growers, expanding into EV distribution and Bitcoin mining/data center businesses through its subsidiaries Visiontech and Hydroman - The company is an evolving agricultural technology company providing products, primarily commercial-grade LED lights and related equipment, to indoor growers in North American controlled environment agriculture (CEA)[249] - The company is entering the electric vehicle (EV) market, aiming to distribute EV medium-duty trucks to Latin American customers and develop in-truck indoor growing systems[249] - The company began investing in Future Tech Inc., a Bitcoin mining and data center business, in 2024[249] - The company operates through two subsidiaries: Visiontech (eFinity brand, offering grow lights, media, etc.) and Hydroman (specialized lighting technology and equipment, now focused on EV distribution)[251] Trends and Expectations The company plans to increase investment in product and brand development, including acquisitions, product improvements, and proprietary automated growing systems, while adhering to LED lighting import/distribution guidelines, leveraging utility energy rebate programs, maintaining long-term relationships with Asian suppliers, seeking new European manufacturing ties, and monitoring uncertain tariffs on Chinese imports - The company plans to increase investment in product and brand development, actively evaluating and seeking to acquire product brand names, improving existing products, and developing proprietary 'all-in-one' automated and robotic indoor growing systems[254][255] - The company adheres to import and distribution guidelines for LED lighting equipment in the U.S. and Canada and leverages energy rebate programs offered by utility companies[256] - The company maintains long-term relationships with Asian suppliers, has a strategic cooperation agreement with Sinoinnovo Technology (Guangdong) Co., Ltd. to establish advanced manufacturing capabilities, and is seeking new manufacturing relationships in Europe[257][258] - A 10% tariff is currently imposed on goods imported from China, with uncertainty regarding future tariff levels[259] Results of Operations This section analyzes the company's operating results for the three and six months ended June 30, 2025, revealing significant declines in revenue and gross profit, sustained net losses, primarily impacted by inventory constraints and increased interest expense from high-interest loans For the Three Months ended June 30, 2025 and 2024 For the three months ended June 30, 2025, the company's revenue decreased by 85.8% year-over-year to $484,009, gross profit declined by 93.6% to $28,958, and gross margin fell from 13.3% to 6.0%, with net loss slightly increasing due to lower gross profit and higher interest expense Three-Month Operating Results Comparison (in USD) | Indicator | June 30, 2025 | June 30, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $484,009 | $3,404,967 | $(2,920,958) | (85.8)% | | Cost of sales | $455,051 | $2,952,747 | $(2,497,696) | (84.6)% | | Gross profit | $28,958 | $452,220 | $(423,262) | (93.6)% | | Selling, general, and administrative expenses | $1,025,625 | $1,722,715 | $(697,090) | (40.5)% | | Allowance for credit losses | $155,984 | $14,176 | $141,808 | 1,000.3% | | Operating loss | $(1,152,651) | $(1,284,671) | $132,020 | (10.3)% | | Other expenses, net | $(618,286) | $(482,848) | $(135,438) | 28.0% | | Net loss | $(1,770,937) | $(1,768,319) | $(2,618) | (0.1)% | | Gross margin | 6.0% | 13.3% | | | - The decline in revenue was primarily due to cash constraints limiting inventory purchases, with the company mainly selling existing inventory, and management anticipates improved revenue as inventory levels recover[262] - Selling, general, and administrative expenses decreased by 40.5%, primarily due to reduced stock-based compensation, lower professional fees, and decreased salary expenses from a smaller workforce[266] - Interest expense increased by $119,740, primarily due to the addition of multiple convertible notes and high-interest loans in 2025, particularly an increased proportion of high-interest factoring loans[268][269] For the Six Months ended June 30, 2025 and 2024 For the six months ended June 30, 2025, the company's revenue decreased by 71.6% year-over-year to $1,590,828, gross profit declined by 73.3% to $204,258, and gross margin fell from 13.6% to 12.8%, with net loss decreasing by 7.0% primarily due to a significant reduction in non-cash financial expenses, partially offset by a substantial increase in interest expense Six-Month Operating Results Comparison (in USD) | Indicator | June 30, 2025 | June 30, 2024 | Change Amount | Change Percentage | | :--- | :--- | :--- | :--- | :--- | | Revenue | $1,590,828 | $5,609,687 | $(4,018,859) | (71.6)% | | Cost of sales | $1,386,570 | $4,845,150 | $(3,458,580) | (71.4)% | | Gross profit | $204,258 | $764,537 | $(560,279) | (73.3)% | | Selling, general, and administrative expenses | $2,338,736 | $3,027,534 | $(688,798) | (22.8)% | | Allowance for credit losses | $179,267 | $24,391 | $154,876 | 635.0% | | Operating loss | $(2,313,745) | $(2,287,388) | $(26,358) | (1.2)% | | Other expenses, net | $(1,475,303) | $(1,785,237) | $309,934 | (17.4)% | | Net loss | $(3,790,748) | $(4,075,125) | $284,377 | (7.0)% | | Gross margin | 12.8% | 13.6% | | | - The decline in revenue was primarily due to cash constraints limiting inventory purchases, with the company mainly selling existing inventory, and management anticipates improved revenue as inventory levels recover[275] - Selling, general, and administrative expenses decreased by 22.8%, primarily due to reduced stock-based compensation, lower professional fees, and decreased salary expenses from a smaller workforce[279] - Interest expense increased by $714,368, primarily due to the addition of multiple convertible notes and high-interest loans in 2025, particularly an increased proportion of high-interest factoring loans, while non-cash financial expenses decreased by $1,000,000 due to a one-time expense from a 2024 merger-related stock issuance[281][282][283] LIQUIDITY AND CAPITAL RESOURCES The company faces severe liquidity challenges, with a cash balance of only $9,511 and a working capital deficit of approximately $17.5 million as of June 30, 2025, coupled with continuous losses, raising substantial doubt about its ability to continue as a going concern, and is actively seeking various external financing sources, including an equity line of credit (ELOC), convertible notes, and related party support, to address its funding gap - As of June 30, 2025, the company's cash balance was $9,511, with a working capital deficit of approximately $17.5 million[287] - The company has incurred continuous losses and negative operating cash flows since 2022, and management believes these conditions raise substantial doubt about its ability to continue as a going concern for the next year[289] - The company has secured a $20 million equity line of credit (ELOC) program and can utilize convertible note financing and financial support from related parties, such as Big Lake Capital, LLC, controlled by CEO Tie Li[289][290] Cash Flow Data (Six Months Ended June 30, in USD) | Cash Flow Activities | 2025 | 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(909,024) | $(1,742,515) | | Net cash used in investing activities | $(721,000) | $(40,000) | | Net cash provided by financing activities | $1,219,144 | $1,591,323 | | Cash and cash equivalents at end of period | $9,511 | $30,532 | OFF-BALANCE SHEET ARRANGEMENTS The company currently has no off-balance sheet arrangements that could have a material effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources - The company has no off-balance sheet arrangements that have or are reasonably likely to have a current or future material effect on its financial condition, revenues, expenses, results of operations, liquidity, capital expenditures, or capital resources[300] CRITICAL ACCOUNTING POLICIES AND ESTIMATES This section outlines the critical accounting policies and estimates relied upon in preparing the financial statements, including revenue recognition, measurement methods for net accounts receivable and inventory, and the potential impact of recently issued accounting pronouncements on the company's financial reporting - The company recognizes revenue from product sales when control of the products is transferred to customers, in accordance with ASC 606 revenue recognition guidance, after identifying contracts, determining performance obligations, and establishing and allocating transaction prices[302][307] - Accounts receivable are presented at the amount expected to be collected from customers, with an allowance for credit losses based on expected losses under historical, current, and forecasted conditions[312] - Inventory is measured at the lower of cost or net realizable value, using the weighted-average cost method, with the company regularly reviewing inventory and recording write-downs for slow-moving and obsolete items[313][314] - The company has adopted ASU 2024-04 to prospectively account for induced conversions of convertible debt instruments effective January 1, 2025, and is evaluating the disclosure impact of ASU 2023-09 and ASU 2024-03[315][316][317] Item 3. Quantitative and Qualitative Disclosures About Market Risk As a smaller reporting company, the company has elected to use scaled disclosure obligations and is therefore not required to provide quantitative and qualitative disclosures about market risk for this item - As a smaller reporting company, the company has elected to use scaled disclosure obligations and is therefore not required to provide quantitative and qualitative disclosures about market risk for this item[320] Item 4. Controls and Procedures As of June 30, 2025, the company's disclosure controls and procedures were deemed ineffective due to multiple material weaknesses in internal control over financial reporting, including deficiencies in risk assessment, overall control environment, monitoring, insufficient financial accounting personnel, IT control design and operating effectiveness, financial reporting controls, and income tax controls, with remediation plans involving hiring qualified accounting staff, providing training, engaging external consultants, and strengthening corporate governance - As of June 30, 2025, the company's disclosure controls and procedures were deemed ineffective, primarily due to multiple material weaknesses in internal control over financial reporting[322] - Material weaknesses include a lack of effective risk assessment processes, overall control environment, monitoring controls, insufficient financial accounting personnel leading to inadequate segregation of duties, ineffective design and operation of information technology controls, inadequate or ineffectively designed controls impacting financial reporting, and deficiencies in revenue recognition, purchasing cutoff, and income tax controls[322] - The company plans remediation efforts including hiring more qualified accounting personnel, implementing GAAP accounting and financial reporting training, engaging external consultants to assist with Sarbanes-Oxley Act compliance assessment, and appointing independent directors to strengthen corporate governance[322] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[324] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of equity securities, defaults upon senior securities, mine safety disclosures, other information, and a list of exhibits Item 1. Legal Proceedings The company faced multiple legal proceedings during the reporting period, primarily involving debt disputes with lenders, but has reached settlement agreements with some, establishing new repayment plans - On July 16, 2025, lender Factor K filed a lawsuit against the company, claiming $129,463 plus interest and attorney's fees, but both parties reached a settlement agreement on July 22, 2025[327] - On July 31, 2025, Factor I filed a forbearance and settlement agreement, with both parties agreeing to a new repayment plan totaling $186,572 from August 5 to December 9, 2025[328] - On August 1, 2025, the company entered into a settlement agreement with Factor L, requiring payments totaling $201,170 from August 5 to October 27, 2025[329] - On August 6, 2025, the company entered into a standstill agreement with MaximCash Solutions LLC, after MaximCash had filed a lawsuit due to the company's failure to make timely payments, with the company having made partial payments[330] Item 1A. Risk Factors As a smaller reporting company, the company has elected to use scaled disclosure obligations and has not disclosed any new material risk factors this quarter, with no substantive changes from those previously filed in its prospectus - As a smaller reporting company, the company has elected to use scaled disclosure obligations and has not disclosed any new material risk factors this quarter[331] - There have been no substantive changes to the risk factors previously disclosed in the company's final prospectus filed on July 17, 2025[331] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds During the reporting period, the company conducted multiple unregistered equity security sales, including a convertible promissory note agreement with related party Big Lake Capital, LLC, an equity purchase financing agreement (ELOC) with GHS Investments, LLC, and sales of Series A Preferred Stock and convertible promissory notes - On April 11, 2025, the company entered into a convertible promissory note agreement with related party Big Lake Capital, LLC, providing up to $2,000,000 in financing, with an initial tranche of $600,000, convertible into the company's common stock[332] - On May 7, 2025, the company entered into an Equity Purchase Financing Agreement (ELOC) with GHS Investments, LLC, committing up to $20,000,000 in equity financing and issuing 150,000 commitment shares to the investor[333] - On May 7, 2025, the company sold 250 shares of Series A Preferred Stock to an investor via a securities purchase agreement for a total purchase price of $250,000, convertible into common stock[335] - On May 7, 2025, the company entered into another securities purchase agreement with Diagonal, selling a convertible promissory note with a principal amount of $140,250 at a 14% annual interest rate, convertible into the company's common stock upon default[336] Item 3. Defaults Upon Senior Securities The company did not experience any defaults upon senior securities during this reporting period - None[339] Item 4. Mine Safety Disclosures This item is not applicable to the company's business operations - Not applicable[340] Item 5. Other Information No other information required disclosure during this reporting period - None[341] Item 6. Exhibits This section lists all exhibits filed with the Form 10-Q report, including certificates of designation, loan agreements, equity purchase financing agreements, securities purchase agreements, settlement agreements, and CEO and CFO certifications Exhibit Index | Exhibit Number | Description | | :--- | :--- | | 4.1 | Certificate of Designation | | 10.1 | Convertible Promissory Note dated April 11, 2025 | | 10.2 | Form of Warrant Agreement | | 10.3 | Equity Purchase Financing Agreement dated May 6, 2025 | | 10.4 | Securities Purchase Agreement dated May 6, 2025 | | 10.5 | Registration Rights Agreement dated May 6, 2025 | | 10.6 | Settlement Agreement with Funders App LLC dba Tenthly dated July 22, 2025 | | 10.7 | Forbearance and Settlement Agreement with Webfunder LLC dated July 31, 2025 | | 10.8 | Settlement Agreement and Mutual Release with Wave Advance, Inc. dated August 1, 2025 | | 10.9 | Standstill Agreement with MaximCash Solutions LLC dated August 6, 2025 | | 31.1** | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 and 15d-14(a) | | 31.2** | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 and 15d-14(a) | | 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 | | 101 | Interactive Data File | | 104 | Cover Page Interactive Data File | - Exhibits 32.1 and 32.2 are furnished solely for purposes of Section 1350 of 18 U.S.C. and are not deemed 'filed' for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such filing[344] SIGNATURES This section contains the official signatures of the company's senior officers, confirming the submission of the report Signatures of Officers This report was duly signed by Tie (James) Li, Chief Executive Officer, and George Yutuc, Chief Financial Officer of Nature's Miracle Holding Inc. on August 14, 2025 - This report was signed by Tie (James) Li, Chief Executive Officer, and George Yutuc, Chief Financial Officer of Nature's Miracle Holding Inc. on August 14, 2025[348]