Nature's Miracle Holding Inc 10-Q for FY2026 Q1
Nature's Miracle Holding Inc. (NMHI)
About this 10-Q
Nature's Miracle Holding Inc filed this 10-Q on May 27, 2026, covering the quarter ended March 31, 2026 (FY2026 Q1).
Headline figures
Quarter ended March 31, 2026, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $41.61K
- down 96.2% from $1.11M a year earlier
- Net income
- $2.85M
- compared with a net loss of $2.02M a year earlier
- Diluted EPS
- $0.01
- compared with -$0.43 a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
FOR THE QUARTERLY
PERIOD ENDED
or
FOR THE TRANSITION PERIOD FROM _________ to __________
COMMISSION FILE NUMBER
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) |
| (Address of principal executive offices) (Zip Code) | (Registrant’s telephone number, including area code) |
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act:
| Title of each class | Trading symbol(s) | |
| * | The securities of Nature’s Miracle Holding Inc. have been suspended from trading on The Nasdaq Stock Market and are currently trading on the . |
Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Indicate by check mark
whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation
S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| ☒ | Smaller reporting company | ||
| Emerging growth company |
If an emerging growth
company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or
revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark
whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐
No
As of May 26, 2026, the registrant had a total of
INDEX
i
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends impacting the financial condition of our business. Forward-looking statements should not be read as a guarantee of future performance or results and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time those statements are made and/or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements.
Forward-looking statements include all statements that are not historical facts. In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “should,” “could,” “would,” “expect,” “intend,” “seek,” “plan,” “anticipate,” “believe,” “estimate,” “project,” “predict,” “potential,” “might,” “forecast,” “continue,” or the negative of those terms, and similar expressions and comparable terminology intended to reference future periods. Forward-looking statements include, but are not limited to, statements about:
| ● | Our ability to effectively operate our business segments; |
| ● | Our ability to manage our research, development, expansion, growth and operating expenses; |
| ● | Our ability to evaluate and measure our business, prospects and performance metrics; |
| ● | Our ability to compete, directly and indirectly, and succeed in a highly competitive and evolving industry; |
| ● | Our ability to respond and adapt to changes in technology and customer behavior; and |
| ● | Our ability to protect our intellectual property and to develop, maintain and enhance a strong brand. |
Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.
Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We cannot guarantee future results, levels of activity, performance or achievements. Accordingly, the forward-looking statements in this Quarterly Report on Form 10-Q should not be regarded as representations that the results or conditions described in such statements will occur or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements.
ii
PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NATURE’S MIRACLE HOLDING INC., SUBSIDIARIES AND VIE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| As of March 31, | As of December 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Prepayments and other current assets | ||||||||
| Loan receivable - related party | ||||||||
| Other receivable - related party | ||||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Deposits | ||||||||
| Right-of-use assets, net | ||||||||
| Property and equipment, net | ||||||||
| Total Assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT | ||||||||
| CURRENT LIABILITIES | ||||||||
| Short-term loans | $ | $ | ||||||
| Short-term loans - related parties | ||||||||
| Current portion of long-term debts | ||||||||
| Convertible notes | ||||||||
| Convertible notes - related party | ||||||||
| Accounts payable | ||||||||
| Accounts payable - related parties | ||||||||
| Other payables and accrued liabilities | ||||||||
| Other payables - related parties | ||||||||
| Operating lease liabilities - current | ||||||||
| Commitment shares to be issued | ||||||||
| Debt settlement shares to be issued | ||||||||
| Tax accrual | ||||||||
| Deferred income - Contract liabilities | ||||||||
| Deferred income - Contract liabilities - related party | ||||||||
| Total Current Liabilities | ||||||||
| NON-CURRENT LIABILITIES | ||||||||
| Long-term debts, net of current portion | ||||||||
| Operating lease liabilities, net of current portion | ||||||||
| Long-term convertible notes - related party | ||||||||
| Total Non-Current Liabilities | ||||||||
| Total Liabilities | ||||||||
| COMMITMENTS AND CONTINGENCIES | ||||||||
| Redeemable convertible preferred stock ($ | ||||||||
| SHAREHOLDERS’ DEFICIT | ||||||||
| Preferred stock ($ | ||||||||
| Common stock ($ | ||||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Stockholders’ Deficit | ( | ) | ( | ) | ||||
| Total Liabilities and Stockholders’ Deficit | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
1
NATURE’S MIRACLE HOLDING INC., SUBSIDIARIES AND VIE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS
OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
| For the Three Months Ended | For the Three Months Ended | |||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| REVENUE (including related party revenue of and $ | $ | $ | ||||||
| COST OF REVENUE | ||||||||
| GROSS PROFIT | ||||||||
| OPERATING EXPENSES: | ||||||||
| Selling, general and administrative | ||||||||
| Provision for credit losses | ||||||||
| Total operating expenses | ||||||||
| LOSS FROM OPERATIONS | ( | ) | ( | ) | ||||
| OTHER INCOME (EXPENSE) | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Gain on loan extinguishment | ||||||||
| Gain on debt settlement | ||||||||
| Change in fair value of commitment shares to be issued | ||||||||
| Other expense | ( | ) | ||||||
| Total other income (expense), net | ( | ) | ||||||
| INCOME (LOSS) BEFORE INCOME TAXES | ( | ) | ||||||
| PROVISION FOR INCOME TAXES | ||||||||
| NET INCOME (LOSS) | $ | $ | ( | ) | ||||
| OTHER COMPREHENSIVE INCOME (LOSS) | ||||||||
| Foreign currency translation adjustment | ||||||||
| COMPREHENSIVE INCOME (LOSS) | $ | $ | ( | ) | ||||
| BASIC WEIGHTED AVERAGE NUMBER OF COMMON STOCK | ||||||||
| BASIC EARNINGS (LOSS) PER SHARE | $ | $ | ( | ) | ||||
| DILUTED WEIGHTED AVERAGE NUMBER OF COMMON STOCK | ||||||||
| DILUTED EARNINGS (LOSS) PER SHARE | $ | $ | ( | ) | ||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2
NATURE’S MIRACLE HOLDING INC., SUBSIDIARIES AND VIE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
| Preferred stock | Common stock | Additional paid in | Accumulated | Accumulated other comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | Deficit | loss | Total | |||||||||||||||||||||||||
| BALANCE, December 31, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock compensation expense | - | - | ||||||||||||||||||||||||||||||
| Shares issued through convertible notes conversion | - | |||||||||||||||||||||||||||||||
| Shares issued under equity line of credit | - | |||||||||||||||||||||||||||||||
| Shares issued for purchase of convertible note | - | |||||||||||||||||||||||||||||||
| Shares issued through preferred shares conversion | - | |||||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||
| Cumulative dividend for Series A, D and F preferred stock | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| Net income | - | - | ||||||||||||||||||||||||||||||
| BALANCE, March 31, 2026 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Preferred stock | Common stock | Additional paid in | Accumulated | Accumulated other comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | capital | Deficit | loss | Total | |||||||||||||||||||||||||
| BALANCE, December 31, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock compensation expense | - | |||||||||||||||||||||||||||||||
| Shares to be issued for stock compensation | - | ( | ) | |||||||||||||||||||||||||||||
| Shares issued through warrants exercises | - | |||||||||||||||||||||||||||||||
| Shares issued through debt-to-equity conversion | - | ( | ) | |||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | ||||||||||||||||||||||||||||||
| Net loss | - | - | ( | ) | ( | ) | ||||||||||||||||||||||||||
| BALANCE, March 31, 2025 (Unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3
NATURE’S MIRACLE HOLDING INC., SUBSIDIARIES AND VIE
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
| For the Three Months Ended | For the Three Months Ended | |||||||
| March 31, | March 31, | |||||||
| 2026 | 2025 | |||||||
| (Unaudited) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | $ | ( | ) | ||||
| Adjustments to reconcile net income (loss) to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Provision for credit losses | ||||||||
| Amortization of operating right-of-use asset | ||||||||
| Amortization of debt issuance cost | ||||||||
| Gain on loan extinguishment | ( | ) | ||||||
| Gain on debt settlement | ( | ) | ||||||
| Stock compensation expenses | ||||||||
| Change in fair value of commitment shares to be issued | ( | ) | ||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ||||||||
| Inventories | ||||||||
| Prepayments and other current assets | ( | ) | ||||||
| Other receivable - related party | ( | ) | ||||||
| Security deposit | ( | ) | ||||||
| Accounts payable | ( | ) | ( | ) | ||||
| Other payables and accrued liabilities | ||||||||
| Accrued interest payable - related parties | ||||||||
| Operating lease liabilities | ( | ) | ( | ) | ||||
| Tax accrual | ( | ) | ( | ) | ||||
| Deferred income - Contract liabilities | ( | ) | ||||||
| Net cash used in operating activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Deposit from investment of Future Tech | ( | ) | ||||||
| Purchase of property and equipment | ( | ) | ||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Capital contribution in advance | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Payments of deferred offering costs | ( | ) | ||||||
| Proceeds from shares issued under equity line of credit | ||||||||
| Proceeds from long-term loan borrowing | ||||||||
| Repayments on long-term loan | ( | ) | ||||||
| Short-term loan borrowing from third parties | ||||||||
| Repayments on short-term loan from third parties | ( | ) | ( | ) | ||||
| Repayments on short-term loan from related parties | ( | ) | ||||||
| Convertible notes borrowing | ||||||||
| Repayments on convertible notes | ( | ) | ( | ) | ||||
| Borrowings from other payables - related parties | ||||||||
| Net cash provided by financing activities | ||||||||
| EFFECT OF FOREIGN EXCHANGE ON CASH | ||||||||
| CHANGES IN CASH | ( | ) | ( | ) | ||||
| CASH AND CASH EQUIVALENTS, beginning of period | ||||||||
| CASH AND CASH EQUIVALENTS, end of period | $ | $ | ||||||
| SUPPLEMENTAL CASH FLOW INFORMATION: | ||||||||
| Cash paid for income tax | $ | $ | ||||||
| Cash paid for interest | $ | $ | ||||||
| SUPPLEMENTAL DISCLOSURE OF NON-CASH TRANSACTIONS: | ||||||||
| Conversion of convertible notes into shares | $ | $ | ||||||
| Debt settlement of third party’s debt | $ | $ | ||||||
The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
4
Nature’s Miracle
Holding Inc., Subsidiaries and VIE
Notes to Unaudited Condensed Consolidated Financial Statements
Note 1 — Nature of business and organization
Nature’s Miracle Holding
Inc., which until March 11, 2024 was known as LBBB Merger Corp. (the “Company”, “Nature’s Miracle”) is
a company incorporated on
On March 11, 2024, Lakeshore
merged with and into the Company for the sole purpose of reincorporating Lakeshore into the State of Delaware (“Reincorporation”).
Immediately after the Reincorporation, the Company consummated the merger contemplated by the Merger Agreement between the Company and
Nature’s Miracle, Inc., a Delaware corporation (“NMI”), resulting in the stockholders of NMI becoming
Pursuant to the Merger Agreement,
at the effective time of the Merger, each share of NMI common stock issued and outstanding immediately prior to the effective time was
canceled and automatically converted into the right to receive the applicable pro rata portion of shares of the Company common stock,
the aggregate value of which was equal to: (a) $
The Merger is considered
as a reverse recapitalization in accordance with Accounting Standards Codification (“ASC”) 805-40. Under this method of accounting,
Lakeshore will be treated as the “acquired” company for financial reporting purposes. This determination is primarily based
on NMI’s stockholders comprise
Accordingly, for accounting purposes, the financial statements of the Company will represent a continuation of the financial statements of NMI with the Merger treated as the equivalent of NMI issuing stock for the net assets of Lakeshore, accompanied by a recapitalization. The net assets of Lakeshore will be stated at historical cost, with no goodwill or other intangible assets recorded. Operations prior to the Merger will be presented as those of NMI in financial statements of the Company. The consolidation of the Company and its subsidiaries have been accounted for at historical cost and prepared on the basis as if the aforementioned transactions had become effective as of the beginning of the first period presented in the accompanying unaudited condensed consolidated financial statements in accordance with ASC 805-50-45-5.
The Company is a growing agriculture technology company focusing on the greenhouse and cultivation industry and providing products to indoor growers in a CEA (Controlled Environment Agriculture) setting in North America.
Reorganization under NMI
NMI is a holding company incorporated on March 31, 2022 in Delaware. NMI has no substantial operations other than holding all the outstanding share capital of its subsidiaries. NMI, its subsidiaries and variable interest entity (“VIE”).
On June 1, 2022, NMI entered
into the Share Exchange Agreements with the stockholders of Visiontech Group, Inc., a California Company (“Visiontech”), resulting
in the stockholders of Visiontech becoming
The transaction was accounted
as a reverse recapitalization in accordance with ASC 805. The process of identifying the accounting acquirer began with a consideration
of the guidance in ASC 810-10 related to determining the existence of a controlling financial interest. The general rule provided by
ASC 810-10 is that the party that holds directly or indirectly greater than
5
On June 1, 2022, NMI also
entered into the Share Exchange Agreements with the stockholders of Hydroman, Inc. (“Hydroman”, a California Company) to
acquire
On July 28, 2022, Nature’s Miracle (California), Inc., (“NMCA”), a California corporation wholly owned by NMI was incorporated. NMCA focuses on greenhouse development services and started providing container grow sales in first quarter of 2024.
On August 27, 2021, Visiontech
and Upland 858 LLC (“Upland”), who share common stockholders with Visiontech, entered into a promissory note agreement. Upland
is a special purchase entity set up to purchase and hold a warehouse located in California. Upland promised to pay to Visiontech the
sum of $
On August 27, 2022, Upland
entered into an assignment and assumption of unsecured promissory note with Zhiyi (Jonathan) Zhang, Vartor Vahe Doudakian and Yang Wei
(collectively “Assignees”). Upland transferred to Assignees all of its right, title, duties, liabilities and obligation under
the promissory note signed by and among Visiontech and Upland on August 27, 2021 in the original principal amount of $
On May 10, 2024, NM Data, Inc. (“NM Data”), a Nevada corporation wholly owned by the Company was incorporated. NM Data is a shell company and has no operations.
On October 18, 2024, NM Rebate, Inc. (“NM Rebate”), a California corporation wholly owned by the Company was incorporated. NM Rebate focus on energy rebate solutions combined with the supply of LED lights that qualify for energy-saving rebates provided by large utility companies throughout the U.S.
6
On November 18, 2024, the
Company filed a certificate of amendment to its amended and restated certificate of incorporation to effect a one-for-thirty (
On September 18, 2025, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Big Lake Capital LLC (“Big Lake”), pursuant to which, the Company agreed to purchase from Big Lake all of the membership interests of Zak Properties, LLC, an Ohio limited liability company (“Zak Properties”), which in turn owns certain real property located in the State of Ohio, commonly known as 405 Madison Ave. The Company’s Chief Executive Officer and Chairman, Tie (James) Li, is the sole member of Zak Properties prior to the sale. For details see related party transaction in Note 6 – Asset acquisition under common control.
Note 2 — Going concern
In assessing liquidity, the
Company monitors and analyzes cash on-hand and operating expenditure commitments. The Company’s liquidity needs are to meet working
capital requirements and operating expense obligations. To date, the Company financed its operations primarily through cash flows from
operations, debt financing from financial institution and related parties. As of March 31, 2026 and December 31, 2025 the Company had
approximately $
The Company has experienced recurring losses from operations and negative
cash flows from operating activities since 2022. Although the Company reported net income of approximately $
If the Company is unable to realize its assets within the normal operating cycle of a twelve (12) month period, the Company may have to consider supplementing its available sources of funds through the following sources:
| ● | financial support from the Company’s related parties and stockholders; |
| ● | other available sources of financing from banks and other financial institutions; |
| ● | equity financing through capital market. |
The Company has a $
The Company has access to investors who are providing convertible notes financing for public companies and the Company has been utilizing the convertible notes for part of its financing needs.
The shareholder of the Company
also offers support for the Company. Big Lake Capital, LLC, a related party controlled by Tie Li (our Chairman and CEO) entered into
a $
7
The Company can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to the Company, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on the Company and would materially adversely affect its ability to continue as a going concern.
The unaudited condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Note 3 — Basis of presentation and summary of significant accounting policies
Basis of presentation
The unaudited condensed consolidated financial statements have been prepared in accordance with the generally accepted accounting principles in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP can be condensed or omitted. These unaudited condensed consolidated financial statements have been prepared on the same basis as its annual consolidated financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2026, or for any other interim period or for any other future year. All intercompany balances and transactions have been eliminated in consolidation.
Principles of consolidation
The unaudited condensed consolidated financial statements include the financial statements of the Company and its subsidiaries, which include its wholly owned subsidiaries and VIE over which the Company exercises control and, when applicable, entities for which the Company has a controlling financial interest or is the primary beneficiary. All transactions and balances among the Company and its subsidiaries and VIE have been eliminated upon consolidation.
Use of estimates and assumptions
The preparation of unaudited condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities reported and disclosures of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates.
Cash and cash equivalents
Cash and cash equivalents consist of amounts held as cash on hand and bank deposits.
From time to time, the Company
may maintain bank balances in interest bearing accounts in excess of the $
Prepayments and other current assets
Prepaid expenses and other current assets primarily include prepaid expenses paid to product providers, and other deposits. Management regularly reviews the aging of such balances and changes in payment and realization trends and records allowances when management believes collection or realization of amounts due are at risk. Accounts considered uncollectable are written off against allowances after exhaustive efforts at collection are made. As of March 31, 2026 and December 31, 2025, allowance for doubtful account was recorded.
8
Accounts receivable, net
Starting from January 1, 2023, the Company adopted ASU No.2016-13 “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). The Company used a modified retrospective approach, and the adoption does not have an impact on our unaudited condensed consolidated financial statements. During the ordinary course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at the amount the Company expects to collect from customers. An allowance for expected credit loss is recorded in the period in which loss is determined to be probable based on lifetime expected losses considering historical, current, and forecasted conditions. Amounts deemed uncollectible are written off against the allowance after all collection efforts have ceased.
Inventory
Inventory consists of finished goods ready for sale and is stated at the lower of cost and net realizable value. The Company values its inventory using the weighted average costing method. The Company’s policy is to include as a part of cost of goods sold any freight incurred to ship the product from its vendors to warehouses. Outbound freight costs related to shipping costs to customers are considered periodic costs and are reflected in cost of revenue. The Company regularly reviews inventory and considers forecasts of future demand, market conditions and product obsolescence.
If the estimated realizable
value of the inventory is less than cost, the Company makes provisions in order to reduce its carrying value to its estimated market
value. The Company also reviews inventory for slow moving inventory and obsolescence and records impairment for obsolescence. During
the three months ended March 31, 2026 and 2025, the Company recorded inventory impairment losses of $
Deposits
Deposits consist of security
deposits for vendors and deposits for acquisition. To maintain a stable supply for goods and build a long-term relationship, the
Company may pay certain amount of funds to its vendors as security deposits which are recorded as non-current assets on the balance sheet
depending on its return date. On November 22, 2024, NM Data entered into an investment agreement to acquire
Property and equipment
Property and equipment are stated at historical cost. Depreciation is provided over the estimated useful life of each class of depreciable assets and is computed using the straight-line method over the useful lives of the assets are as follows:
| Useful Life | ||
| Machinery and equipment | ||
| Computer and peripherals | ||
| Trucks and automobiles | ||
| Building improvements | ||
| Buildings |
The cost and related accumulated depreciation of assets sold or otherwise retired are eliminated from the accounts and any gain or loss is included in the statements of operations. Expenditures for maintenance and repairs are expensed as incurred, while additions, renewals and betterments, which are expected to extend the useful life of assets, are capitalized.
9
Long-lived assets impairment
The Company reviews the impairment of its long-lived assets on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These events or changes in circumstances may include but are not limited to, a significant deterioration of operating results, a change in the regulatory environment, changes in business plans, or adverse changes in anticipated future cash flows. If an impairment indicator is present, the Company evaluates the recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to result from the use and eventual disposition of the assets. If the assets are determined to be impaired, the impairment recognized is the excess of the carrying amount over the fair value of the assets. Fair value is generally determined by the discounted cash flow method. The discount rate used in any estimate of discounted cash flows is the rate commensurate with a similar investment of similar risk.
In connection with the preparation of the unaudited condensed consolidated financial statements as of March 31, 2026 and December 31, 2025, the Company evaluated potential impairment indicators related to its long-lived assets, including the Company’s operating results and overall business conditions. The Company determined that substantially all long-lived assets, including vehicles and real estate holdings, continue to be utilized in operations and that their carrying values are recoverable. In addition, the Company’s recently acquired Zak Property building in Ohio was evaluated and management determined that the carrying value was not impaired. Furniture and fixtures were not considered material to the unaudited condensed consolidated financial statements. Accordingly, impairment of long-lived assets was recognized as of March 31, 2026 and December 31, 2025.
Fair value measurement
The Company adopted ASC Topic 820, Fair Value Measurements and Disclosures which defines fair value, establishes a framework for measuring fair value and expands financial statement disclosure requirements for fair value measurements.
ASC Topic 820 defines fair value as the price that would be received from the sale of an asset or paid to transfer a liability (an exit price) on the measurement date in an orderly transaction between market participants in the principal or most advantageous market for the asset or liability. ASC Topic 820 specifies a hierarchy of valuation techniques, which is based on whether the inputs into the valuation technique are observable or unobservable. The hierarchy is as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.
Level 3 inputs to the valuation methodology are unobservable and significant to the fair value. Unobservable inputs are valuation technique inputs that reflect the Company’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.
When available, the Company uses quoted market prices to determine the fair value of an asset or liability. If quoted market prices are not available, the Company measures fair value using valuation techniques that use, when possible, current market-based or independently sourced market parameters, such as interest rates and currency rates.
Fair values of financial instruments
Financial instruments include cash and cash equivalents, accounts receivable, prepayments, loan receivable, and other current assets, other payable and accrued liabilities, accounts payable — related parties, short term loans and taxes payable. The Company considers the carrying amount of short-term financial instruments to approximate their fair values because of the short period of time between the origination of such instruments and their expected realization. The Company’s long-term debts are measured at amortized cost, no fair value option is elected.
Revenue recognition
The Company follows Accounting Standards Codification (“ASC”) 606 Revenue Recognition and recognizes revenue from product sales revenues, net of promotional discounts and return allowances, when the following revenue recognition criteria are met: a contract has been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance obligation.
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The Company is a growing agriculture technology company providing CEA hardware products to growers in the controlled environment agriculture industry setting in North America. Majority of the Company’s products were grow lights and related products for the indoor growing settings. The Company also provides indoor grow containers to its customers.
The Company’s contracts with customers where the amounts charged per product is fixed and determinable, the specific terms of the contracts were agreed on by the Company including payment terms which are typically 30 to 60 days for existing customers and prepaid for most new customers. In certain contracts involving sales to customers that entered into rebate programs who can get rebates with utility companies for using LED lighting, payment term ranges from 60 to 120 days.
The Company’s performance obligation is to deliver the products to customers. For indoor grow container products, the Company also involved in customization of the products to suit customer’s specific needs. The provision of customization and configuration to meet certain technical specification per US market and delivery of product is considered one performance obligation as the services provided are not distinct within the context of the contract whereas the customers can only obtain benefit when the services and products are provided together. At times, the Company may charge customers shipping and handling for delivery of products, control of goods does not transfer to the customer before shipment, therefore shipping is not a promised service to the Company and is not considered a separate performance obligation. Any fee charged for shipping would be included in the transaction price for the good.
Transaction prices are mostly fixed. In some contracts, when determining the transaction price, the Company adjusts consideration for the effects of the time value of money if the timing of payments provides the Company with a significant benefit of financing. The Company does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customers and the transfer of the promised goods or services to the licensees will be one year or less. For customers that entered into rebate programs with utility companies, transaction price may depend on level of energy saving the products achieved. The Company estimated the amount of consideration using the expected value of the most likely amount depending on which method the Company expects to better predict the amount of consideration to which it will receive with a constraint applied such that a significant reversal of revenue is not probable.
The Company transfers the risk of loss or damage upon shipment, therefore, revenue from product sales is recognized at a point in time when control of product transfer to customer and the Company has no further obligation to provide services related to such product evidenced by customer signing acceptances upon receipt of goods. Return allowances, which reduce product revenue by the Company’s best estimate of expected product returns, are estimated using historical experience.
The Company evaluates the criteria of ASC 606 — Revenue Recognition Principal-Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs or the net amount earned as commissions. The Company ships the products according to shipping terms on the purchase order or sales order. Once delivery is complete, the Company then sends an invoice to the customer according to the quantity and price of shipment.
The Company evaluates the indicators of control in accordance with ASU 2016-08: 1) the Company is the most visible entity to customers and assumes fulfilment risk and risks related to the acceptability of products, including addressing customer inquiries directly and handling of product returns or refunds directly if any. For grow light products, the Company has its own brand for marketing. For indoor grow containers products, the Company is also involved in the design and technical specification of the products to meet requirement in the US market. 2) The Company assumes inventory risk either through storing the products in its own warehouses; or for drop shipments directly from vendors, the Company takes the title from vendors through inspection and acceptance and is responsible for product damage during shipment period prior to acceptance of its customers and is also responsible for product return if the customer is not satisfied with the products. 3) The Company determines the resale price of the products. 4) The Company is the party that directs the use of the inventory and can prevent the vendor from transferring the product to a customer or to redirect the products to a different customer, after evaluating the above scenario, the Company considers itself the principal of these arrangements and records revenue on a gross basis.
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The Company’s disaggregated revenue stream by products are summarized below:
| For the Three Months Ended | ||||||||
| March 31, 2026 (Unaudited) | March 31, 2025 (Unaudited) | |||||||
| Grow light | $ | $ | ||||||
| Grow Media and others | ||||||||
| Total | $ | $ | ||||||
Prepayments received from customers prior to the delivery of goods to customers or picked up by the customers are recorded as contract liability under the account Deferred income — contract liabilities.
Movements of deferred income — contract liabilities (including related party) consisted of the following as of the date indicated:
| As of March 31, 2026 (Unaudited) | As of December 31, 2025 (Audited) | |||||||
| Beginning balance | $ | $ | ||||||
| Prepayments from customers | ||||||||
| Recognized as revenues | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
The Company periodically provides incentive offers to its customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases and other similar offers. Current discount offers, when accepted by the Company’s customers, are treated as a reduction to the transaction price of the related transaction.
Sales discounts are recorded in the period in which the related sales are recognized. Sales return allowances are recorded and estimated based on historical returns which were generally immaterial to the Company.
Estimated warranty is immaterial
because suppliers provide a warranty period of
Cost of revenue
Cost of revenue mainly consists of costs for purchases of products and related storage, warehouse rent, outbound freight, delivery fees and payroll related expenses.
Segment reporting
The Company follows ASC 280,
Segment Reporting. The Company’s chief operating decision maker, the Chief Executive Officer, reviews the results of operations
when making decisions about allocating resources and assessing the performance of the Company as a whole and hence, the Company has only
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Leases
The Company follows ASC 842 — Leases (“ASC 842”), which requires lessees to record right-of-use (“ROU”) assets and related lease obligations on the balance sheet, as well as disclose key information regarding leasing arrangements.
ROU assets represent our right to use an underlying asset for the lease terms and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. As the Company’s leases do not provide an implicit rate, the Company generally uses its incremental borrowing rate based on the estimated rate of interest for collateralized borrowing over a similar term of the lease payments at commencement date. The operating lease ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Income taxes
The Company accounts for income taxes under the asset and liability method. Deferred tax assets and liabilities are recognized for future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their perspective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded, when necessary, to reduce deferred tax assets to the amount expected to be realized.
As a result of the implementation of certain provisions of ASC 740, Income Taxes (“ASC 740”), which clarifies the accounting and disclosure for uncertainty in tax position, as defined, ASC 740 seeks to reduce the diversity in practice associated with certain aspects of the recognition and measurement related to accounting for income taxes. The Company follows the provisions of ASC 740 and has analyzed filing positions in each of the federal and state jurisdictions where the Company is required to file income tax returns, as well as open tax years in such jurisdictions. The Company has identified the U.S. federal jurisdiction, and the states of Delaware, as its “major” tax jurisdictions.
The Company believes that our income tax filing positions and deductions will be sustained on audit and do not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to ASC 740. The Company’s policy for recording interest and penalties associated with income-based tax audits is to record such items as a component of income taxes.
Stock-based compensation
The Company accounts for stock-based compensation awards to employees in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”, which requires that stock-based payment transactions with employees be measured based on the grant-date fair value of the equity instrument issued and recognized as compensation expense over the requisite service period.
The Company accounts for stock-based compensation awards to non-employees in accordance with FASB ASC Topic 718 amended by ASU 2018-07. Under FASB ASC Topic 718, stock compensation granted to non-employees has been determined as the fair value of the consideration received or the fair value of equity instrument issued, whichever is more reliably measured and is recognized as an expense as the goods or services are received.
Warrants
The Company evaluates the public and private warrants as either equity-classified or liability-classified instruments based on an assessment of the warrants’ specific terms and applicable authoritative guidance in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 480, Distinguishing Liabilities from Equity (“ASC 480”) and ASC 815, Derivatives and Hedging (“ASC 815”). The assessment considers whether the warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability pursuant to ASC 480, and whether the warrants meet all of the requirements for equity classification under ASC 815, including whether the warrants are indexed to the Company’s own ordinary shares, among other conditions for equity classification. Pursuant to such evaluation, both public and private warrants are classified in shareholders’ equity.
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For issued warrants that meet all of the criteria for equity classification and issued with debt instruments, the proceeds from the sale of the debt instruments are allocated to the two elements based on the relative fair values of the debt instrument without the warrants and of the warrants themselves at time of issuance. The portion of the proceeds so allocated to the warrants is accounted for as paid-in capital. The remainder of the proceeds is allocated to the debt instrument portion of the transaction at a discount and amortized over the term of the debt instrument using the effective interest rate method.
Convertible notes
Upon adoption of ASU 2020-06 on January 1, 2021, the elimination of the beneficial conversion feature (“BCF”) and cash conversion models in ASC 470-20 that requires separate accounting for embedded conversion features in convertible instruments results in the convertible debt instruments being recorded as a single liability (i.e., there is no separation of the conversion feature, and all proceeds are allocated to the convertible debt instruments as a single unit of account). Unless conversion features are derivatives that must be bifurcated from the host contracts in accordance with ASC 815-15 or, in the case of convertible debt, if the instruments are issued with a substantial premium, in the latter case, ASC 470-20-25-13 requires the substantial premium to be attributable to the conversion feature and recorded in additional paid-in capital (APIC).
Redeemable convertible preferred stock
The Company accounts for its preferred shares in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity” (ASC 480). For preferred shares subject to mandatory redemption (if any) will be classified as a liability instrument and will be measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) will be classified as temporary equity. At all other times, ordinary shares will be classified as shareholders’ equity. In accordance with ASC 480-10-S99, the Company classifies the Series A, D, and F preferred shares outside of permanent equity as the shares are subject to possible redemption after 120 days of closing. The Company recorded the Series A, D, and F preferred shares as temporary equity with accrued dividend included in redemption value.
Commitments and Contingencies
In the ordinary course of business, the Company is subject to certain contingencies, including legal proceedings and claims arising out of the business that relate to a wide range of matters, such as government investigations and tax matters. The Company recognizes a liability for such contingency if it determines it is probable that a loss has occurred, and a reasonable estimate of the loss can be made. The Company may consider many factors in making these assessments including historical and specific facts and circumstances of each matter.
Related party transactions
A related party is generally
defined as (i) any person and or their immediate family hold
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Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to holders of common stock by the weighted average number of common stock outstanding during the year. Diluted earnings (loss) per share presents the dilutive effect on a per share basis of the potential common stock (e.g., convertible securities, options, and warrants) as if they had been converted at the beginning of the periods presented, or issuance date, if later. Potential common stock that have an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted earnings (loss) per share.
For
the three months ended March 31, 2026 and 2025, basic earnings (loss) per share were $
The following table presents the computation of basic and diluted earnings (loss) per share of common stock:
| March 31, 2026 (Unaudited) | March 31, 2025 (Unaudited) | |||||||
| Basic earnings (loss) per share: | ||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | ) | ||||
| Deduct: Preferred dividend | ||||||||
| Net income (loss) used in computing basic earnings (loss) per share of common stock | ( | ) | ||||||
| Basic weighted average number of common stock | ||||||||
| Basic earnings (loss) per share | $ | $ | ( | ) | ||||
| March 31, 2026 (Unaudited) | March 31, 2025 (Unaudited) | |||||||
| Diluted earnings (loss) per share: | ||||||||
| Net income (loss) attributable to common stockholders | $ | $ | ( | ) | ||||
| Add: Preferred dividend | ||||||||
| Add: Interest expenses | ||||||||
| Net income (loss) used in computing diluted earnings (loss) per share of common stock | $ | $ | ( | ) | ||||
| Weighted average shares used in computing net income per share of common stock, basic | ||||||||
| Add: Convertible notes | ||||||||
| Add: Preferred shares | ||||||||
| Weighted average shares used in computing net income per share of common stock, diluted | ||||||||
| Diluted earnings (loss) per share | $ | $ | ( | ) | ||||
The
Recently issued accounting pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expenses in the notes of the financials, to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2024-03 will have on its related disclosures.
Except as mentioned above, the Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated balance sheets, statements of operations and comprehensive income (loss), changes in stockholders’ deficit and cash flows.
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Note 4 — Variable interest entity
The Company does not have direct ownership in Upland but has been actively involved in their operations and has the power to direct the activities and significantly impact Upland’s economic performance. The Company also bears the risk of losses from Upland. As such, in accordance with ASC 810, Upland is considered variable interest entity (“VIE”) of the Company and the financial statements of Upland was consolidated from the date of control and variable interest existed.
Based on the loan agreement between its creditor and Upland 858 LLC, the loan is a non-recourse debt secured by the assets owned by Upland 858 LLC only and guaranteed by the stockholders of Upland 858 LLC only. Upland 858 LLC’s creditor will have no-recourse to Visiontech which is considered to be the primary beneficiary of the VIE structure but not the legal owner of Upland 858 LLC:
Accordingly, the accounts of Upland were consolidated in the accompanying financial statements as VIE of Visiontech from January 2022 when Upland acquired the warehouse in California.
The carrying amount of the assets and liabilities are as follows:
| As of March 31, 2026 (Unaudited) | ||||
| Cash | $ | |||
| Property and equipment, net | ||||
| Total assets | $ | |||
| Current portion of long-term debt | $ | |||
| Long-term debt, net of current portion | ||||
| Accrued expenses | ||||
| Intercompany payable to Visiontech | ||||
| Total liabilities | $ | |||
The operating results of VIE included in the unaudited condensed consolidated statements of operations are as follows for the period indicated:
| For the Three Months Ended March 31, 2026 (Unaudited) | ||||
| Revenue* | $ | |||
| Selling, general and administrative | ||||
| Interest expense | ||||
| Net income | $ | |||
| * |
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Note 5 — Debt settlement with Megaphoton
On August 22, 2023, two
separate lawsuits were filed against NMI and two of its wholly-owned subsidiaries: Visiontech Group Inc., a California corporation, and
Hydroman Inc., a California corporation (collectively referred to as the “Defendants”) by Megaphoton. Megaphoton, a manufacturer
and producer of artificial lighting equipment for use in agriculture and industrial applications, filed the lawsuits against the Defendants
in Los Angeles Superior Court, asserting that the Defendants have breached a contract/guarantee agreement by failing to pay a total of
$
On February 2, 2026,
the Company entered into a Settlement and Mutual Release Agreement with Megaphoton, Inc. to resolve previously disclosed litigation pending
in the United States District Court for the Central District of California. Pursuant to the agreement, the Company agreed, among other
things, to (i) issue
On February 2, 2026, Mr.
Du became the Company’s President and a member of our board of directors. The Company’s shares were valued at $
| Fair value of shares to be issued: | $ | |||
| Cash to be paid: | ||||
| Total consideration | ||||
| Debt settled | ||||
| Gain from debt settlement | $ |
As of the date of filing,
board approval has been obtained but issuance of the
Note 6 — Asset acquisition under common control
On September 18, 2025, the
Company entered into a Membership Interest Purchase Agreement with Big Lake, pursuant to which, the Company agreed to purchase from Big
Lake all of the membership interests of Zak Properties, which in turn owns certain real property located in the State of Ohio, commonly
known as 405 Madison Ave. The Company’s Chief Executive Officer and Chairman, Tie (James) Li, is the sole member of Zak Properties
prior to the sale. The purchase price for Zak Properties is $
17
Since Big Lake, Zak Properties and the Company are under common control of Mr. Li and the asset acquired is concentrated in a single identifiable asset which is a building, the acquisition is accounted for as asset acquisition under common control where the assets are transferred at the cost basis on September 18, 2025. The excess of consideration paid over the carrying value was recorded as a reduction in the Company’s additional paid in capital.
Fair value of consideration transferred:
| Series B and C preferred stock | $ | |||
| Issuance cost of preferred stock | ||||
| Convertible promissory note | ||||
| Total | $ |
Carrying value of assets and liabilities transferred:
| As of September 18, 2025 | ||||
| Current assets | $ | |||
| Property and equipment, net | ||||
| Total assets | ||||
| Total liabilities | ( | ) | ||
| Net assets | $ | |||
Equity in the Company as a result of the asset acquisition increased as follows:
| As of September 18, 2025 | ||||
| Net assets acquired | $ | |||
| Less: debt incurred | ( | ) | ||
| Less: cost associated with issuance of Series B and C preferred stock | ( | ) | ||
| Increase in equity | $ | |||
Note 7 — Accounts receivable, net
Accounts receivable, net consisted of the following as of the date indicated:
| As of March 31, 2026 (Unaudited) | As of December 31, 2025 (Audited) | |||||||
| Accounts receivable | $ | $ | ||||||
| Less: allowance for credit losses | ( | ) | ( | ) | ||||
| Accounts receivable, net | ||||||||
| Accounts receivable - related party | ||||||||
| Less: allowance for credit losses – related party | ( | ) | ( | ) | ||||
| Accounts receivable – related party, net | ||||||||
| Total accounts receivable, net | $ | $ | ||||||
Provision for credit losses
were $
18
Movement of allowance:
Movement of allowance for expected credit losses (including related party) consisted of the following as of the date indicated:
| March 31, 2026 (Unaudited) | December 31, 2025 (Audited) | |||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Ending balance | $ | $ | ||||||
Note 8 — Property and equipment, net
Property and equipment, net consists of the following:
| As of March 31, 2026 (Unaudited) | As of December 31, 2025 (Audited) | |||||||
| Trucks & Automobiles | $ | $ | ||||||
| Machinery & Equipment | ||||||||
| Warehouse Equipment | ||||||||
| Computers & Peripherals | ||||||||
| Building | ||||||||
| Building improvements | ||||||||
| Land | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation expense for
the three months ended March 31, 2026 and 2025 amounted to $
Note 9 — Loans payable
Short-term loans:
| As of March 31, 2026 (Unaudited) | As of December 31, 2025 (Audited) | |||||||
| Factor H (1) | $ | $ | ||||||
| Factor J (2) | ||||||||
| Factor L (3) | ||||||||
| Jie Zhang (4) | ||||||||
| RedOne Investment Limited (“RedOne”) (5) | ||||||||
| Agile Capital Funding, LLC (6) | ||||||||
| J.J. Astor & Co.(7) | ||||||||
| Yan Li(8) | ||||||||
| Newtek Business Services Holdco 6, Inc. (9) | ||||||||
| Other loans | ||||||||
| Total short-term loans | $ | $ | ||||||
Short-term loans consist of account receivable factoring agreements, subordinated business loan and third parties loans as of March 31, 2026 and December 31, 2025.
| (1) | On
October 23, 2023, the Merchants entered into a standard merchant cash advance agreement with Factor H. The Company sold $ |
19
On May 2, 2024, the Merchants entered
into another standard merchant cash advance agreement with Factor H. The Company sold $
On November 18, 2024, the Merchants
entered into another standard merchant cash advance agreement with Factor H. The Company sold $
| (2) | On
September 27, 2024, the Merchants entered into a standard merchant cash advance agreement with Factor J. The Company sold $ |
On February 11, 2025, the Merchants entered into another standard merchant
cash advance agreement with Factor J. The Company sold $
| (3) | On
February 7, 2025, the Merchants entered into a standard merchant cash advance agreement with Wave advance Inc (the “Factor L”).
The Company sold $ |
On February 25, 2025, the Merchant
entered into another standard merchant cash advance agreement with Factor L. The Company sold $
20
On August 1, 2025, the Company and
Factor L signed a settlement agreement that required payments from August 5 to October 27, 2025, for an aggregate amount of $
These
receivable purchase agreements were accounted for as secured borrowing under ASC 860 since there is no legal, actual, effective
transfer of the receivables to the Factors. Rather, the Factors only have generally claim against the receivable pools not a particular
receivable. As of March 31, 2026 and December 31, 2025, outstanding balance amounted to $
| (4) |
| (5) | On
February 10, March 28, June 5, June 27, September 22, December 22, 2023 and February 20, 2024, Lakeshore entered into seven promissory
notes with RedOne to which Lakeshore borrowed an aggregate principal amount of $ |
The balance of $
| (6) | On
June 6, 2024, the Merchants entered into a subordinated business loan and security agreement with Agile Capital Funding, LLC and Agile
Lending, LLC for the principal amount of $ |
On
September 25, 2024, the Merchants entered into another subordinated business loan and security agreement with Agile Capital Funding,
LLC and Agile Lending, LLC for the principal amount of $
21
On
November 21, 2024, the Merchants entered into another subordinated business loan and security agreement with Agile Capital Funding, LLC
and Agile Lending, LLC for the principal amount of $
| (7) |
| (8) |
| (9) |
Interest expense for short term loans amounted to $
Short-term loans — related parties: refer to Note 11 Related Party transactions.
Long-term debts:
Long-term debts consist of four auto loans, one building loan, one secured business loan and one promissory note as of March 31, 2026 and December 31, 2025.
The outstanding amount of
the auto loans were $
Minimum required principal payments towards the Company’s auto loans as of March 31, 2026 are as follows:
| Twelve months ended March 31, | Repayment | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| Total | $ | |||
The outstanding amount of
the building loan was $
22
Minimum required principal payments towards the Company’s building loan as of March 31, 2026 are as follows:
| Twelve months ended March 31, | Repayment | |||
| 2027 | $ | |||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
The outstanding amount of
the secured business loan was $
The outstanding amount of the promissory note was $
Minimum required principal payments towards the Company’s promissory note as of March 31, 2026 are as follows:
| Twelve months ended March 31, | Repayment | |||
| 2027 | $ | |||
| 2028 | ||||
| Total | $ | |||
Interest expenses for long term loans amounted to $
23
Note 10 — Convertible notes
The Company entered into a series of convertible note agreements with investors as described below. The Company also determined that the embedded conversions in the notes meets the scope exception to be considered indexed to a reporting’s own stock based on the two-step approach in accordance with ASC 815-40-15 and does not require to be separately accounted for as a derivative. As a result, the Company classified all the convertible notes as a debt instrument in its entirely.
On July 3, 2024, the Company entered into four convertible note agreements
total of $
On November 18, 2024, the
Company signed one convertible note agreement of $
During the third and fourth
quarters of 2025, the Company entered into another five securities purchase agreements with Diagonal pursuant to which the Company issued
the following convertible promissory notes to the Diagonal: i) principal amount of $
24
During the third quarter
of 2025, the Company entered into the following two convertible promissory notes with CFI Capital LLC: i) principal amount of $
On July 30, 2025, the Company entered into a securities purchase agreement
with Labrys Fund II, L.P., pursuant to which the Company sold to Labrys Fund II, L.P. a convertible promissory note in the aggregate principal
amount of $
On August 5, 2025, the Company
entered into a securities purchase agreement with FirstFire Global Opportunities Fund LLC, pursuant to which the Company sold a convertible
promissory note in the aggregate principal amount of $
On August 4, 2025, the Company
entered into a securities purchase agreement with AES Capital Management LLC, pursuant to which the Company sold a convertible promissory
note in the aggregate principal amount of $
On August 4, 2025, the Company
entered into a securities purchase agreement with Lambda Venture Partners LLC, pursuant to which the Company sold a convertible promissory
note in the aggregate principal amount of $
25
On August 15, 2025, the
Company entered into a securities purchase agreement with Actus Fund LLC, pursuant to which the Company sold a convertible promissory
note in the aggregate principal amount of $
On October 16, 2025, the
Company entered into a securities purchase agreement with AES Capital Management LLC, pursuant to which the Company sold a convertible
promissory note in the aggregate principal amount of $
On December 10, 2025, the
Company entered into a securities purchase agreement with Boot Capital LLC, pursuant to which the Company sold a convertible promissory
note in the aggregate principal amount of $
On December 26, 2025, the Company entered into a securities purchase
agreement with Quick Capital, LLC, pursuant to which the Company sold a convertible promissory note in the aggregate principal amount
of $
On December 29, 2025, the Company entered into a securities purchase
agreement with AES Capital Management LLC, pursuant to which the Company sold a convertible promissory note in the aggregate principal
amount of $
On February 23, 2026, the Company entered into another securities purchase agreement with Lambda Venture Partners,
LLC, pursuant to which the Company issued a convertible promissory note in the aggregate principal amount of $
On February 23, 2026, the Company entered into another securities purchase
agreement with Lambda Venture Partners, LLC, pursuant to which the Company issued a convertible promissory note in the aggregate principal
amount of $
Interest expense in connection with the convertible notes for the three
months ended March 31, 2026 and 2025 amounted to $
26
Note 11 — Related party transactions
Purchases and accounts payable – related parties:
On April 11, 2023, one
of the Company’s customers and vendors, Iluminar Lighting LLC (“Iluminar”) entered into Debt Conversion Agreement with
the Company pursuant to which it will convert $
Revenue - related party:
During the three months ended March 31, 2026 and 2025, the sales revenue
from Iluminar was $
Other receivable - related party:
As of March 31, 2026, other receivable – related party from Mr. Tie (James) Li, a shareholder of the Company,
was $
Loan receivable – related party:
As of March 31, 2026 and
December 31, 2025, loan receivable from Big Lake amounted to $
Deferred income – contract liabilities - related party:
As of March 31, 2026 and
December 31, 2025, the deferred income - contract liabilities from Iluminar was and $
Other payables — related parties
In 2022, Nature’s
Miracle Inc. (Cayman) (“NMCayman”), former stockholders of NMI, currently under common control of Mr. Tie (James) Li, the
Company’s CEO, paid a total amount of $
In 2021, Yang Wei, former shareholder of the Visiontech and current
shareholder of the Company, paid a total amount of $
In 2022, Zhiyi (Jonathan) Zhang, paid a total amount of $
27
As of March 31, 2026 and
December 31, 2025, Nature’s Miracle Holding Inc. has an outstanding amount due to James Li for and $
As of March 31, 2026 and
December 31, 2025, Nature’s Miracle Holding Inc. has an outstanding amount due to Zhiyi (Jonathan) Zhang for $
As of March 31, 2026 and
December 31, 2025, Visiontech had outstanding amounts due to Xi Liu of $
Short-term loans — related parties
| As of March 31, 2026 (Unaudited) | As of December 31, 2025 | |||||||
| Zhiyi Zhang (1) | $ | $ | ||||||
| Tie Li (2) | ||||||||
| Big Lake(3) | ||||||||
| Total short-term loans – related parties | $ | $ | ||||||
| (1) |
| (2) | On
December 18, 2025, the Company signed one loan with Tie (James) Li for the principal amount of $ |
On December 30, 2025, the Company signed
one loan with Tie (James) Li for the total principal amount of $
| (3) | On
December 22, 2025, the Company signed a loan agreement with Big Lake Capital, LLC for a total principal amount of $ |
Interest expense for short-term
loans - related parties amounted to $
28
Convertible notes — related party
On April 11, 2025, the Company signed a convertible promissory note
agreement with Big Lake. Big Lake is a related party controlled by Tie “James” Li, Chairman and CEO of the Company. The agreement
calls for up to $
In connection with the acquisition of Zak Properties as stated in Note
6 – Asset acquisition under common control, the Company issued a convertible promissory note in the aggregate principal amount of
$
Interest expense for convertible
notes - related party amounted to $
Note 12 — Income taxes
As of March 31, 2026 and
December 31, 2025, the Company’s deferred tax asset had a full valuation allowance recorded against it. The effective tax rate for
the three months ended March 31, 2026 and 2025 were
Note 13 — Series A, D, and F preferred shares subject to possible redemption
On May 7, 2025, the Company
entered into a Securities Purchase Agreement (the “SPA”) where the Company sold to GHS Investments, LLC, a Nevada limited
liability company (the “Investor”)
On September 19, 2025, the
Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Y. K. Capital Management, Inc. (the
“Series D Investor”), whereby the Series D Investor agreed to purchase
29
The Series D Shares have
a stated value of $
On October 10, 2025, the
Company entered into another Securities Purchase Agreement (the second SPA) with the Investor, whereby the Investor agreed to purchase
The Series A Shares have
a stated value of $
On October 29, 2025, the Company entered into a Securities Purchase
Agreement with a third party (“Series F Investor”), whereby the Series F Investor agreed to purchase
The Series F Shares have
a stated value of $
The Company accounts for
its Series A, D, and F preferred shares in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from
Equity” (ASC 480). Series A, D, and F preferred shares subject to mandatory redemption (if any) will be classified as a liability
instrument and will be measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption
rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within
the Company’s control) will be classified as temporary equity. At all other times, ordinary shares will be classified as shareholders’
equity. In accordance with ASC 480-10-S99, the Company classifies the Series A, D, and F preferred shares outside of permanent equity
as the shares are subject to possible redemption after
As of March 31, 2026, the Series A, D, and F preferred shares subject to possible redemption reflected in the unaudited condensed consolidated balance sheets are reconciled in the following table:
| Balance as of January 1, 2026 | $ | |||
| Series A preferred shares | ( | ) | ||
| Series D preferred shares | ||||
| Series F preferred shares | ||||
| Cumulative dividend | ||||
| Balance as of March 31, 2026 | $ |
On October 28, 2025, the
Investor converted
30
On January 2, 2026, the
Investor converted
On March 16, 2026, the Investor
converted
Note 14 — Equity
Reverse recapitalization
The total number of shares which the Company shall have the authority
to issue is one billion and one million (
Shares issued in connection with the Company’s Merger on March 11, 2024:
| Common Stock | ||||
| Lakeshore’s shares outstanding prior to reverse recapitalization | ||||
| Shares issued to private rights | ||||
| Conversion of the Lakeshore’s public shares and rights | ||||
| Shares issued to service providers | ||||
| Shares issued for commitment fee | ||||
| Bonus shares issued to in connection with Lakeshore loans * | ||||
| Bonus shares issued to in connection with NMI loans * | ||||
| Conversion of NMI’s shares into the Company’s ordinary shares | ||||
| Total shares outstanding | ||||
| * | In connection with the Merger, the Company, Lakeshore and NMI further entered into a Letter Agreement on November 15, 2023, a total of |
| The shares were valued $ |
| * |
31
The Company has paid YA
Global II SPV, LLC, a subsidiary of Yorkville, a structuring fee in the amount of $
Stock compensation
In connection with the Merger, the Company adopted the Equity Incentive Plan (the “2024 Incentive Plan”).
The 2024 Incentive Plan will provide for grants of stock options, stock appreciation rights, restricted stock, restricted stock units, and other stock or equity-related cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, will be eligible for grants under the 2024 Incentive Plan.
The 2024 Incentive Plan
provides for the future issuance of shares of the Company’s Common Stock, representing
Pursuant to board resolution
dated August 23, 2023, the Company is to grant a one-time award of
Pursuant to board resolution
dated September 20, 2023, the Company approved a stock grant to Mr. Darin Carpenter, Chief Operating Officer of the Company, pursuant
to which Mr. Carpenter will be issued
On August 1, 2024, the Company
and Darin Carpenter entered into the mutual termination of employment agreement and intent to transition to project-based work (the “Agreement”),
in which it was agreed that Mr. Carpenter shall resign from his position as Chief Operating Officer of the Company effective as of July
31, 2024. Pursuant to the Agreement, the Company and Mr. Carpenter agreed that Mr. Carpenter will provide services as a consultant to
the Company on a per project basis as needed. In addition, the Company agreed to fully vest
Shares award to Mr. Hausman
and Mr. Carpenter per Letter Agreement stated above has a fair value of $
32
Pursuant to board resolution
dated March 24, 2024, certain key employees were approved for stock incentives including George Yutuc (Chief Financial Officer), Kirk
Collins (Director of Sales), and Amber Wang (Controller). Each can receive shares that vest over time of
On April 2, 2024, the Company
entered into an investor relations consulting agreement with MZHCI LLC (“MZHCI”) pursuant to which MZHCI will provide investor
relations services to the company and the agreement has a term of six months. The Company will pay $
Pursuant to board resolution
dated October 25, 2024, the Company approved the issuance of
Pursuant to board resolution dated November 18, 2024, the Company approved
the issuance of
On July 22, 2025, the Company
entered into a two-month consulting agreement with Root Ventures LLC. In exchange for curation services to be provided under the agreement, the
Company issued
On October 29, 2025, the
Company entered into a consulting agreement with Huanfu Cui (the “Consultant”), pursuant to which the Consultant agreed to
provide financing advisory services, including presenting tailored financing options, reviewing deal-related documents, and coordinating
with lenders to facilitate financing transactions. As compensation, the Company agreed to issue the Consultant
For the three months ended
March 31, 2026 and 2025, the Company recorded stock compensation expenses of $
Common stock issued with private placement
On July 19, 2024, the Company
issued a total of
Public Offering
On July 29, 2024, the Company
closed an underwriting public offering for the sale of
33
On November 7, 2024, the Company entered into an underwriting agreement
with D. Boral Capital LLC as the underwriter, relating to a firm commitment underwritten public offering of (i)
On May 7, 2025, the Company entered into the equity financing agreement
(or the “EPFA”), with GHS Investments, LLC, a Nevada limited liability company (the “Investor”), in connection
with an equity line of credit (“ELOC”) for up to $
| Commitment shares to be issued: | ||||
| Beginning balance as of December 31, 2025 | $ | |||
| Change in fair value of commitment shares to be issued | ( | ) | ||
| Ending balance as of March 31, 2026 | $ | |||
For the three months ended March 31, 2026, the Company sold 14,636,713 shares
of its common stock, net proceeds to the Company amounting to $
Preferred shares
In connection with the acquisition
of Zak Properties as stated in Note 6– Asset acquisition under common control, the purchase price for Zak Properties is $
| (i) | the Company shall issue |
| (ii) | the Company shall issue |
The Company issued
On December 9, 2025, Big
Lake converted
34
Shares issued through debt-to-equity conversion
Refer to Note 9 — Loans payable and Note 11 — Related party transactions for detail.
On July 24, 2025, the Company
entered into separate debt-to-equity conversion agreements with Tie Li, George Yutuc, and Jonathan Zhang pursuant to which each individual
agreed to convert certain accrued and unpaid wages and salaries into shares of the Company’s common stock at a conversion price
of $
Shares issued through convertible notes conversion
Refer to Note 10 — Convertible notes for detail.
Warrants:
Warrants issued prior to reverse recapitalization
In connection with the reverse
recapitalization, the Company has assumed
Each whole warrant entitles
the holder to purchase one ordinary share at a price of $
The Company may redeem the
warrants at a price of $
Warrant issued with July convertible notes
On July 17, 2024, the Company
issued a total of
The issuance of the warrants described above were deemed exempt from registration under Section 4(a)(2) of the Securities Act or Regulation D promulgated thereunder in that the issuance of securities were made to an accredited investor and did not involve a public offering. The recipient of such securities represented its intention to acquire the securities for investment purposes only and not with a view to or for sale in connection with any distribution thereof.
The total number of these warrant shares is subject to adjustments for stock splits, recapitalizations and reorganizations. If the Company issues or sells any shares of common stock or other securities for a price per share, exercise price, or conversion price, as the case may be, that is less than the current exercise price of the warrant, subject to exceptions, the exercise price of the warrant will be adjusted to match the price per share, exercise price, or conversion price, in the issuance, as applicable.
35
Series A Warrants issued in July Public offering
On July 29, 2024, the Company
issued a total
The Series A warrant is
immediately exercisable on the date of issuance at an exercise price of $
The Series A warrants are exercisable at any time after their original issuance up to the date that is five years after their original issuance. The Series A warrants will be exercisable, at the option of each holder, in whole or in part by delivering to us a duly executed exercise notice accompanied by payment in full in immediately available funds for the number of shares of Common Stock subscribed for upon such exercise (except in the case of a cashless exercise as discussed below). If a registration statement registering the issuance of the shares of Common Stock underlying the Series A warrants under the Securities Act is not effective or available, the holder may, in its sole discretion, elect to exercise the Series A warrants through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of Common Stock determined according to the formula set forth in the Series A warrants.
The exercise price per whole
share of Common Stock issuable upon exercise of Series A warrants is $
In November 2024, a total
of
Warrants and Pre-Funded Warrants issued in November Public offering
On November 12, 2024, the
Company issued a total
The Series A Warrants was
exercisable commencing upon warrant stockholder approval (“Warrant Stockholder Approval”, see define below), have an exercise
price of $
The Series B Warrants were
exercisable commencing upon Warrant Stockholder Approval, will have an exercise price of $
The purchase price of each
Pre-Funded Unit is $
The exercise price and number
of shares of common stock issuable under the Series A Warrants are subject to adjustment and the number of shares of common stock issuable
under the Series B Warrants will be determined following the 10th trading day after the date of Warrant Stockholder Approval (the “Reset
Date”), and to be determined pursuant to
36
Warrant Stockholder Approval. Under Nasdaq listing rules, the Warrants may not be exercised unless and until the Company obtain the approval of its stockholders. While the Company intends to promptly seek stockholder approval, there is no guarantee that the Warrant Stockholder Approval will ever be obtained. If the Company is unable to obtain the Warrant Stockholder Approval, the Warrants may not be exercised and will have substantially less value. In addition, the Company will incur substantial cost, and management will devote substantial time and attention, in attempting to obtain the Warrant Stockholder Approval.
Warrants issued with convertible note – related party
In connection with the convertible
note issued to Big Lake, the Company has issued to the note holder and an investor of the holder, warrants to purchase up to
Warrants issued with August 2025 convertible note
In connection with the convertible
note issued to Auctus Fund, LLC on August 15, 2025, the Company granted the note holder warrants to purchase
In December 2024, a total
of
On January 13, 2025, the exercise price for the Series A warrant has
been reset to $
In January 2025, a total
of
The summary of warrants activity is as follows:
| Warrants Outstanding | Common Stock Issuable | Weighted Average Exercise Price | Average Remaining Contractual Life (in years) | |||||||||||||
| US$ | ||||||||||||||||
| December 31, 2025 | $ | |||||||||||||||
| Adjustment | ||||||||||||||||
| Granted | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Exercised | ||||||||||||||||
| March 31, 2026 | $ | |||||||||||||||
37
| Warrants Outstanding | Common Stock Issuable | Weighted Average Exercise Price | Average Remaining Contractual Life (in years) | |||||||||||||
| US$ | ||||||||||||||||
| December 31, 2024 | $ | |||||||||||||||
| Adjustment | ||||||||||||||||
| Granted | ||||||||||||||||
| Forfeited | ||||||||||||||||
| Exercised | ( | ) | ( | ) | ||||||||||||
| March 31, 2025 | $ | |||||||||||||||
Note 15 — Concentration of risk
Credit risk
Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable.
As of March 31, 2026 and December 31, 2025, $
Accounts receivable is typically unsecured and derived from revenue earned from customers, thereby exposing the Company to credit risk. The risk is mitigated by the Company’s assessment of its customers’ creditworthiness and its ongoing monitoring of outstanding balances. The Company maintains reserves for estimated credit losses, and such losses have generally been within expectations.
Customer and vendor concentration risk
During the three months ended March 31, 2026 and 2025, the major customers of the Company are as below. Iluminar is a related party of the Company since April 11, 2023, as disclosed in Note 11— Related party transactions.
| For the Three Months Ended March 31, 2026 (Unaudited) | As of March 31, 2026 (Unaudited) | |||||||
| Percentage of Revenue | Percentage of Accounts Receivable | |||||||
| Customer C | - | % | % | |||||
| Pharm Fresh LLC | % | % | ||||||
| Elevated Equipment Supply – MI | % | |||||||
| Hydrotek Arizona LLC | % | - | % | |||||
38
| For the Year Ended December 31, 2025 (Audited) | As of December 31, 2025 (Audited) | |||||||
| Percentage of Revenue | Percentage of Accounts Receivable | |||||||
| Customer C | % | % | ||||||
| RapidGrow LED Technologies | < | % | % | |||||
| SAC Projects, Inc. | < | % | % | |||||
| Concentrated Services LLC | < | % | % | |||||
| House of Clones, Inc | < | % | % | |||||
| For the Three Months Ended March 31, 2025 (Unaudited) | As of March 31, 2025 (Unaudited) | |||||||
| Percentage of Revenue | Percentage of Accounts Receivable | |||||||
| Customer A | < | % | % | |||||
| Customer C | % | < | % | |||||
| Customer K | < | % | % | |||||
| Customer L | % | < | % | |||||
| Iluminar | < | % | % | |||||
During the three months ended March 31, 2026 and 2025, the major vendors of the Company are as below. Iluminar is a related party of the Company. Megaphoton was not a related party prior to February 2, 2026, but became a related party following the debt settlement transaction disclosed in Note 5 and Note 17, as a result of Mr. Du becoming the President and a member of the board of directors of the Company.
| For the Three Months Ended March 31, 2026 (Unaudited) | As of March 31, 2026 (Unaudited) | |||||||
| Percentage of Purchases | Percentage of Accounts Payable | |||||||
| Iluminar | % | % | ||||||
| HangZhou HanGuang Illumination | % | % | ||||||
| Vendor C | % | % | ||||||
| Vendor A | % | % | ||||||
| Vendor B | % | % | ||||||
39
| For the Year Ended December 31, 2025 (Audited) | As of December 31, 2025 (Audited) | |||||||
| Percentage of Purchases | Percentage of Accounts Payable | |||||||
| Vendor A | < | % | | % | ||||
| Vendor C | < | % | % | |||||
| Vendor D | % | < | % | |||||
| Iluminar | % | < | % | |||||
| Megaphoton Inc. | < | % | % | |||||
| For the Three Months Ended March 31, 2025 (Unaudited) |
As of March 31, 2025 (Unaudited) |
|||||||
| Percentage of Purchases |
Percentage of Accounts Payable |
|||||||
| Vendor A | < |
% | |
% | ||||
| Vendor E | % | < |
% | |||||
| Iluminar | % | < |
% | |||||
| Megaphoton Inc. | < |
% | % | |||||
Note 16 — Lease
The Company follows ASC 842 Leases. The Company has entered into
lease agreements for an office in California. $
40
On April 11, 2024, the Company
entered into a lease agreement for an office located in California. The lease term was from
As of March 31, 2026 and
December 31, 2025, the weighted-average remaining operating lease term of its existing leases is approximately
| Lease cost | March 31, 2026 (Unaudited) | March 31, 2025 (Unaudited) | ||||||
| Operating lease cost (included in Cost of Revenue and Other Expense in the Company’s Statement of Operations and Comprehensive Income (Loss)) | $ | $ | ||||||
| Other information | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||
| Weighted average remaining term in years | ||||||||
| Average discount rate – operating leases | % | % | ||||||
The supplemental balance sheet information related to leases for the period is as follows:
| As of March 31, 2026 (Unaudited) | As of December 31, 2025 (Audited) | |||||||
| Operating leases | ||||||||
| Right of use asset | ||||||||
| Lease Liability – current portion | ||||||||
| Lease Liability – net of current portion | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
Maturities of the Company’s lease liabilities are as follows:
| Twelve months ended March 31, | Operating Lease | |||
| 2027 | $ | |||
| 2028 | ||||
| Thereafter | ||||
| Less: Imputed interest/present value discount | ( | ) | ||
| Present value of lease liabilities | $ | |||
Note 17 — Commitments and Contingencies
Except as disclosed below, the Company may, from time to time, be involved in legal matters arising in the ordinary course of its business. While the Company does not believe any currently pending legal proceedings, other than those disclosed below, will have a material adverse effect on its business, financial condition, or results of operations, there can be no assurance that future matters will not arise or that any such matters will not at some point proceed to litigation and have a material adverse effect on the Company.
41
On March 1, 2024 NMI was notified of a complaint in San Bernardino Superior Court by Vien Le, its former CFO, who was employed approximately 2 months. The lawsuit claims wrongful discharge, untimely payment of wages and other related items. The Company has retained counsel and believes it will successfully defend against this lawsuit.
On October 22, 2024, Growterra, LLC (“Growterra”) filed a complaint against the Company and the Company’s chief executive officer in the Court of Common Pleas, Hamilton County, Ohio, alleging that it purchased lighting products from the Company, under which the Company would provide Growterra software, IP, and design documentation related to hydroponic containers and identify Growterra as an additional insured on the Company’s product liability insurance. Growterra alleges the Company failed to perform these obligations. Growterra is alleging breach of contract, fraud, and misappropriation of trade secrets as well as related causes of action. On March 27, 2026 the above-mentioned Court has denied Growterra’s motion for summary judgement. The Court has also denied the Company’s counterclaim for breach of contract without the opportunity to conduct discovery. The trial is rescheduled for November 9 to 12, 2026.
On October 30, 2024, Visiontech
filed a cross-complaint against Beverly Hills View, Inc. (“BHV”) in Los Angeles Superior Court. This action responded to
an initial lawsuit filed by BHV on August 29, 2024, in which BHV claimed that the lighting products received were unsuitable for its
cannabis growing operation and claiming damages of $
On February 2, 2026, in connection
with the Settlement and Mutual Release Agreement with Megaphoton and the related employment agreement with Jinlong Du as President of
the Company, the Company agreed to issue i)
On March 30, 2026 858 Upland
LLC, the owner of the warehouse and offices leased by Visiontech Group Inc. (
As of May 22, 2026, the mortgage loan owed by Upland 858 LLC to BMO Bank, is past due. Upland 858 LLC is the landlord to Visiontech Group LLC. On April 5, 2026 BMO Bank closed the bank account associated with Upland 858 LLC. The Law Offices of Richard G. Witkin APC, on behalf of the Lender and Beneficiaries, have sent a notice of default letter to the principals of Upland 858 LLC.
Originally filed March 11, 2026 and served afterwards, Bloc Dispensary LLC, a customer of Visiontech Group Inc., filed in the Superior Court of California, County of San Bernardino, a complaint relating to its prior order of LED lights. The complaint alleges breach of express warranty and breach of implied warranty of merchantability and includes a request for a jury trial. The Company has retained counsel to defend against the complaint.
On April 30, 2026, 1800 Diagonal Lending LLC (“1800 Diagonal”)
filed an action against the Company in the U.S. District Court for the Eastern District of Virginia alleging defaults under certain convertible
promissory notes. On May 8, 2026, the Court granted a temporary restraining order requiring the Company to restore and maintain required
share reserves and restricting the issuance or transfer of shares pending compliance with the reserve requirements. On May 19, 2026, the
Company and 1800 Diagonal entered into a Settlement Agreement resolving the litigation, pursuant to which the parties agreed to settle
approximately $
Nasdaq Stock Market Delisting, Move to OTCQB and OTCID
After receiving various notification
letters from Nasdaq for non-compliance on certain continued listing requirements since April 2024, the Company was delisted by Nasdaq
on January 15, 2025. The Company commenced trading immediately on OTC Markets Group as an OTCQB stock. OTCQB stocks are required to maintain
a minimum trade price of $
42
Note 18 — Segment Information
The key measure of segment profitability that the CODM uses to allocate
resources and assess performance is segment profit or loss, as reported on the statements of operations and comprehensive income (loss).
| Three Months Ended March 31, | ||||||||
| 2026 (Unaudited) | 2025 (Unaudited) | |||||||
| Revenues | $ | $ | ||||||
| Less: | ||||||||
| Cost of revenues | ||||||||
| Operating expenses: | ||||||||
| Salary and benefits expenses | ||||||||
| Professional fees | ||||||||
| Stock-based compensation | ||||||||
| Other selling, general and administrative | ||||||||
| Provision for credit losses | ||||||||
| Other income (expense): | ||||||||
| Interest expense, net | ( | ) | ( | ) | ||||
| Gain on loan extinguishment | ||||||||
| Gain on debt settlement | ||||||||
| Income taxes | ( | ) | ||||||
| Change in fair value of commitment shares to be issued | ||||||||
| Other segment expense | ( | ) | ||||||
| Net Income (loss) | $ | $ | ( | ) | ||||
Note 19 — Subsequent events
The Company evaluated subsequent events through the date the financial statements were available to be issued and identified the following subsequent events for disclosure.
Originally filed March 11, 2026 and served afterwards, Bloc Dispensary LLC, a customer of Visiontech Group Inc., filed in the Superior Court of California, County of San Bernardino, a complaint on relating to its prior order of LED lights. The complaint alleges breach of express warranty and breach of implied warranty of merchantability and includes a request for a jury trial. The Company has retained counsel to defend against the complaint.
On April 24, 2026, The OTC Markets Group notified the Company that
it is being moved from OTCQB to OTCID on market open starting April 27, 2026. If the bid price for the Company stock can meet or exceed
$
On April 30, 2026, 1800 Diagonal
Lending LLC (“1800 Diagonal”) filed an action against the Company in the U.S. District Court for the Eastern District of Virginia
alleging defaults under certain convertible promissory notes. On May 8, 2026, the Court granted a temporary restraining order requiring
the Company to restore and maintain required share reserves and restricting the issuance or transfer of shares pending compliance with
the reserve requirements. On May 19, 2026, the Company and 1800 Diagonal entered into a Settlement Agreement resolving the litigation,
pursuant to which the parties agreed to settle approximately $
As of May 27, 2026, the mortgage loan owed by Upland 858 LLC to BMO Bank, is past due. Upland 858 LLC is the landlord to Visiontech Group LLC. On April 5, 2026 BMO Bank closed the bank account associated with Upland 858 LLC. The Law Offices of Richard G. Witkin APC, on behalf of the Lender and Beneficiaries, have sent a notice of default letter to the principals of Upland 858 LLC.
The Company has restated its condensed consolidated financial statements as of and for the three and nine months ended September 30, 2025, to appropriately include the recording of certain short-term loan and related party receivable. The original financial statements were included in the Company’s Quarterly Report on Form 10-Q filed with the SEC on November 14, 2025, and the restated financial statements were filed in the Company’s Amendment No.1 on Form 10-Q/A filed with the SEC on April 14, 2026.
On May 26, 2026, George Yutuc resigned as the CFO of the company, effective May 27, 2026. Tie (James) Li subsequently has been appointed as the interim CFO of the company, effective immediately.
43
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis should be read in conjunction with our financial statements and the related notes thereto included elsewhere herein. The Management’s Discussion and Analysis (“MD&A”) contains forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. Any statements that are not statements of historical fact are forward-looking statements. When used, the words “believe,” “plan,” “intend,” “anticipate,” “target,” “estimate,” “expect,” and the like, and/or future-tense or conditional constructions (“will,” “may,” “could,” “should,” etc.), or similar expressions, identify certain of these forward-looking statements. These forward-looking statements are subject to risks and uncertainties that could cause actual results or events to differ materially from those expressed or implied by the forward-looking statements in this form. Our actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of several factors.
Historical results may not indicate future performance. Our forward-looking statements reflect our current views about future events, are based on assumptions and are subject to known and unknown risks and uncertainties that could cause actual results to differ materially from those contemplated by these statements. We undertake no obligation to publicly update or revise any forward-looking statements, including any changes that might result from any facts, events, or circumstances after the date hereof that may bear upon forward-looking statements. Furthermore, we cannot guarantee future results, events, levels of activity, performance, or achievements. Unless otherwise indicated or the context otherwise requires, references in this section to “we,” “us,” “our,” and other similar terms refer to Nature’s Miracle Holding Inc. and its consolidated subsidiaries and VIE.
Overview
We are a growing agriculture technology company providing products to indoor growers in a CEA (Controlled Environment Agriculture) setting in North America. Our main products are commercial grade LED lights and related equipment designed for indoor growers. For over 10 years, the Company has utilized manufacturing relationships in China to provide quality and cost-efficient products in this space. In the 4th quarter 2024, we renamed a subsidiary to Hydroman Electric Inc. for the purpose of entering electric vehicle (“EV”) market as we aim to distribute EV medium sized trucks to customers in Latin America and also develop indoor growing systems within these EV trucks. In 2024, the Company also started investments in Future Tech Inc., a Bitcoin mining and data center business.
We focus on the greenhouse and cultivation industry and aim at providing integrated greenhouse solutions, including grow lights, dehumidifiers, coco and grow media for vertical farming and multiple growing system. These systems enable year-round cultivation of crops, avoids harsh environments with very cold or hot climate. Many states focused on farming are limited to grow crops are certain months such as Spring to Fall only, and or are too far from production states too have fresh produce year-round. There are cost advantages also as vertical farming systems produces a much higher yield per acre of land. In most cases, water consumption is much lower, up to 90%. Many indoor growers can locate closer to large population centers which can significantly reduce cost of trucking, and lead time whilst reducing carbon emissions as well.
The Company acquired a commercial office building in Toledo, Ohio in September 2025. The building is the highest office tower in Toledo and is rented to a local court, major law firms and other tenants. We started recognizing office rental income and related espenses starting in the fourth quarter of 2025.
We operate mainly through three subsidiaries in California, Visiontech, Hydroman and Zak Properties LLC. Visiontech is known for the brand “eFinity” and provides high-efficiency and high-quality grow lights, grow media, fixtures and other related equipment; Hydroman supplies commercial greenhouse developers and owners with professional lighting technology and equipment. On November 11, 2024, Hydroman, Inc. changed its name to Hydroman Electric Corporation and will focus on business of electric vehicles distribution. Zak Proprties LLC owns the building in Toledo Ohio.
In its first expansion plan, the Company has added additional products to our offering. These include organic and non-organic fertilizers, organic plant growth additives, and dehumidifiers. We have diverse suppliers including from countries such as India, Holland and Turkey. Additional equipment is being considered as well. These are value add components that will help growers increase yield, but more importantly reduce failures and dramatically improve growing environments such. The new products are a natural complement to its our base of LED grow lights.
The Company also seeks to enter the joint ventures in other industry verticals to utilize excess space available for vertical farming.
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Trends and Expectations
The following factors have been important to our business, and we expect them to impact our results of operations and financial condition in future periods:
Product and Brand Development
We plan to increase investments in product and brand development. We actively evaluate and pursue acquisitions of product brand names and improvements on existing products. We continue to work with our suppliers in improving lighting products to be both of the highest quality and simultaneously cost effective for the customer. The Company invests in trips abroad to source and partner with manufacturing companies. We expect to develop additional manufacturing relationships and suppliers in Europe in the near future.
The Company is also developing proprietary “all in one” automated and robotic indoor growing systems that are under design and testing phases.
The Company utilizes its vast network in the industry and recent publicity in listing on Nasdaq in acquiring leads for potential partnerships in sourcing, research and development of new product and business acquisitions.
Regulatory Environment
The importation of LED lighting and distribution of such equipment in the United States and Canada does not require strict government disclosures and technical inspections. The Company obtains local business permits to store in our main warehouses, obtain licenses to resell, and follows guidelines on packaging. Certain utility companies in the U.S. have programs that award rebates to heavy usage customers, some of which are in the indoor farming business. These customers are required to install LED lights with a minimum 50,000 hours life. There is also a performance requirement set by DesignLights Consortium, a non-profit energy improvement agency.
Sourcing
The Company has long-term relationships with suppliers in Asia. Our top three suppliers of LED equipment are American Agricultural Innovation Technology Inc., Solislike-Tech Co., Ltd., Dongguan ZSC Lighting Co., Ltd. Each supplier provides us net 30 to net 90-day terms. The Company has also been approached by established lighting companies based in Japan and Germany. On grow feed, fertilizers and nutrients, our potential suppliers are based in Europe and some in Asia. Our grow container product was jointly developed and manufactured by a company based in Shenzhen, China.
On April 24, 2023, we entered into a strategic cooperation agreement with Sinoinnovo Technology (Guangdong) Co., Ltd. (“Sinoinnovo”), a company incorporated under the laws of China, pursuant to which Nature’s Miracle will source from Sinoinnovo its grow light systems for distribution in the U.S. and Europe. Both companies will also cooperate jointly to set up advanced manufacturing capabilities in China and the U.S.
On October 28, 2025 we entered into a licensing agreement with Datavault AI (Nasdaq: DVLT), a leader in patented data tokenization and monetization. This agreement calls for Nature’s Miracle to license Datavault AI’s Carbon Credit Tokenization System.
Asset acquisition of Zak Properties, LLC
On September 18, 2025, the Company entered into a Membership Interest Purchase Agreement (the “Purchase Agreement”) with Big Lake Capital LLC (“Big Lake”), pursuant to which, the Company agreed to purchase from Big Lake all of the membership interests of Zak Properties, LLC, an Ohio limited liability company (“Zak Properties”), which in turn owns certain real property located in the State of Ohio, commonly known as 405 Madison Ave. with equity and debt financing. The Company’s Chief Executive Officer and Chairman, Tie (James) Li, is the sole member of Zak Properties prior to the sale. As such we recorded the acquisition of the property at cost. Nature’s Miracle issued 5,000 Series B and 9,500 Series C Preferred Shares to Big Lake, assumed 2.6 million in loans and also signed a new note of $3 million.
We acquired Zak Properties in order to strengthen our balance sheet, generate rental income to provide us a steadier stream of cashflow, and to have the ability to obtain real estate loans to augment our capital needs.
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RESULTS OF OPERATIONS
For the Three Months ended March 31, 2026 and 2025
The following table presents certain combined statement of operations information and presentation of that data as a percentage of change from year to year.
| For the Three Months Ended | Percentage | |||||||||||||||
| 2026 | 2025 | Change | Change | |||||||||||||
| Revenues | 41,605 | 1,106,819 | (1,065,214 | ) | (96.2 | )% | ||||||||||
| Cost of revenues | 38,685 | 931,519 | (892,834 | ) | (95.8 | )% | ||||||||||
| Gross profit | 2,920 | 175,300 | (172,380 | ) | (98.3 | )% | ||||||||||
| Selling, general and administrative expenses | 1,089,802 | 1,313,111 | (223,309 | ) | (17.0 | )% | ||||||||||
| Provision for credit losses | 982 | 23,283 | (22,301 | ) | (95.8 | )% | ||||||||||
| Loss from operation | (1,087,864 | ) | (1,161,094 | ) | 73,230 | 6.3 | % | |||||||||
| Total other income (expense), net | 3,933,138 | (857,017 | ) | 4,790,155 | (558.9 | )% | ||||||||||
| Income (loss) before income taxes | 2,845,274 | (2,018,111 | ) | 4,863,385 | (241.0 | )% | ||||||||||
| Total provision for income taxes | - | 1,700 | (1,700 | ) | (100.0 | )% | ||||||||||
| Net income (loss) | 2,845,274 | (2,019,811 | ) | 4,865,085 | (240.9 | )% | ||||||||||
| Gross profit % of revenues | 7.0 | % | 15.8 | % | ||||||||||||
| Net income (loss) % of revenues | 6838.6 | % | (182.5 | )% | ||||||||||||
| Basic earnings (loss) per share | 0.02 | (0.43 | ) | |||||||||||||
| Diluted earnings (loss) per share | 0.01 | (0.43 | ) | |||||||||||||
Revenue
Revenue for the three months ended March 31, 2026 decreased by 96.2% to $41,605 as compared to $1,106,819, for the three months ended March 31, 2025. Revenue declined due to cash constraints that restricted inventory purchases; as we were mainly selling our inventory on hand. The Company is seeking additional financing in second quarter to replenish inventory, and management expects the revenue situation to improve once inventory levels are restored.
For the three months ended March 31, 2026 and 2025, we had 6 and 47 customers, respectively. Average revenue per customer for the three months ended March 31, 2026 and 2025 were $6,934 and $23,549, respectively. Our revenue from top 5 customers for the three months ended March 31, 2026 was $41,330 compared to $831,086 for the three months ended March 31, 2025, representing a decrease of 95.0%. The lower average sale and decreased revenue from top 5 customer are reflective the impact of limited inventory availability.
Costs of Revenue
Costs of revenue for the three months ended March 31, 2026 decreased 95.8% to $38,685 as compared to $931,519 for the three months ended March 31, 2025. Cost of revenue decreased primarily due to the decrease in revenue, which was in turn primarily driven by lower sales volume of our products due to limited inventory availability.
Gross Profit
Gross profit was $2,920 for the three months ended March 31, 2026, compared to $175,300 for the three months ended March 31, 2025. Gross margin decreased to 7.0% for the three months ended March 31, 2026 from 15.8% for the three months ended March 31, 2025. The decrease in gross profit was primarily attributable to the significant decline in revenue during the period. The decrease in gross margin was primarily due to limited working capital, which restricted the Company’s ability to purchase higher-margin products.
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Operating expenses
Operating expenses for the three months ended March 31, 2026 decreased 18.4% to $1,090,784 as compared to $1,336,394 for the three months ended March 31, 2025. The decrease was mainly due to following reasons:
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended March 31, 2026 decreased 17.0% to $1,089,802 as compared to $1,313,111 for the three months ended March 31, 2025. The decrease was mainly due to decrease in professional fees of $148,018, mainly related to lower spending on public relations and SEC filing activities; and a decrease in payroll expenses of $146,760 resulting from a reduced headcount, which offset by increase in depreciation expenses of $106,180, resulting from increased building improvement from acquisition of Zak Properties.
Provision for credit losses
Provision for credit losses for the three months ended March 31, 2026 decreased 95.8% to $982 as compared to $23,283 for the three months ended March 31, 2025. The decrease was primarily due to the full allowance of long-aged accounts receivable previously deemed uncollectible, resulting in lower incremental credit loss provisions during the current period.
Other Income (Expense)
Other income (Expense) primarily consist of net interest expense, gain on loan extinguishment, gain on debt settlement and change in fair value of commitment shares to be issued. Other Income for the three months ended March 31, 2026 was $3,933,138 as compared to other expense of $857,017 for the three months ended March 31, 2025, representing an increase of $4,790,155, or 558.9%. The increase was mainly due to the increase in gain on debt settlement of $5,070,520; the increase in change in fair value of commitment shares to be issued of $168,048, offset by the increase in other expense of $524,716, the decrease in gain on loan extinguishment of $40,000.
Interest expense for the three months ended March 31, 2026 and 2025 were $780,714 and $897,017, respectively; decreased due to multiple high interest loans got terminated in 2025. As of March 31, 2026 and 2025, the short-term loan balances were approximately $4.8 million and $2.6 million, respectively. As of March 31, 2026 and 2025, the high-rate factoring loans balances were approximately $0.8 million and $1.1 million, respectively. The decrease in higher-rate factoring loans in the current period and the decrease in overall loan balances contributed to the decrease in interest expense.
Gain on loan extinguishment for the three months ended of March 31, 2026 and 2025 were $0 and $40,000, respectively. The decrease was due to the extinguishment of a short-term loan, which was paid off with a new loan, and the cancellation of a convertible note in 2025.
Gain on debt settlement for the three months ended of March 31, 2026 and 2025 were $5,070,520 and $0, respectively. The increase was due to a gain recognized in connection with the settlement of litigation with Megaphoton, Inc., whereby the Company issued equity, made cash payments, and entered into related arrangements to resolve outstanding obligations.
Change in fair value of commitment shares to be issued for the three months ended of March 31, 2026 and 2025 were $168,048 and $0, respectively
Other expenses for the three months ended March 31, 2026 and 2025 were $524,716 and $0, respectively, primarily consisting of rental expense from Zak Properties.
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Income Tax Expense
Our income tax expense was amounted to $0 and $1,700 for the three months ended March 31, 2026 and 2025, respectively.
The effective tax rate for the three months ended March 31, 2026 and 2025 were 0.0% and (0.1)%. The effective tax rate differs from the federal and state statutory tax rate of 21.0% primarily due to the valuation allowance on the deferred tax assets from our operating losses.
Basic and Diluted Earnings (Loss) Per Share
Basic earnings per share for the three months ended March 31, 2026 was $0.02, compared to basic loss per share of $(0.43) for the three months ended March 31, 2025. Diluted earnings per share for the three months ended March 31, 2026 was $0.01, compared to diluted loss per share of $(0.43) for the three months ended March 31, 2025. The improvement in both basic and diluted earnings per share was primarily attributable to net income recognized during the three months ended March 31, 2026, which was mainly driven by the non-recurring gain on debt settlement. The difference between basic and diluted earnings per share for the three months ended March 31, 2026 was primarily due to the inclusion of potentially dilutive securities, including convertible notes and preferred shares, which increased the diluted weighted average number of common shares outstanding.
Net Income (Loss)
Net Income for the three months ended March 31, 2026 was $2,845,274 as compared to net loss of $2,019,811 for the three months ended March 31, 2025, representing an increase of $4,865,085. The increase was primarily due to a gain on debt settlement.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
In assessing liquidity, we monitor and analyze cash on-hand and operating expenditure commitments. Our liquidity needs are to meet working capital requirements and operating expense obligations. To date, we financed our operations primarily through debt financing from financial institution and related parties. As of March 31, 2026, we had $45,695 in cash which primarily consists of bank deposits, which are unrestricted as to withdrawal and use. Our working capital deficit was $17,685,917 as of March 31, 2026.
We have experienced recurring losses from operations and negative cash flows from operating activities since 2022. Although the Company reported net income of $2,845,274 for the three months ended March 31, 2026, primarily due to a gain on debt settlement of $5,070,520, the Company continues to incur operating losses and negative cash flows from operating activities. These conditions raise substantial doubt about the our ability to continue as a going concern. Our actual revenue for the three months ended March 31, 2026 and 2025 was approximately $42,000 and $1.1 million, respectively. Such volume and relatively low gross profit margins are not enough to support high administrative costs relating to our going public and expenses as a public company. We have raised equity capital twice in 2024 but utilized most proceeds towards repayment of debt incurred in the going-public merger, higher corporate costs and paying interest and principal on short-term loans. Due to the negative cash flow, our financial position is under pressure, and may potentially continue to have, an ongoing need to raise additional cash from outside sources to fund our expansion plan and related operations. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued. If we are unable to realize our assets within the normal operating cycle of a twelve (12) month period, we may have to consider supplementing our available sources of funds through the following sources:
| ● | financial support from our related parties and shareholders; |
| ● | other available sources of financing from banks and other financial institutions; |
| ● | equity financing through capital market |
We have a $20 million equity financing program (“ELOC”) with GHS Investments, LLC and this was declared effective by SEC. The Company can draw on this facility for its working capital needs and others. The Company received $78,752 and nil for the three months ended March 31, 2026 and 2025 under this facility, with approximately $19.7 million of credit still available.
We have access to investors who are providing convertible note financing for public companies and we have been utilizing the convertible note for part of our financing needs.
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Our shareholder also offers support for the Company. Big Lake Capital, LLC, a related party controlled by Tie Li (our Chairman and CEO) entered into a $2 million Convertible Promissory Note on April 11, 2025 with the initial tranche of $600,000. We have borrowed $170,000 and nil for the three months ended March 31, 2026 and 2025 under this note, with $1,016,400 of credit still available.
We can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to us, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on us and would materially adversely affect our ability to continue as a going concern.
The unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
Cash Flows
The following tables set forth our selected unaudited condensed consolidated cash flow data for the periods indicated:
| For the Three Months Ended March 31, | ||||||||
| 2026 | 2025 | |||||||
| US$ | US$ | |||||||
| Net cash used in operating activities | (1,605,615 | ) | (594,171 | ) | ||||
| Net cash used in investing activities | (1,000,000 | ) | (300,000 | ) | ||||
| Net cash provided by financing activities | 2,553,574 | 491,297 | ||||||
| Effect of exchange rate changes | 42 | 395 | ||||||
| Net change in cash | (51,999 | ) | (402,479 | ) | ||||
| Cash and cash equivalents, at the beginning of period | 97,694 | 420,131 | ||||||
| Cash and cash equivalents, at the end of period | 45,695 | 17,652 | ||||||
Operating Activities
Net cash used in operating activities was approximately $1.6 million for the three months ended March 31, 2026. The Company reported net income of approximately $2.8 million for the period; however, this included a non-cash gain on debt settlement of approximately $5.1 million related to the Megaphoton debt settlement, which was deducted in the reconciliation of net income to net cash used in operating activities. Cash outflows from operating activities were primarily driven by an increase in other receivables—related parties of approximately $0.2 million, partially offset by non-cash adjustments totaling approximately $0.6 million, including depreciation expense, provision for credit losses, amortization of debt issuance costs, stock-based compensation expense, and amortization of operating right-of-use assets, as well as an increase in other payables and accrued liabilities of approximately $0.6 million primarily related to accrued professional fees and accrued interest on long-term loans and convertible notes.
Net cash used in operating activities was approximately $0.6 million for the three months ended March 31, 2025, which was mainly due to our net loss of approximately $2.0 million with non-cash items, including depreciation expense, provision for credit losses, amortization of debt issuance cost, stock compensation expense, and amortization of operating right-of-use asset of approximately $0.3 million. Our cash outflow is mainly due to decrease in accounts payable of approximately $0.9 million due to decrease in our purchase from vendor. Our cash outflow is offset by cash inflow of approximately $0.9 million of inventory due to sold more on hand inventory, increase from other payable and accrued liabilities of approximately $1.0 million accrued professional fees and accrued interest on short term loans, long term loans and convertible notes. Additionally, approximately $0.3 million decreased in accounts receivable as our sales decreased.
Investing Activities
For the three months ended March 31, 2026, net cash used in investing activities amount to $1,000,000 which was primarily for increased building improvement of $1,000,000.
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For the three months ended March 31, 2025, net cash used in investing activities amount to $300,000 which was primarily for deposit from investment of Future Tech.
Financing Activities
Net cash provided by financing activities was approximately $2.6 million for the three months ended March 31, 2026. The increase in net cash provided was primarily a result of increase long-term loan borrowing of approximately $5.0 million, proceeds from capital contribution in advance of approximately $0.05 million, proceeds from shares issued under equity line of credit of approximately $0.08 million, net proceeds from convertible notes borrowing of approximately $0.2 million offset by repayments on short-term loan from third parties of approximately $2.8 million.
Net cash provided by financing activities was approximately $0.5 million for the three months ended March 31, 2025. The increase in net cash provided was primarily a result of net proceeds from exercise of warrants of approximately $0.9 million, net proceeds from short-term loan from third parties of approximately $0.4 million, net proceeds from convertible notes borrowing of approximately $0.1 million offset by repayments on short-term loan from third parties of approximately $0.5 million, repayments on convertible notes of approximately $0.3 million, repayments on short-term loan from related parties of approximately $0.2 million.
Non-cash transactions
Non-cash transactions primarily consisted of conversion of convertible notes into shares of $388,071 and debt settlement of third party’s debt of $6,120,520.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements (as that term is defined in Item 303 of Regulation S-K) that are reasonably likely to have a current or future material effect on our financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
We prepare our unaudited condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States, or GAAP and pursuant to the rules and regulations of the Securities Exchange Commission (“SEC”). The preparation of unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates. In some cases, changes in the accounting estimates are reasonably likely to occur from period to period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and actual results, our financial condition and results of operations will be affected. We base our estimates on experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies, which we discuss further below. While our significant accounting policies are more fully described in Note 3 to our unaudited condensed consolidated financial statements, we believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our unaudited condensed consolidated financial statements.
Revenue recognition
We follow Accounting Standards Codification (“ASC”) 606 Revenue Recognition and recognizes revenue from product sales revenues, net of promotional discounts and return allowances, when the following revenue recognition criteria are met: a contract has been identified, separate performance obligations are identified, the transaction price is determined, the transaction price is allocated to separate performance obligations and revenue is recognized upon satisfying each performance obligation.
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We are a growing agriculture technology company providing CEA hardware products to growers in the controlled environment agriculture industry setting in North America. Majority of our products were grow lights and related products for the indoor growing settings. Starting from first quarter of 2024, we also provide indoor grow containers to our customers.
Our contracts with customers where the amounts charged per product is fixed and determinable, the specific terms of the contracts were agreed on by us including payment terms which are typically 30 to 60 days for existing customers and prepaid for most new customers. In certain contracts involving sales to customers that entered into rebate programs who can get rebates with utility companies with utility companies for using LED lighting, payment term ranges from 60 to 120 days.
Our performance obligation is to deliver the products to customers. For indoor grow container products, we also involved in customization of the products to suit customer’s specific needs. The provision of customization and configuration to meet certain technical specification per US market and delivery of product is considered one performance obligation as the services provided are not distinct within the context of the contract whereas the customers can only obtain benefit when the services and products are provided together. At times, we may charge customers shipping and handling for delivery of products, control of goods does not transfer to the customer before shipment, therefore shipping is not a promised service to us and is not considered a separate performance obligation. Any fee charged for shipping would be included in the transaction price for the good.
Transaction prices are mostly fixed. In some contracts, when determining the transaction price, we adjust consideration for the effects of the time value of money if the timing of payments provides us with a significant benefit of financing. We does not assess whether a contract has a significant financing component if the expectation at contract inception is such that the period between payment by the customers and the transfer of the promised goods or services to the licensees will be one year or less. For customers that entered into rebate programs with utility companies, transaction price may depend on level of energy saving the products achieved. We estimated the amount of consideration using either the expected value of the most likely amount depending on which method we expects to better predict the amount of consideration to which it will receive with a constraint applied such that a significant reversal of revenue is not probable.
We transfer the risk of loss or damage upon shipment, therefore, revenue from product sales is recognized at a point in time when control of product transfer to customer and we have no further obligation to provide services related to such product evidenced by customer signing acceptances upon receipt of goods. Return allowances, which reduce product revenue by our best estimate of expected product returns, are estimated using historical experience.
We evaluate the criteria of ASC 606 — Revenue Recognition Principal-Agent Considerations in determining whether it is appropriate to record the gross amount of product sales and related costs, or the net amount earned as commissions. We ship the products according to shipping terms on the purchase order or sales order. Once delivery is complete, we then send an invoice to the customer according to the quantity and price of shipment.
We evaluate the indicators of control in accordance with ASU 2016-08: 1) We are the most visible entity to customers and assumes fulfilment risk and risks related to the acceptability of products, including addressing customer inquiries directly and handling of product returns or refunds directly if any. For grow light products, we have our own brand for marketing. For indoor grow containers products, we are also involved in the design and technical specification of the products to meet requirement in the US market. 2) We assume inventory risk either through storing the products in our own warehouses; or for drop shipments directly from vendors, we take the title from vendors through inspection and acceptance and are responsible for product damage during shipment period prior to acceptance of our customers and are also responsible for product return if the customer is not satisfied with the products. 3) We determine the resale price of the products. 4) We are the party that direct the use of the inventory and can prevent the vendor from transferring the product to a customer or to redirect the products to a different customer, after evaluating the above scenario, we consider ourselves the principal of these arrangements and records revenue on a gross basis.
Payments received prior to the delivery of goods to customers or picked up by the customers are recorded as contract liabilities.
We periodically provide incentive offers to our customers to encourage purchases. Such offers include current discount offers, such as percentage discounts off current purchases and other similar offers.
Current discount offers, when accepted by our customers, are treated as a reduction to the transaction price of the related transaction.
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Sales discounts are recorded in the period in which the related sale is recognized. Sales return allowances are recorded upon recognizing the related sales.
Accounts receivable, net
Starting from January 1, 2023, the Company adopted ASU No.2016-13 “Financial Instruments — Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”). The Company used a modified retrospective approach, and the adoption does not have an impact on our unaudited condensed consolidated financial statements. During the ordinary course of business, the Company extends unsecured credit to its customers. Accounts receivable are stated at the amount the Company expects to collect from customers. An allowance for expected credit loss is recorded in the period in which loss is determined to be probable based on lifetime expected losses considering historical, current, and forecasted conditions. Amounts deem uncollectible are written off against the allowance after all collection efforts have ceased.
Inventory
Inventory consists of finished goods ready for sale and is stated at the lower of cost and net realizable value. We value our inventory using the weighted average costing method. We include a part of cost of goods sold any freight incurred to ship the product from our vendors to warehouses. Outbound freight costs related to shipping costs to customers are considered period costs and reflected in cost of revenue. We regularly review inventory and consider forecasts of future demand, market conditions and product obsolescence.
If the estimated realizable value of the inventory is less than cost, we make provisions in order to reduce our carrying value to our estimated market value. We also review inventory for slow moving and obsolescence and records allowance for obsolescence.
Long-lived assets impairment
The Company reviews the impairment of its long-lived assets on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of an asset or group of assets may not be fully recoverable. These events or changes in circumstances may include but are not limited to, a significant deterioration of operating results, a change in the regulatory environment, changes in business plans, or adverse changes in anticipated future cash flows. If an impairment indicator is present, the Company evaluates the recoverability by a comparison of the carrying amount of the assets to future undiscounted net cash flows expected to result from the use and eventual disposition of the assets. If the assets are determined to be impaired, the impairment recognized is the excess of the carrying amount over the fair value of the assets. Fair value is generally determined by the discounted cash flow method. The discount rate used in any estimate of discounted cash flows is the rate commensurate with a similar investment of similar risk. As of March 31,2026 and 2025, we determined there was no impairment as we estimated disposal value of our assets (mainly two buildings) exceed carrying value.
Recently issued accounting pronouncements
In November 2024, the FASB issued ASU 2024-03, Income Statement–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires the disaggregation of certain expenses in the notes of the financials, to provide enhanced transparency into the expense captions presented on the face of the income statement. ASU 2024-03 is effective for annual reporting periods beginning after December 15, 2026 and interim periods beginning after December 15, 2027 and may be applied either prospectively or retrospectively. The Company is currently evaluating the impact that ASU 2024-03 will have on its related disclosures.
Except as mentioned above, we do not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on our unaudited condensed consolidated balance sheets, statements of income and comprehensive income and statements of cash flows.
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and in Item 10(f)(1) of Regulation S-K, we are electing scaled disclosure reporting obligations and therefore are not required to provide the information requested by this item.
ITEM 4. CONTROLS AND PROCEDURES.
Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s (“SEC”) rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Evaluation of Disclosure Controls and Procedures
As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Chief Executive Officer and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of March 31, 2026. Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15 (e) and 15d-15 (e) under the Exchange Act) were not effective as of March 31, 2026, due solely to the material weakness in our internal control over financial reporting related to (i) a lack of effective risk assessment process; (ii) a lack of effective overall control environment; (iii) a lack of controls over monitoring; (iv) a lack of human resources within finance and accounting functions leading to lack of segregation of duties; (v) a lack of information technology control design and operating effectiveness; (vi) a lack of controls or ineffectively designed controls impacting financial reporting; (vii) an inadequate control over proper revenue recognition and purchase cutoff; and (viii) a lack of controls over income tax. We plan to continue to take remedial measures including (i) hiring more qualified accounting personnel with relevant U.S. generally accepted accounting principles (“GAAP”) and SEC reporting experience and qualifications to strengthen the financial reporting function and to set up a financial and system control framework; (ii) implementing regular and continuous GAAP accounting and financial reporting training programs for our accounting and financial reporting personnel; (iii) engaging an external consulting firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal control; and (iv) appointing independent directors, and strengthening corporate governance.
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II. OTHER INFORMATION
ITEM 1.
From time to time, claims are made against us in the ordinary course of business, which could result in litigation. Claims and associated litigation are subject to inherent uncertainties and unfavorable outcomes could occur, such as monetary damages, fines, penalties or injunctions prohibiting us from selling one or more products or engaging in other activities.
On March 1, 2024 NMI was notified of a complaint in San Bernardino Superior Court by Vien Le, its former CFO, who was employed approximately 2 months. The lawsuit claims wrongful discharge, untimely payment of wages and other related items. The Company has retained counsel and believes it will successfully defend against this lawsuit.
On October 22, 2024, Growterra, LLC (“Growterra”) filed a complaint against the Company and the Company’s chief executive officer in the Court of Common Pleas, Hamilton County, Ohio, alleging that it purchased lighting products from the Company, under which the Company would provide Growterra software, IP, and design documentation related to hydroponic containers and identify Growterra as an additional insured on the Company’s product liability insurance. Growterra alleges the Company failed to perform these obligations. Growterra is alleging breach of contract, fraud, and misappropriation of trade secrets as well as related causes of action. On March 27, 2026 the above-mentioned Court has denied Growterra’s motion for summary judgement. The Court has also denied the Company’s counterclaim for breach of contract without the opportunity to conduct discovery. The trial is rescheduled for November 9 to 12, 2026.
On October 30, 2024, Visiontech filed a cross-complaint against Beverly Hills View, Inc. (“BHV”) in Los Angeles Superior Court. This action responded to an initial lawsuit filed by BHV on August 29, 2024, in which BHV claimed that the lighting products received were unsuitable for its cannabis growing operation and claiming damages of $2,500,000. The case is set for trial in November 2026.
On July 16, 2025, Funders App LLC dba Tenthly, a lender to the Company (“Factor K”) filed a complaint in Court in Monroe County, New York referring to an outstanding balance of $100,588 after payments of $46,551 on its loan agreement with the Company, dated February 11, 2025. The total claimed amount is $129,463 plus interest from June 30, 2025 and attorney fees. On July 22, 2025, Factor K and the Company entered into a Stipulation of Settlement Agreement pursuant to which each party agreed to a settlement amount and remittance schedule that commenced July 23, 2025. In the event of default on payments, Factor K may file a default judgment for the sum of $129,463.45 less remittances pursuant to the Stipulation of Settlement Agreement.
On July 31, 2025, Webfunder LLC (“Factor I”) filed a Settlement Agreement for Stay of Prosecution in the Seventeenth Judicial Court in Broward County, Florida, pursuant to which both parties agreed to a new payment schedule from August 5, 2025 to December 9, 2025 for a total amount of $186,572. The original loan referred to in this Settlement Agreement for Stay of Prosecution was a standard merchant cash advance settlement agreement dated December 12, 2024 (Refer to Note 9 for detail). There are remedies and other protective language for Factor I in the event of non-performance.
On August 1, 2025, the Company and Wave Advance, Inc. (“Factor L”) entered into a Settlement Agreement and Mutual Release that requires payments from August 5 to October 27, 2025, for an aggregate amount of $201,170. The original loan referred to in this Settlement Agreement was a Standard Merchant Cash Advance Settlement Agreement dated February 2, 2025 (Refer to Note 9 for detail). There are remedies and other protective language for Factor L in the event of non-performance.
On August 6, 2025, the Company entered into a Standstill Agreement with MaximCash Solutions LLC (“MaximCash”). A complaint was previously filed on July 8, 2025 by MaximCash against the Company in the Third Judicial Court of Utah pertaining to the loan agreement dated December 30, 2024 (the “MaximCash Loan”), as a result of a failure to make the required repayment pursuant to the MaximCash Loan agreement. The claimed amount was $230,738 plus daily interest and attorney fees. On August 7, 2025, the Company wired $61,720 to MaximCash as partial payment. On December 17, 2025, the Company entered into a loan payoff Agreement and Settlement of a prior complaint with this Lender. The Company and MaximCash settled for $40,000 as complete payment for all loans, interest and any claims.
Originally filed March 11, 2026 and served afterwards, Bloc Dispensary LLC, a customer of Visiontech Group Inc., filed in the Superior Court of California, County of San Bernardino, a complaint relating to its prior order of LED lights. The complaint alleges breach of express warranty and breach of implied warranty of merchantability and includes a request for a jury trial. The Company has retained counsel to defend against the complaint.
On April 30, 2026, 1800 Diagonal Lending LLC (“1800 Diagonal”) filed an action against the Company in the U.S. District Court for the Eastern District of Virginia alleging defaults under certain convertible promissory notes. On May 8, 2026, the court granted a temporary restraining order requiring the Company to restore and maintain required share reserves under the applicable notes and restricting the issuance or transfer of shares pending compliance with the reserve requirements. On May 19, 2026, the Company and 1800 Diagonal entered into a Settlement Agreement resolving the litigation, pursuant to which the parties agreed to settle approximately $791,323 of claimed indebtedness for $575,000 through a combination of cash payments and note conversions. In connection with the settlement, the Company agreed to maintain share reserves for the exclusive benefit of 1800 Diagonal, including placing 222,000,000 shares in reserve which was recorded by the transfer agent on May 18, 2026, and to increase authorized shares as necessary to satisfy future conversion and reserve requirements by July 31, 2026. Another term requires the Company to pay $50,000 within five business days after the execution of the Settlement Agreement. The Settlement Agreement permits 1800 Diagonal to continue exercising conversion rights under the applicable notes, and upon full satisfaction of the settlement amount, the notes will be cancelled and related share reserves released to the Company.
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ITEM 1A. RISK FACTORS
We have incurred substantial operating losses since 2022 and there is doubt about our ability to continue as a going concern.
We have experienced recurring losses from operations and negative cash flows from operating activities since 2022. For the fiscal years ended December 31, 2024 and December 31, 2025 we incurred substantial losses as shown in our 10K financial statement section. Our actual revenue for the year ended December 31, 2024 and 2025 was approximately $9.3 million and $1.7 million, respectively. Such declining and low volume combined with low gross profit margins are not enough to support high administrative costs relating to our expenses as a public company and regular operating expenses. We raised equity capital twice in 2024 but utilized most proceeds towards repayment of debt incurred in the going-public merger, higher corporate costs and paying interest and principal on short-term loans. We also raised money in 2025 by issuing convertible debt and convertible Preferred Equity. We have drawn on our Equity Line of Credit but these were relatively small amounts that fund daily operations or repay maturing interest and debt. We also secured a $5 million real estate loan but the proceeds were used to refinanced prior outstanding loans and for expenditure on leasehold improvements. Due to the negative cash flow, our financial position is under pressure, and may potentially continue to have, an ongoing need to raise additional cash from outside sources to fund our expansion plan and related operations. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support our cost structure. In connection with our assessment of going concern considerations in accordance with Financial Accounting Standard Board’s Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that these conditions raise substantial doubt about our ability to continue as a going concern within one year after the date that these consolidated financial statements are issued. If we are unable to realize our assets within the normal operating cycle of a twelve (12) month period, we may have to consider supplementing our available sources of funds through the following sources:
| ● | financial support from our related parties and shareholders; |
| ● | other available sources of financing from banks and other financial institutions; and |
| ● | equity financing through capital market. |
We can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to us, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on us and would materially adversely affect our ability to continue as a going concern.
| ● | the substantial shortfall in revenue may lead to severe liquidity constraints, impacting our ability to fund operations and meet financial obligations; |
| ● | reduction in revenue may necessitate pay cuts in key areas (e.g., research and development), marketing and staffing, potentially hindering our growth and competitive position; |
| ● | missing revenue projections by a large margin may diminish investor confidence, potentially leading to a decline in stock price and making it more difficult to obtain financings in the future; and |
| ● | significant deviations from projected revenue may trigger increased scrutiny from regulatory bodies, necessitating more stringent reporting and compliance efforts. |
These risks may threaten our operational viability and could materially adversely affect our business, financial condition and results of operations.
Our stock has a very low trading price and has been moved to lower tier levels at OTC Markets.
Even after a reverse stock split in November 2024, our stock continues to trade at low levels. We failed to meet the listing requirements of the Nasdaq Market and was delisted in January 2025. Our stock went below .01 per share in 2026 and consequently, the OTC Markets Group moved us from OTCQB to OTCID, the latter is for Companies trading below .01 per share.
We anticipate capital raises via share issuances to be difficult based on the low trading price and lower attractiveness of OTCID traded stocks, The lower trading price will also affect the conversion price provided to convertible loan lenders necessitating much higher number of share issuances which further dilutes our current shareholders.
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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(A) Unregistered Sales of Equity Securities
On April 8, 2025, Big Lake Capital LLC invested $678,290 in the form of a convertible note. The exercise price is 0.198 and has been exercised. Shares issued are 3,425,706. The control person of Big Lake Capital LLC is Tie Li.
On September 18, 2025, Big Lake Capital LLC sold its interest in Zak Properties to the Company and was issued $5,000,000 of Series B Convertible Preferred and $9,500,000 Series C Convertible Preferred, The Series C has been fully converted to 80,508,475 common shares.
On September 18, 2025 the Company signed a $3,000,000 Convertible note due to Big Lake Capital LLC as part of the sale of Zak Properties LLC. The conversion price is to be determined.
On September 19, 2025, YK Capital Management, LLC invested $700,000 and was issued Series D Convertible Preferred Shares. The conversion price is to be determined. Ting Chen Kao, a foreign-based investor, is the control party at YK Capital Management.
On October 30 and 31, 2025 Huanfu Cui invested $200,000 and $250,000, respectively. He added $50,000 on March 19, 2026 and was issued Series F Preferred Shares amounting to $500,000.
(B) Use of Proceeds
Not applicable.
(C) Issuer Purchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
The Company is past due on its loan to Newtek Business Services Holdco 6, The 10-year loan calls for monthly payments and none have been made in 2026. In a confirmation letter dated March 4, 2026 signed by Jeff Norman, VP at Newtek Bank Orlando Florida office, the interest is paid thru March 18, 2025. The Bank has updated a new penalty interest rate of 18.39%.. This letter also confirms a due date of April 1, 2025. The original due date was July 1, 2033.The loan is personally guaranteed by Tie Li, CEO and Zhiyi Zhang, former president. The loan is also secured by a trust deed on the property leased to Visiontech Group Inc., subsidiary of the Company; the lessor and owner of the real estate is 858 Upland LLC, a related entity controlled by Zhiyi Zhang and two LLC partners.
1800 Diagonal Lending LLC (“Lender”) is a convertible note lender to the Company. The Lender has given notice of a loan default with a cross-default provision with other loans outstanding. Due to the very low trading price of the Company stock, the Lender has requested that additional share reserves be recorded by Continental Stock Transfer and Trust (“Transfer Agent”) for use in converting its loans into common shares under the terms of the notes. On May 8, 2026, the Lender was granted a Temporary Restraining Order by a court in Virginia to freeze issuances on shares and new reserves submitted to the Transfer Agent. The Transfer Agent confirmed receiving such court order on May 12, 2026 and notified the Company. On May 19, 2026, the Company and 1800 Diagonal entered into a Settlement Agreement resolving the litigation, pursuant to which the parties agreed to settle approximately $791,323 of claimed indebtedness for $575,000 through a combination of cash payments and note conversions. In connection with the settlement, the Company agreed to maintain share reserves for the exclusive benefit of 1800 Diagonal, including placing 222,000,000 shares in reserve, which was recorded by the Transfer Agent on May 18, 2026, and to increase authorized shares as necessary to satisfy future conversion and reserve requirements by July 31, 2026. Another term requires the Company to pay $50,000 within five business days after the execution of the Settlement Agreement. The Settlement Agreement permits 1800 Diagonal to continue exercising conversion rights under the applicable notes, and upon full satisfaction of the settlement amount, the notes will be cancelled and related share reserves released to the Company.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
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ITEM 6. EXHIBITS
EXHIBIT INDEX
| Exhibit No. | Description | |
| 31.1 | Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14 and Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 31.2 | Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14 and Rule 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
| 32.1** | Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101 | Interactive Data Files | |
| 101.INS | Inline XBRL Instance Document | |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document | |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
| ** | Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| NATURE’S MIRACLE HOLDING INC. | |
| Dated: May 27, 2026 | /s/ Tie (James) Li |
| Tie (James) Li | |
Chief Executive Officer (Principal Executive Officer) | |
| Dated: May 27, 2026 | /s/ Tie (James) Li |
| Tie (James) Li | |
Interim Chief Financial Officer (Principal Financial and Accounting Officer) |
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Exhibit 31.1
CERTIFICATION
I, Tie (James) Li, certify that:
| 1. | I have reviewed this report on Form 10-Q of Nature’s Miracle Holding Inc. for the quarter ending March 31, 2026; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Tie (James) Li | |
| Tie (James) Li | |
| Chief Executive Officer | |
| May 27, 2026 |
Exhibit 31.2
CERTIFICATION
I, Tie (James) Li, certify that:
| 1. | I have reviewed this report on Form 10-Q of Nature’s Miracle Holding Inc. for the quarter ending March 31, 2026; |
| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
| 3. | Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
| 4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
| a. | designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | |
| b. | designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles; | |
| c. | evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | |
| d. | disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| 5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions): |
| a. | all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | |
| b. | any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
| /s/ Tie (James) Li | |
| Tie (James) Li | |
| Interim Chief Financial Officer | |
| May 27, 2026 |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Nature’s Miracle Holding Inc. (the “Company”) on Form 10-Q for the quarter ending March 31, 2026, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), each of the undersigned, in the capacities and on the dates indicated below, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:
| (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
| (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
| /s/ Tie (James) Li | |
| Tie (James) Li | |
| Chief Executive Officer | |
| May 27, 2026 | |
| /s/ Tie (James) Li | |
| Tie (James) Li | |
| Interim Chief Financial Officer | |
| May 27, 2026 |