NMHI 10-Q/A
Nature's Miracle Holding Inc. (NMHI)
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 Market. |
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 April 13, 2026,
the registrant had a total of
INDEX
i
EXPLANATORY NOTE
Restatement Background.
During the preparation of the Company’s financial close for the quarter and year ended December 31, 2025, the Company became aware of the fact that a $1.65 million loan made by a third party on April 11, 2025 to Zak Properties, LLC, an entity newly acquired by the Company on September 18, 2025 (“Zak Properties”), was not properly recorded on Zak Properties’ books and records, causing the understatement of short term loans on the Company’s books and records as of and for the period ended September 30, 2025.
As a result, the Company’s restated financial statements reflect the proper recognition of the $1.65 million loan as a short-term liability of Zak Properties as of the acquisition date, with corresponding adjustments to the Company’s net assets acquired, additional paid-in capital, current assets/liabilities, debt disclosures, and related statements of operations, changes in stockholders’ deficit, and cash flows.
Management evaluated the erroneous omission in accordance with SEC Staff Accounting Bulletin No. 99 and No. 108, and concluded that the omission was material to the previously issued interim financial statements for the periods ended September 30, 2025. The omission did not result from intentional misconduct and was attributable to a lack of proper control over Zak Properties as a newly acquired subsidiary entity of the Company.
The Company has corrected the error in the current period and plans to implement enhanced reconciliation and review controls designed to prevent similar errors in future reporting periods.
Internal Control Considerations.
The above-described error resulted from deficiencies in the Company’s internal controls over financial reporting with respect to lack of controls for performance of due diligence on new acquisitions.
This control deficiency is consistent with and directly related to the material weaknesses in internal control over financial reporting previously disclosed in the Company’s Original Filing, in which management concluded that disclosure controls and procedures were not effective as of September 30, 2025. For more information, including regarding management’s remediation measures, see Part I, Item 4, “Controls and Procedures.”
Items Amended.
The following items of the Original Filing have been amended and restated:
Part I, Item 1: Financial Statements (Unaudited) - including the unaudited condensed consolidated balance sheet as of September 30, 2025, the unaudited condensed consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2025, the unaudited condensed consolidated statements of change in stockholders’ deficit for the three and nine months ended September 30, 2025, the unaudited condensed consolidated statements of cash flows for the nine months ended September 30, 2025, and the related notes to the unaudited condensed consolidated financial statements.
Part I, Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Part I, Item 4: Controls and Procedures
Part II, Item 6: Exhibits
In addition, the Company’s Chief Executive Officer and Chief Financial Officer have provided new certifications dated as of the date of this Form 10-Q/A (Exhibits 31.1, 31.2 and 32.1).
This Amended Report makes no other changes to the Original Filing and no attempt has been made in this Amended Report to modify or update the other disclosures presented in the Original Filing. This Amended Report does not reflect subsequent events occurring after the original filing of the Original Filing (i.e., those events occurring after November 14, 2025) or modify or update in any way those disclosures that may be affected by subsequent events. Accordingly, this Amended Report should be read in conjunction with the Original Filing and our other filings with the SEC
ii
PART I – FINANCIAL INFORMATION
NATURE’S MIRACLE HOLDING INC., SUBSIDIARIES AND VIE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
| As of September 30, | As of December 31, | |||||||
| 2025 | 2024 | |||||||
| (Restated) | ||||||||
| ASSETS | ||||||||
| CURRENT ASSETS | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Accounts receivable, net | ||||||||
| Accounts receivable - related parties, net | ||||||||
| Inventories, net | ||||||||
| Prepayments and other current assets | ||||||||
| Prepayments - related parties | ||||||||
| Loan receivable – related party | - | |||||||
| Total Current Assets | ||||||||
| NON-CURRENT ASSETS | ||||||||
| Deposits | ||||||||
| Right-of-use assets, net | ||||||||
| Cost method investment | ||||||||
| Property and equipment, net | ||||||||
| Total Non-Current Assets | ||||||||
| Total Assets | $ | 23,009,358 | $ | 11,311,819 | ||||
| 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 | - | |||||||
| 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 LOSS
| For the Three Months Ended | For the Three Months Ended | For the Nine Months Ended | For the Nine Months Ended | |||||||||||||
| September 30, | September 30, | September 30, | September 30, | |||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| (Restated) | (Unaudited) | (Restated) | (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 | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Non cash finance expense | ( | ) | ( | ) | ( | ) | ||||||||||
| Loss on loan extinguishment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Change in fair value of commitment shares to be issued | ( | ) | ( | ) | - | |||||||||||
| Other income (expense) | ( | ) | ||||||||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| LOSS BEFORE INCOME TAXES | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| PROVISION FOR INCOME TAXES | ||||||||||||||||
| NET LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| OTHER COMPREHENSIVE LOSS | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ||||||||||
| COMPREHENSIVE LOSS | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| WEIGHTED AVERAGE NUMBER OF COMMON STOCK* | ||||||||||||||||
| Basic and diluted | ||||||||||||||||
| LOSS PER SHARE | ||||||||||||||||
| Basic and diluted | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| * |
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 CHANGE 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, 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) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Stock compensation expense | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Shares issued through convertible notes conversion | - | - | - | - | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| BALANCE, June 30, 2025 (Unaudited) | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Preferred stock issued for asset acquisition | - | - | - | - | ||||||||||||||||||||||||||||
| Stock compensation expense | - | - | - | - | ||||||||||||||||||||||||||||
| Shares issued through convertible notes conversion | - | - | - | - | ||||||||||||||||||||||||||||
| Shares issued under equity line of credit | - | - | - | - | ||||||||||||||||||||||||||||
| Shares issued for purchase of convertible note | - | - | - | - | ||||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Cumulative dividend for Series A and D preferred stock | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| BALANCE, September 30, 2025 (Restated) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||||||||||||||||||
| Preferred stock | Common stock | Additional paid in | Accumulated | Accumulated other comprehensive | ||||||||||||||||||||||||||||
| Shares | Amount | Shares* | Amount | capital | Deficit | loss | Total | |||||||||||||||||||||||||
| BALANCE, December 31, 2023 | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Issuance of shares upon the reverse recapitalization | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||||
| Additional shares issued in connection with reverse recapitalization | - | - | ( | ) | - | - | - | |||||||||||||||||||||||||
| Stock compensation expense | - | - | - | - | - | |||||||||||||||||||||||||||
| Shares to be issued for stock compensation | - | - | ( | ) | - | - | - | - | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| BALANCE, March 31, 2024 (Unaudited) | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock compensation expense | - | - | - | - | ||||||||||||||||||||||||||||
| Shares to be issued for stock compensation | - | - | ( | ) | - | - | - | - | - | |||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| BALANCE, June 30, 2024 (Unaudited) | $ | - | $ | $ | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||||||||||||||||||
| Stock compensation expense | - | - | - | - | - | |||||||||||||||||||||||||||
| Shares to be issued for stock compensation | - | - | ( | ) | - | - | - | - | - | |||||||||||||||||||||||
| Shares and warrants issued through public offering | - | - | - | - | ||||||||||||||||||||||||||||
| Shares and warrants issued through private placement | - | - | - | - | ||||||||||||||||||||||||||||
| Forgiveness of related party’s debt | - | - | - | - | - | - | ||||||||||||||||||||||||||
| Foreign currency translation adjustments | - | - | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||||||||
| Net loss | - | - | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||||||||
| BALANCE, September 30, 2024 (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 Nine Months Ended | For the Nine Months Ended | |||||||
| September 30, | September 30, | |||||||
| 2025 | 2024 | |||||||
| (Restated) | (Unaudited) | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation expense | ||||||||
| Allowance for credit losses | ||||||||
| Amortization of operating right-of-use asset | ||||||||
| Amortization of debt issuance cost | ||||||||
| Loss on loan extinguishment | ||||||||
| Gain on disposal of fixed assets | ( | ) | ||||||
| Stock compensation expenses | ||||||||
| Non cash finance expense | ||||||||
| Change in fair value of commitment shares to be issued | ||||||||
| Change in operating assets and liabilities: | ||||||||
| Accounts receivable | ( | ) | ||||||
| Inventories | ||||||||
| Prepayments and other current assets | ( | ) | ||||||
| Prepayments - related parties | ( | ) | ||||||
| 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: | ||||||||
| Loan to Lakeshore | ( | ) | ||||||
| Deposit from investment of Future Tech | ( | ) | ||||||
| Deposit from licensing fee of Datavault AI | ( | ) | ||||||
| Proceeds from disposal of property and equipment | ||||||||
| Proceeds from asset acquisition | - | |||||||
| Net cash used in investing activities | ( | ) | ( | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from the reverse recapitalization | ||||||||
| Payments of transaction costs incurred by Lakeshore | ( | ) | ||||||
| Repayments of promissory note - related party of Lakeshore | ( | ) | ||||||
| Proceeds from issuance of Series A and D preferred stock | ||||||||
| Proceeds from exercise of warrants | ||||||||
| Shares and warrants issued through public offering | ||||||||
| Payments of deferred offering costs | ( | ) | ||||||
| Proceeds from shares issued under equity line of credit | ||||||||
| 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 | ||||||||
| Payments on 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: | ||||||||
| Right of use assets acquired under new operating leases | $ | $ | ||||||
| Reduction of right-of-use asset and operating lease liabilities based on modification | $ | $ | ||||||
| Accumulated deficit acquired upon the reverse recapitalization | $ | $ | ||||||
| Deferred offering cost converted to APIC upon the reverse recapitalization | $ | $ | ||||||
| Conversion of convertible notes into shares | $ | $ | ||||||
| Forgiveness of related party’s debt | $ | $ | ||||||
| Asset acquisition via preferred stock issuance | $ | $ | ||||||
| Asset acquisition via convertible note issuance | $ | $ | ||||||
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 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. (“Visiontech”, a California Company),
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 18, 2022,
NMI acquired
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 aimed at entering the data center and Bitcoin mining business.
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.
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 401-405 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 7 – Asset acquisition under common control.
6
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 September 30, 2025 and December 31, 2024, the Company
had approximately $
The Company has experienced recurring losses from operations and negative cash flows from operating activities since 2022. In addition, the Company had, and may potentially continue to have, an ongoing need to raise additional cash from outside sources to fund its expansion plan and related operations. Successful transition to attaining profitable operations is dependent upon achieving a level of revenues adequate to support the Company’s cost structure. In connection with the Company’s 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 the Company’s ability to continue as a going concern within one year after the date that these unaudited condensed consolidated financial statements are issued.
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 note financing for public companies and we have been utilizing the convertible note for part of our 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
$
The Company entered into
a securities purchase agreement for $
7
On October 1, 2025, the Company
entered into another securities purchase agreement with 1800 Diagonal Lending LLC (“Diagonal”) pursuant to which the Company
sold to the Diagonal a convertible promissory note in the aggregate principal amount of $
On October 20, 2025, the Company received an investment of $
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 — Restatement of previously issued financial statements
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 401-405 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 $
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.(See Note 7 for details)
During the preparation of the Company’s
annual report, the Company noted a misstatement in Zak’s properties’ beginning balance where a short term loan with face
value of $
Impact of the misstatement:
Unaudited condensed consolidated balance sheets as of September 30, 2025
| As Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Loan receivable - related party | $ | $ | $ | |||||||||
| Total other current assets | $ | $ | ||||||||||
| Total current assets | $ | $ | $ | |||||||||
| Property and equipment, net | $ | $ | $ | |||||||||
| Other non current assets | ||||||||||||
| Total assets | $ | $ | $ | |||||||||
| Other payable and accrued liabilities | $ | $ | $ | |||||||||
| Short-term loans | $ | $ | $ | |||||||||
| Total current liabilities | $ | $ | $ | |||||||||
| Total Liabilities | $ | $ | $ | |||||||||
| Net assets | $ | ( | ) | ( | ) | $ | ( | ) | ||||
8
Unaudited condensed consolidated statement of change in stockholders’ deficit for the nine months ended September 30, 2025
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Accumulated deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Additional paid in capital | ( | ) | ||||||||||
| Total Stockholders’ Deficit | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Unaudited condensed consolidated statement of operations and comprehensive loss for the three months ended September 30, 2025
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Total operating expenses | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Total other expenses, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Other comprehensive loss - foreign currency | ( | ) | $ | ( | ) | |||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Unaudited condensed consolidated statement of operations and comprehensive loss for the nine months ended September 30, 2025
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Total operating expenses | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Total other expenses, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Other comprehensive loss - foreign currency | $ | |||||||||||
| Comprehensive loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
Unaudited condensed consolidated statement of cash flow for nine months ended September 30, 2025
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | |||
| Amortization of debt issuance cost | $ | $ | $ | |||||||||
| Depreciation expense | $ | $ | $ | |||||||||
| Other payable and accrued liabilities | $ | $ | $ | |||||||||
| Cash flows from operating activities: | $ | ( | ) | $ | $ | ( | ) | |||||
| Supplemental disclosure of non cash transactions : | ||||||||||||
| Asset acquisition via preferred stock issuance | $ | $ | ( | ) | $ | |||||||
9
Note 4 — 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, 2025, 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 September 30, 2025 and December 31, 2024,
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.
10
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. For the three and
nine months ended September 30, 2025, there was
Cost method investment
The Company accounts for
investments with less than
Cost method investment is
evaluated for impairment when facts or circumstances indicate that the fair value of the long-term investments is less than its carrying
value. An impairment is recognized when a decline in fair value is determined to be other-than-temporary. The Company reviews several
factors to determine whether a loss is other-than-temporary. These factors include, but are not limited to, the: (i) nature of the
investment; (ii) cause and duration of the impairment; (iii) extent to which fair value is less than cost; (iv) financial
condition and near-term prospects of the investments; and (v) ability to hold the security for a period of time sufficient to allow
for any anticipated recovery in fair value. No event had occurred and indicated that other-than-temporary impairment existed and
therefore during the three and nine months ended September 30, 2025, the Company did
Deposits
Deposit consists of security
deposits for vendors, deposits for acquisition and deposits for licensing fee. 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 | ||
| 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.
11
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 September 30, 2025 and 2024, there was no impairment of long-lived assets.
Deferred offering costs
Deferred offering costs consist primarily of expenses paid to attorneys, consultants, underwriters, and etc. related to its merger transaction. The balance has been offset with the proceeds received after the close of the offering.
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.
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. Starting from first quarter of 2024, the Company also provides indoor grow containers to its customers.
12
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.
The Company’s disaggregate revenue stream by products are summarized below:
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||||||||
| Grow light | $ | $ | $ | $ | ||||||||||||
| Indoor grow containers | ||||||||||||||||
| Grow media and others | ||||||||||||||||
| Total revenues | $ | $ | $ | $ | ||||||||||||
13
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 September 30, 2025 | As of December 31, 2024 | |||||||
| 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 sale is recognized. Sales return allowances are recorded and estimated based on historical returns which were generally immaterial to the Company.
Estimated warranty are immaterial
because suppliers provide a warranty period of
Cost of revenue
Cost of revenue mainly consist 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
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.
14
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. To the extent a stock-based award is subject to a performance condition, the amount of expense recorded in a given period, if any, reflects an assessment of the probability of achieving such performance condition, with compensation recognized once the event is deemed probable to occur. Forfeitures are recognized as incurred.
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.
15
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).
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
Loss per share
Basic loss per share is computed by dividing net loss attributable to holders of common stock by the weighted average number of common stock outstanding during the year. Diluted 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 has an anti-dilutive effect (i.e., those that increase income per share or decrease loss per share) are excluded from the calculation of diluted loss per share.
For the three and nine months ended September 30, 2025 and 2024, diluted EPS equals basic EPS because the Company incurred a net loss.
Recently issued accounting pronouncements
In December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. The Company is currently evaluating the potential impact of adopting this new guidance on its unaudited condensed consolidated financial statements and related disclosures.
16
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.
In November 2024, the FASB issued ASU 2024-04, Debt–Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversion of Convertible Debt Instruments (“ASU 2024–04”), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06, which includes the Company. Adoption can be on a prospective or retrospective basis. The Company adopted ASU 2024-04 effective January 1, 2025 on a prospective basis.
In July 2025, the FASB issued ASU 2025-05 Financial Instruments – Credit Losses (Subtopic 326) (“ASU 2025-05”), simplifies the Current Expected Credit Loss (CECL) model for receivables and contract assets by offering a practical expedient to use current conditions for forecasts and an accounting policy election to consider post-balance sheet collections, allowing for early adoption for financial statements not yet issued. The guidance is effective for annual reporting periods beginning after December 15, 2025, but early adoption is permitted. The Company plans to adopt the ASU prospectively for the year ended December 31, 2025.
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 loss and statements of cash flows.
Note 5 — 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 September 30, 2025 | ||||
| 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 | $ | |||
17
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 September 30, 2025 | For
the nine months ended September 30, 2025 | |||||||
| Revenue* | $ | $ | ||||||
| Selling, general and administrative | ||||||||
| Interest expense | ||||||||
| Income tax | ||||||||
| Net income | $ | $ | ||||||
| * |
Note 6 — Reverse recapitalization
On March 11, 2024, Lakeshore
merged with and into the Company for the sole purpose of reincorporating Lakeshore into the State of Delaware. Immediately after the Reincorporation,
the Company consummated the merger between the Company and NMI, resulting in the stockholders of NMI becoming
The following table presents the number of the Company’s common stock issued and outstanding immediately following the reverse recapitalization:
| 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 investors | ||||
| Conversion of NMI’s shares into the Company’s ordinary shares | ||||
| Total shares outstanding | ||||
In connection with the
reverse recapitalization, the Company has assumed
In connection with the reverse
recapitalization, the Company raised approximately $
18
The following table reconciles the elements of the reverse recapitalization to the unaudited condensed consolidated statements of cash flows and the changes in shareholders’ equity (deficit):
| As of March 11, 2024 | ||||
| Funds held in Lakeshore’s trust account | $ | |||
| Funds held in Lakeshore’s operating cash account | ||||
| Less: amount paid to redeem public shares of Lakeshore’s ordinary shares | ( | ) | ||
| Proceeds from the reverse recapitalization | ||||
| Less: payments of transaction costs incurred by Lakeshore | ( | ) | ||
| Less: repayments of promissory note – related party of Lakeshore’ | ( | ) | ||
| Less: notes assumed from Lakeshore | ( | ) | ||
| Less: liability assumed from Lakeshore | ( | ) | ||
| Less: transaction costs paid by NMI | ( | ) | ||
| Add: receivable assumed from Lakeshore | ||||
| Net liabilities assumed from issuance of common stock upon the Merger, balance classified to retained deficit | $ | ( | ) | |
Note 7 — Asset acquisition under common control (restated)
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 401-405 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 $
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:
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Current assets | $ | $ | $ | |||||||||
| Property and equipment, net | ||||||||||||
| Total assets | ||||||||||||
| Total liabilities | ( | ) | ( | ) | ( | ) | ||||||
| Net assets | $ | $ | ( | ) | $ | |||||||
19
Equity in the Company as a result of the asset acquisition increased as follows as of September 18, 2025:
| As | ||||||||||||
| Previously | ||||||||||||
| Reported | Adjustments | As Restated | ||||||||||
| Net assets acquired | $ | $ | ( | ) | $ | |||||||
| Less: debt incurred | ( | ) | ( | ) | ||||||||
| Less: cost associated with issuance of Series B and C preferred stock | ( | ) | ( | ) | ||||||||
| Increase in equity | $ | $ | ( | ) | $ | |||||||
Note 8 — Accounts receivable, net
Accounts receivable consisted of the following as of the date indicated:
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| 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 | $ | $ | ||||||
| Total allowance for credit losses | ( | ) | ( | ) | ||||
| Total accounts receivable, net | $ | $ | ||||||
Provision for credit losses
were $
Provision for credit losses
were $
Movement of allowance:
Movement of allowance for expected credit losses (including related party) consisted of the following as of the date indicated:
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| Beginning balance | $ | $ | ||||||
| Addition | ||||||||
| Write-off | ( | ) | ||||||
| Ending balance | $ | $ | ||||||
Note 9 — Cost method investment
Cost method investment consists of the following:
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| $ | $ | |||||||
| Total | $ | $ | ||||||
On April 11, 2023, one
of the Company’s customers, Iluminar Lighting LLC (“Iluminar”) entered into Debt Conversion Agreement with the Company
pursuant to which it will convert $
20
Note 10 — Property and equipment, net (restated)
Property and equipment, net consist of the following:
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| Trucks & Automobiles | $ | $ | ||||||
| Machinery & Equipment | ||||||||
| Building | ||||||||
| Building improvements | ||||||||
| Land | ||||||||
| Subtotal | ||||||||
| Less: accumulated depreciation | ( | ) | ( | ) | ||||
| Total | $ | $ | ||||||
Depreciation expense
for the three months ended September 30, 2025 and 2024 amounted to $
Depreciation expense
for the nine months ended September 30, 2025 and 2024 amounted to $
Note 11 — Loans payable (restated)
Short-term loans:
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| Factor H (1) | $ | $ | ||||||
| Factor I (2) | ||||||||
| Factor J (3) | ||||||||
| Factor K (4) | ||||||||
| Factor L(5) | ||||||||
| Jie Zhang (6) | ||||||||
| Peng Zhang (7) | ||||||||
| RedOne Investment Limited (“RedOne”) (8) | ||||||||
| Agile Capital Funding, LLC (9) | ||||||||
| ClassicPlan Premium Financing, Inc. (10) | ||||||||
| Maximcash Solutions LLC (11) | ||||||||
| J.J.Astor & Co.(12) | ||||||||
| Other loans | ||||||||
| Total short-term loans | $ | $ | ||||||
Short-term loans consist of account receivable factoring agreements, subordinated business loan and third parties loans as of September 30, 2025 and December 31, 2024.
| (1) | On
October 23, 2023, the Merchants entered into a standard merchant cash advance agreement with Factor H. The Company sold $ |
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 $
21
| (2) | On
August 29, 2024, the Merchants entered into a standard merchant cash advance agreement with Factor I. The Company sold $ |
On December 12, 2024, the Merchants
entered into another standard merchant cash advance agreement with Factor I. The Company sold $
On July 31, 2025, 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 pay a weekly installment of $
| (3) | 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 $
| (4) | On
September 30, 2024, the Merchants entered into a standard merchant cash advance agreement with Factor K. The Company sold $ |
On February 11, 2025, the Merchants
entered into another standard merchant cash advance agreement with Factor K. The company sold $
22
On July 16, 2025, Factor K filed a
complaint in Court in Monroe County, New York referring to an outstanding balance of $
| (5) | 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 $
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 September
30, 2025 and December 31, 2024, outstanding balance amounted to $
| (6) |
| (7) |
23
| (8) | 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 $
| (9) | 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 $
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 $
| (10) |
| (11) | On
December 30, 2024, the Merchants entered into a business loan and security agreement (the “Agreement”) with Maximcash Solutions
LLC (the “Maxim”). Under the Agreement, the Maxim loaned $ |
On July 8, 2025, Maxim filed a complaint
against the Company in the
| (12) | On April 11, 2025, Zak Properties
entered into a loan agreement with J.J. Astor & Co. (“JJ Astor”). Under the agreement, JJ Astor loaned $ |
24
Interest expenses for short
term loans amounted to $
Interest expenses for short
term loans amounted to $
Short-term loans — related parties: refer to Note 13 Related Party transactions.
Long-term debts:
Long-term debts consist of three auto loans, one building loan, and one secured business loan as of September 30, 2025 and December 31, 2024.
The outstanding amount of
the auto loans were $
Minimum required principal payments towards the Company’s auto loans as of September 30, 2025 are as follows:
| Twelve months ended September 30, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| Total | $ | |||
The outstanding amount of
the building loan was $
Minimum required principal payments towards the Company’s building loan as of September 30, 2025 are as follows:
| Twelve months ended September 30, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
The outstanding amount of
the secured business loan was $
25
Minimum required principal payments towards the Company’s secured business loan as of September 30, 2025 are as follows:
| Twelve months ended September 30, | Repayment | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| Thereafter | ||||
| Total | $ | |||
Interest expenses for long
term loans amounted to $
Interest expenses for long
term loans amounted to $
Note 12 — 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 July 17, 2024, the Company
entered into a securities purchase agreement with a certain investor pursuant to which the Company sold, in a private placement, a $
On August 13, 2024, the Company
entered a securities purchase agreement with 1800 Diagonal Lending LLC (“Diagonal”), in connection with the issuance of a
promissory note in the aggregate principal amount of $
26
On September 18, 2024, the
Company entered into another securities purchase agreement with Diagonal pursuant to which the Company sold to the Diagonal a convertible
promissory note in the aggregate principal amount of $
On October 14, 2024, the
Company issued and sold to Diagonal a promissory note in the principal amount of $
On November 18, 2024, the
Company signed one convertible note agreement of $
On December 17, 2024, the
Company entered into a securities purchase agreement with a certain investor pursuant for a $
On December 12, 2024, the
Company entered into a convertible promissory note with Diagonal in the principal amount of $
On March 26, 2025, the Company
signed a convertible note with Black Ice Advisors, LLC, face value of the note is $
On May 7, 2025, the Company
entered into another securities purchase agreement with Diagonal pursuant to which the Company sold to the Diagonal a convertible promissory
note in the aggregate principal amount of $
27
On June 10, 2025, the Company
entered into another securities purchase agreement with Diagonal pursuant to which the Company sold to the Diagonal a convertible promissory
note in the aggregate principal amount of $
During the third quarter
of 2025, the Company entered into another three securities purchase agreements with Diagonal pursuant to which the Company issued the
following convertible promissory notes to the Diagonal: i) principal amount of $
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
$
28
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 $
Interest expenses in connection
with the convertible notes for the three and nine months ended September 30, 2025 amounted to $
Note 13 — Related party transactions (restated)
Purchases and accounts payable – related parties:
UniNet Global Inc. (“Uninet”),
a vendor whose stockholder is Zhiyi (Jonathan) Zhang who is also one of the stockholders and management of the Company, sold certain products
to Visiontech. On September 24, 2024, the Company entered into a trade payable forgiveness agreement with Visiontech, Uninet and NMI,
relating to the cancellation of a portion of outstanding trade payables owed by Visiontech to Uninet. Visiontech owed Uninet a trade payable
in the amount of $
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 and accounts receivable - related party:
For the three and nine months
ended September 30, 2025, the sales revenue from Iluminar was $
Prepayments - related party:
As of September 30, 2025
and December 31, 2024, the prepayments from Jonathan was $
Loan receivable – related party:
As of September 30, 2025
and December 31, 2024, loan receivable from Big Lake amounted to $
Deferred income – contract liabilities - related party:
As of September 30, 2025
and December 31, 2024, the deferred income - contract liabilities from Iluminar was $
29
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 $
In September 2024, James
Li paid a total amount of $
As of September 30, 2025,
Nature’s Miracle Holding Inc. has an outstanding amount due to Mr. Tie (James) Li and Zhiyi (Jonathan) Zhang for $
As of September 30, 2025
and December 31, 2024, accrued interest expense from related parties, were $
Short-term loans — related parties
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| Zhiyi Zhang (1) | $ | $ | ||||||
| Tie Li (2) | ||||||||
| NMCayman (3) | ||||||||
| Total short-term loans – related parties | $ | $ | ||||||
| (1) |
| (2) | In December 2022, the Company signed two loans with Tie
(James) Li, the Company’s CEO, for the total principal amount of $ |
30
On July 11, 2023, Lakeshore signed
one loan with Tie (James) Li for a principal amount of $
| (3) | On January 17, 2023, the Company and NMCayman entered into
a loan agreement for the principal amount of $ |
On January 17, 2023, the Company
and NMCayman entered into a loan agreement for the principal amount of $
Interest expense for short-term
loan - related parties amounted to $
Interest expense for short-term
loan – related parties amounted to $
31
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 7 – Asset acquisition under common control, the Company issued a convertible promissory
note in the aggregate principal amount of $
Note 14 — Income taxes
As of September 30, 2025
and December 31, 2024, the Company’s deferred tax asset had a full valuation allowance recorded against it. The effective tax rate
for the three and nine months ended September 30, 2025, were
Note 15 – Series A and D 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
32
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 $
The Company accounts for
its Series A and D preferred shares in accordance with the guidance in ASC Topic 480, “Distinguishing Liabilities from Equity”
(ASC 480). Series A and D 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 and D preferred shares outside of permanent equity
as the shares are subject to possible redemption after
As of September 30, 2025, the Series A and D preferred shares subject to possible redemption reflected in the balance sheets are reconciled in the following table:
| January 1, 2025 | ||||
| Series A preferred shares | $ | |||
| Series D preferred shares | ||||
| Shares issuance cost | ( | ) | ||
| Cumulative dividend | ||||
| Balance as of September 30, 2025 | $ |
The Company issued
Note 16 — Equity
Reverse recapitalization
The total number of shares
which the Company shall have the authority to issue is one hundred and one million (
33
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 $
| * |
The Company has paid YA Global
II SPV, LLC, a subsidiary of Yorkville, a structuring fee in the amount of $
Reverse Split
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 (1-for-30) reverse split (the “Reverse Split”). The Reverse Split became effective on November 21, 2024. As a result of the Reverse Split, every 30 shares of the Company’s issued and outstanding common stock were automatically converted into one share of common stock, with no change to the par value per share. All share and per share data has been retroactively restated to reflect the Reverse Split of the Company.
Stock compensation
In connection with the Merger, the Company adopted the Equity Incentive Plan (the “2024 Incentive Plan”).
34
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 $
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
For the three months ended
September 30, 2025 and 2024, the Company recorded stock compensation expenses of $
For the nine months ended
September 30, 2025 and 2024, the Company recorded stock compensation expenses of $
35
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
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 $
For the three and nine months
ended September 30, 2025, the Company sold
Preferred shares
In connection with the
acquisition of Zak Properties as stated in Note 7– 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
36
Shares issued through debt-to-equity conversion
Refer to Note 11 — Loans payable and Note 13 — Related party transactions for detail.
Shares issued through convertible notes conversion
Refer to Note 12 — 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 $
Warrants 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.
Series A Warrants issued in July Public offering
On July 29, 2024, the Company
issued a total
The Series A warrants
are 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.
37
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 was
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
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
38
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, 2024 | $ | |||||||||||||||
| Adjustment | $ | |||||||||||||||
| Granted | $ | - | ||||||||||||||
| Forfeited | $ | - | ||||||||||||||
| Exercised | ( | ) | ( | ) | $ | - | ||||||||||
| March 31, 2025 | $ | |||||||||||||||
| Granted | $ | - | ||||||||||||||
| Forfeited | $ | - | ||||||||||||||
| Exercised | $ | - | ||||||||||||||
| June 30, 2025 | $ | |||||||||||||||
| Granted | $ | |||||||||||||||
| Forfeited | $ | - | ||||||||||||||
| Exercised | $ | - | ||||||||||||||
| September 30, 2025 | $ | |||||||||||||||
Note 17 — 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 September 30, 2025
and December 31, 2024, $
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.
39
Customer and vendor concentration risk
During the three and nine months ended September 30, 2025 and during the three and nine months ended September 30, 2024, 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 13— Related party transactions.
| For the Three Months ended September 30, 2025 | For the Nine Months ended September 30, 2025 | As of September 30, 2025 | ||||||||||
| Percentage of Revenue | Percentage of Revenue | Percentage of Account Receivable | ||||||||||
| Customer A | < | % | < | % | % | |||||||
| Customer C | % | % | < | % | ||||||||
| Customer M | % | < | % | < | % | |||||||
| Customer N | % | < | % | < | % | |||||||
| Iluminar | < | % | < | % | % | |||||||
| For the Three Months ended September 30, 2024 | For the Nine Months ended September 30, 2024 | As of December 31, 2024 | ||||||||||
| Percentage of Revenue | Percentage of Revenue | Percentage of Account Receivable | ||||||||||
| Iluminar | % | % | % | |||||||||
| Customer A | % | % | % | |||||||||
| Customer C | < | % | % | < | % | |||||||
During the three and nine months ended September 30, 2025 and during the three and nine months ended September 30, 2024, the major vendors of the Company are as below. Both Megaphoton and Uninet Global Inc. are related parties of the Company (Megaphoton is no longer a related party of the Company after April 2023), as disclosed in Note 13— Related party transactions, and all purchases from Uninet Global Inc. are products originally manufactured by Megaphoton Inc.
| For the Three Months ended September 30, 2025 | For the Nine Months ended September 30, 2025 | As of September 30, 2025 | ||||||||||
| Percentage of Purchase | Percentage of Purchase | Percentage of Account Payable | ||||||||||
| Vendor A | < | % | < | % | % | |||||||
| Vendor E | < | % | % | < | % | |||||||
| Iluminar | < | % | % | < | % | |||||||
| Megaphoton Inc. | < | % | < | % | % | |||||||
| For the Three Months ended September 30, 2024 | For the Nine Months ended September 30, 2024 | As of December 31, 2024 | ||||||||||
| Percentage of Purchase | Percentage of Purchase | Percentage of Account Payable | ||||||||||
| Vendor A | % | % | % | |||||||||
| Vendor B | % | < | % | < | % | |||||||
| Vendor E | % | % | < | % | ||||||||
| Vendor F | % | < | % | < | % | |||||||
| Megaphoton Inc. | < | % | < | % | % | |||||||
40
Note 18 — Lease
The Company follows ASC 842
Leases. The Company has entered into lease agreements for vehicles, offices and warehouses space in California, Pennsylvania and Texas.
$
On May 15, 2021, Hydroman entered into a lease agreement of the
warehouse in California. The lease term was from
On May 28, 2023, Visiontech
entered into a lease agreement for a vehicle. The leasing term began on May 28, 2023 and terminated on April 28, 2025 with a
first installment of $
On April 11, 2024, the Company
entered into a lease agreement for an office located in California. The lease term was from
On July 20, 2024, Visiontech
entered into a lease agreement for another vehicle. The leasing term began on September 3, 2024 and will terminate on August 3, 2028 with
a first installment of $
On March 11, 2025, NMI entered
into a lease agreement for a vehicle. The leasing term began on March 11, 2025 and will terminate on February 11, 2028 with a first installment
of $
On August 8, 2025, NMI entered
into a lease agreement for another vehicle. The leasing term began on August 8, 2025 and will terminate on July 8, 2028 with a first installment
of $
As of September 30, 2025
and December 31, 2024, the weighted-average remaining operating lease term of its existing leases is approximately
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| Lease cost | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | ||||||||||||
| Operating lease cost (included in Cost of Revenue and Other Expense in the Company’s Statement of Operations) | $ | $ | $ | $ | ||||||||||||
| Other information | ||||||||||||||||
| Cash paid for amounts included in the measurement of lease liabilities | ||||||||||||||||
The supplemental balance sheet information related to leases for the period is as follows:
| As of September 30, 2025 | As of December 31, 2024 | |||||||
| Operating leases | ||||||||
| Right of use asset | ||||||||
| Lease Liability – current portion | ||||||||
| Lease Liability – net of current portion | ||||||||
| Total operating lease liabilities | $ | $ | ||||||
41
Maturities of the Company’s lease liabilities are as follows:
| Twelve months ended September 30, | Operating Lease | |||
| 2026 | $ | |||
| 2027 | ||||
| 2028 | ||||
| Less: Imputed interest/present value discount | ( | ) | ||
| Present value of lease liabilities | $ | |||
Note 19 — Commitment and Contingencies
The Company may, from time to time, be involved in legal matters arising in the ordinary course of its business. While the Company is not presently subject to any material legal proceedings, there can be no assurance that such matters will not arise in the future or that any such matters in which the Company is involved, or which may arise in the ordinary course of the Company’s business, will not at some point proceed to litigation or that such litigation will not have a material adverse effect on the business, financial condition or results of operations of the Company.
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 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. Growterra does not state an amount of damages but is also seeking rescission. The Company has been negotiating with Growterra and feels it can defend itself successfully. The Company has filed a motion to compel discovery responses against Growterra LLC due to their failure to produce documents in discovery. In response, Growterra filed a partial motion for summary judgment on liability only, arguing they should not have to comply with their discovery obligations. The Company has argued to the court that Growterra must respond to discovery before any other motions are heard. The Company is awaiting the Court’s decision.
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 November 22, 2024, NM
Data entered into an investment agreement to acquire
42
Nasdaq Stock Market LLC (“Nasdaq”) Notification Letters
On January 13, 2025, the Company received notice from Nasdaq indicating that the Nasdaq Hearings Panel (the “Panel”) has determined to delist the Company’s securities from Nasdaq based upon the Company’s non-compliance with Listing Rule 5550(b)(1), Nasdaq’s minimum shareholders’ equity rule. As a result of the Panel’s decision, Nasdaq suspended trading in the Company’s securities effective at the open of trading on Wednesday, January 15, 2025.
Note 20 — Segment information (restated)
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.
| For the Three Months Ended | For the Nine Months Ended | |||||||||||||||
| September 30, 2025 | September 30, 2024 | September 30, 2025 | September 30, 2024 | |||||||||||||
| (Unaudited) | (Unaudited) | (Unaudited) | (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 expenses (income): | ||||||||||||||||
| Interest expense, net | ||||||||||||||||
| Non cash finance expense | ||||||||||||||||
| Loss on loan extinguishment | ||||||||||||||||
| Other segment (income) expense | ( | ) | ( | ) | ||||||||||||
| Income taxes | ||||||||||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
Note 21 — Subsequent events
The Company evaluated subsequent events and transactions that occurred after September 30, 2025 up through April 13, 2026 which is the date of these unaudited condensed consolidated financial statements are available to be issued. Based on this review, except as disclosed below, the Company did not identify any other subsequent events that would require adjustment or disclosure in the unaudited condensed consolidated financial statements.
On October 1, 2025, the Company entered into another securities purchase
agreement with 1800 Diagonal Lending LLC (“Diagonal”) pursuant to which the Company sold to Diagonal a convertible promissory
note in the aggregate principal amount of $
43
On October 8, 2025, the Company filed Certificate of Designations and
related amendments with the State of Delaware. Such filing provided for new classes of preferred stock in Series A, Series B, Series C
and Series D. The Company is authorized to issue up to
On October 10, 2025,
the Company signed a Securities and Purchase Agreement with GHS Investments LLC (“Investor”) which awarded
On October 10, 2025, the Company was notified that a lawsuit has been filed in the State of New York by Agrify Corp. The complaint alleges breach of contract in a purchase order of L.E.D. lights. The purchase order originally was part of a termination agreement of a merger agreement. The Company has always stated that the specific L.E.D. products mentioned in the purchase agreement were not in compliance with government requirements and cannot be re-sold. Agrify seeks damages of approximately $481,000 plus fees and costs. The Company is defending the action. Based on consultation with external counsel, an unfavorable outcome is reasonably possible; however, the Company cannot reasonably estimate a loss or range of loss at this time. Accordingly, no accrual has been recorded as of September 30, 2025, and the Company will update this disclosure as additional information becomes available.
On October 28, 2025, the Company filed form PRE 14C with the Securities
and Exchange Commission that based on a record date of October 16, 2025, shareholders shall be mailed a vote to approve the adoption of
a Reverse Stock Split and Capital Increase Amendment. The range of the Reverse Split is
On October 20, 2025, the Company received an investment of $
On November 6, 2025, GHS Investments LLC converted
44
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 January 29, 2026, Zak Properties entered into a promissory note agreement with American Savings Life Insurance Company (the “Lender”),
pursuant to which Zak Properties issued a promissory note in the principal amount 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 23, 2026,
the Company entered into a note purchase agreement with Lambda Venture Partners, LLC, pursuant to which the Company issued a convertible
promissory note in the principal amount of $
45
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis are intended as a review of significant factors affecting our financial condition and results of operations for the periods indicated. The discussion should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q/A and the audited financial statements and the other information set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Securities and Exchange Commission (the “SEC”) on April 16, 2025. In addition to historical information, the following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these forward-looking statements as a result of certain factors discussed herein and any other periodic reports filed and to be filed with the SEC.
Management’s Discussion and Analysis of Financial Condition and Results of Operation.
The following Management’s Discussion and Analysis should be read in conjunction with our unaudited condensed financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and the other information set forth in the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with Securities and Exchange Commission (the “SEC”) on April 16, 2025. 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.
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. In 2025, the Company made announcements to enter the field of Digital Treasury Management with an emphasis on XRP as a base cryptocurrency and its applications on tokenization of real-world assets.
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.
We operate mainly through two subsidiaries in California, Visiontech and Hydroman. 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.
46
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.
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 401-405 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 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.
47
RESULTS OF OPERATIONS
For the Three Months ended September 30, 2025 and 2024
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 September 30, | Percentage | |||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenues | $ | 72,377 | $ | 3,052,727 | $ | (2,980,350 | ) | (97.6 | )% | |||||||
| Cost of revenues | 71,951 | 2,824,614 | (2,752,663 | ) | (97.5 | )% | ||||||||||
| Gross profit | 426 | 228,113 | (227,687 | ) | (99.8 | )% | ||||||||||
| Selling, general and administrative expenses | 1,205,150 | 2,186,953 | (981,803 | ) | (44.9 | )% | ||||||||||
| Provision for credit losses | 126,824 | 36,597 | 90,227 | 246.5 | % | |||||||||||
| Loss from operation | (1,331,548 | ) | (1,995,437 | ) | 663,889 | (33.3 | )% | |||||||||
| Total other expense, net | (875,282 | ) | (754,899 | ) | (120,383 | ) | 15.9 | % | ||||||||
| Loss before income taxes | (2,206,830 | ) | (2,750,336 | ) | 543,506 | (19.8 | )% | |||||||||
| Total provision for income taxes | - | - | - | - | ||||||||||||
| Net Loss | $ | (2,206,830 | ) | $ | (2,750,336 | ) | $ | 543,506 | (19.8 | )% | ||||||
| Gross profit % of revenues | 0.6 | % | 7.5 | % | ||||||||||||
| Net Income % of revenues | (3,049.1 | )% | (90.1 | )% | ||||||||||||
Revenue
Revenue for the three months ended September 30, 2025 decreased by 97.6% to $72,377 as compared to $3,052,727 for the three months ended September 30, 2024. 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 fourth quarter to replenish inventory, and management expects the revenue situation to improve once inventory levels are restored.
For the three months ended September 30, 2025 and 2024, we had 24 and 59 customers, respectively. Average revenue per customer for the three months ended September 30, 2025 and 2024 were $3,016 and $51,741, respectively. Our revenue from top 5 customers for the three months ended September 30, 2025 was $62,179 compared to $2,303,692 for the three months ended September 30, 2024, representing a decrease of 97.3%. 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 September 30, 2025 decreased 97.5% to $71,951 as compared to $2,824,614 for the three months ended September 30, 2024. 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 $426 for the three months ended September 30, 2025 and $228,113 for the three months ended September 30, 2024, respectively. The gross margin for the three months ended September 30, 2025 decrease to 0.6% from 7.5% for the three months ended September 30, 2024. The decrease in gross margin was primarily driven by the sale of existing inventory, which carried lower margins.
48
Operating expenses
Operating expenses for the three months ended September 30, 2025 decreased 40.1% to $1,331,974 as compared to $2,223,550 for the three months ended September 30, 2024. The decrease was mainly due to following reasons:
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the three months ended September 30, 2025 decreased 44.9% to $1,205,150 as compared to $2,186,953 for the three months ended September 30, 2024. The decrease was mainly due to decreased Company’s stock compensation expenses of $763,929 as a result of completion of vesting periods of certain employees; decrease in professional fees of $93,082, mainly related to lower spending on public relations and SEC filing activities; and a decrease in payroll expenses of $216,283 resulting from a reduced headcount.
Provision for credit losses
Provision for credit losses for the three months ended September 30, 2025 increased 246.5% to $126,824 as compared to $36,597 for the three months ended September 30, 2024. The increase was primarily due to higher estimated credit risk associated with outstanding receivables during the period.
Other Expenses
Other expenses primarily consist of net interest expense, other finance expense related to our loans and net rental income. Other expenses for the three months ended September 30, 2025 was $875,282 as compared to other expense of $754,899 for the three months ended September 30, 2024. The increase was mainly due to the increase in non cash finance expense of $200,000, offset by the decrease in interest expenses of $179,329.
Interest expense for the three months ended of September 30, 2025 and 2024 were $559,156 and $738,468, respectively; decreased as a result of multiple high interest loans matured and the accrued interest decreased during three months ended of September 30, 2025. For the three months ended of September 30, 2025 and 2024, the short-term loan borrowing increase was approximately $0 and $489,970, respectively. As of September 30, 2025 and 2024, the short-term loan balances were approximately $4.2 million and $2.9 million, respectively.
Non-cash finance expense for the three months ended of September 30, 2025 and 2024 were $200,000 and $0, respectively. This increase is primarily due to the expensing of commitment shares to be issued under the Amended Equity Financing Agreement with GHS Investments dated July 25, 2025.
Rental income, net for the three months ended of September 30, 2025 and 2024 were $12,036 and $0, respectively.
Other income for the three months ended of September 30, 2025 was $90 and other expense for the three months ended of September 30, 2024 was $1,300, respectively.
Income Tax Expense
Our income tax expense was amounted to $0 and $0 for the three months September 30, 2025 and 2024, respectively.
The effective tax rate for the three months ended September 30, 2025 and 2024 were 0.0% and 0.0%. 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.
Net Loss
Net loss for the three months ended September 30, 2025 was $2,206,830 as compared to net loss of $2,750,336 for the three months ended September 30, 2024, representing a decrease of $543,506. The decrease was primarily due to decrease of gross profit, selling, general and administrative expenses.
49
For the Nine Months ended September 30, 2025 and 2024
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 Nine Months Ended September 30, | Percentage | |||||||||||||||
| 2025 | 2024 | Change | Change | |||||||||||||
| Revenues | $ | 1,663,205 | $ | 8,662,414 | $ | (6,999,209 | ) | (80.8 | )% | |||||||
| Cost of revenues | 1,458,521 | 7,669,764 | (6,211,243 | ) | (81.0 | )% | ||||||||||
| Gross profit | 204,684 | 992,650 | (787,966 | ) | (79.4 | )% | ||||||||||
| Selling, general and administrative expenses | 3,543,886 | 5,214,487 | (1,670,626 | ) | (32.0 | )% | ||||||||||
| Provision for credit losses | 306,091 | 60,988 | 245,103 | 401.9 | % | |||||||||||
| Loss from operation | (3,645,293 | ) | (4,282,825 | ) | 637,532 | (14.9 | )% | |||||||||
| Total other expense, net | (2,350,585 | ) | (2,540,136 | ) | 189,551 | (7.5 | )% | |||||||||
| Loss before income taxes | (5,959,878 | ) | (6,822,961 | ) | 827,083 | (12.1 | )% | |||||||||
| Total provision for income taxes | 1,700 | 2,500 | (800 | ) | (32.0 | )% | ||||||||||
| Net Loss | $ | (5,997,578 | ) | $ | (6,825,461 | ) | $ | 827,883 | (12.1 | )% | ||||||
| Gross profit % of revenues | 12.3 | % | 11.5 | % | ||||||||||||
| Net Income % of revenues | (360.6 | )% | (78.8 | )% | ||||||||||||
Revenue
Revenue for the nine months ended September 30, 2025 decreased 80.8% to $1,663,205 as compared to $8,662,414 for the nine months ended September 30, 2024. 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 Q4 to replenish inventory, and management expects the revenue situation to improve once inventory levels are restored.
For the nine months ended September 30, 2025 and 2024, we had 68 and 114 customers, respectively. Average revenue per customer for the nine months ended September 30, 2025 and 2024 were $24,459 and $75,986, respectively. Our revenue from top 5 customers for the nine months ended September 30, 2025 was $986,685 compared to $5,443,321 for the nine months ended September 30, 2024, representing a decrease of 81.9%. 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 nine months ended September 30, 2025 decreased 81.0% to $1,458,521 as compared to $7,669,764 for the nine months ended September 30, 2024. 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 $204,684 for the nine months ended September 30, 2025 and $992,650 for the nine months ended September 30, 2024, respectively. The gross margin for the nine months ended September 30, 2025 increase to 12.3% from 11.5% for the nine months ended September 30, 2024. The increase in gross margin was primarily driven by higher sales of new, higher-margin products such as grow media products. Sales revenue from grow media and related products increased to $360,340 for the nine months ended September 30, 2025, compared to $192,221for the same period in 2024.
Operating expenses
Operating expenses for the nine months ended September 30, 2025 decreased 27.0% to $3,849,977 as compared to $5,275,475 for the nine months ended September 30, 2024. The decrease was mainly due to following reasons:
Selling, General and Administrative Expenses
Selling, general and administrative expenses for the nine months ended September 30, 2025 decreased 32.0% to $3,543,886 as compared to $5,214,487 for the nine months ended September 30, 2024. The decrease was mainly due to decrease Company’s stock compensation expenses of $988,239 as a result of completion of vesting periods of certain employees; decrease in professional fees of $265,016, mainly related to lower spending on public relations and SEC filing activities; and a decrease in payroll expenses of $520,682 resulting from a reduced headcount.
50
Provision for credit losses
Provision for credit losses for the nine months ended September 30, 2025 increased 401.9% to $306,091 as compared to $60,988 for the nine months ended September 30, 2024. The increase was primarily due to higher estimated credit risk associated with outstanding receivables during the period.
Other Expenses
Other expenses primarily consist of net interest expense, other finance expense related to our loans and net rental income. Other expenses for the nine months ended September 30, 2025 was $2,350,585 as compared to other expense of $2,540,136 for the nine months ended September 30, 2024. The decrease was mainly due to the decrease in non cash finance expense of $800,000, offset by the increase of interest expenses of $571,056.
Interest expense for the nine months ended of September 30, 2025 and 2024 were $2,098,499 and $1,527,443, respectively; increased as a result of multiple convertible notes and high interest loans in 2025. The convertible notes and convertible notes – related party borrowing increased was approximately $1,993,300 and $797,500, respectively. As of September 30, 2025 and 2024, the short-term loan balances were approximately $2.6 million and $2.9 million, respectively. For the nine months ended September 30, 2024, 66.0% of the loans were from third-party lenders with interest rates ranging from 8.0% to 12.0%, while the remaining loans were receivables factoring loans with significantly higher interest rates ranging from 66.4% to 100.0%. In contrast, for the nine months ended September 30, 2025, 36.0% of the loans were from third-party lenders at 8.0% to 22.6%, with the remainder consisting of receivables factoring loans bearing interest rates between 84.0% and 97.0%. The increase in higher-rate factoring loans in the current year and the increase in overall loan balances contributed to the rise in interest expense.
Non-cash finance expense for the nine months ended of September 30, 2025 and 2024 were $200,000 and $1,000,000, respectively. This decrease is primarily due to the expensing of 3,334 shares of common stock issued under a Letter Agreement dated November 15, 2023, in connection with the merger. These shares, valued at approximately $1.0 million, were issued to Tie (James) Li and Zhiyi Zhang for their guarantees related to the repayment of the Newtek Loan, which had a principal amount of $3,700,000. The value of the shares was expensed as non-cash finance expenses upon the completion of the merger in 2024.
Rental income, net for the nine months ended of September 30, 2025 and 2024 were $12,126 and $0, respectively.
Other expense for the nine months ended of September 30, 2025 was $11,870 and other income for the nine months ended of September 30, 2024 was $2,438.
Income Tax Expense
Our income tax expense was amounted to $1,700 and $2,500 for the nine months September 30, 2025 and 2024, respectively.
The effective tax rate for the nine months ended September 30, 2025 and 2024 were 0.0% and 0.0%. 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.
Net Loss
Net loss for the nine months ended September 30, 2025 was $5,997,578 as compared to net loss of $6,825,461 for the nine months ended September 30, 2024, representing a decrease of $827,883. The decrease was primarily due to decrease of selling, general and administrative expenses.
51
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 September 30, 2025, we had $61,450 in cash which primarily consists of bank deposits, which are unrestricted as to withdrawal and use. Our working capital deficit was approximately $19.7 million as of September 30, 2025.
We have experienced recurring losses from operations and negative cash flows from operating activities since 2022. For the three months ended September 30, 2025 and 2024, and for the nine months ended September 30, 2025 and 2024 we incurred substantial losses as shown in the financial statement section. Our actual revenue for the three months ended September 30, 2025 and 2024 was approximately $72,377 and $3.1 million, respectively. Our actual revenue for the nine months ended September 30, 2025 and 2024 was approximately $1.7 million and $8.7 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 Investment and this was declared effective by SEC. The Company can draw on this facility for its working capital needs and others.
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.
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 $652,800 for the nine months ended September 30, 2025 under this note and may borrow up to an additional amount of $1,347,200 under the note.
We have entered into a securities purchase agreement for $2 million with Y.K. Capital Management, Inc. on September 19, 2025. We have received an initial payment of $500,000 for the issuance of preferred shares and the remaining proceeds of $1.5 million are expected to be collected subsequent to the period end.
On October 20, 2025, we received an investment of $250,000 from Huanfu Cui, an Asian-based individual investor, which was followed with another $200,000 tranche on October 31, 2025. The investments are based on the Securities Purchase Agreement signed on October 29, 2025. This agreement calls for a total investment of $500,000, issuance of Series F Preferred shares which are convertible into common shares at a fixed price of $0.2813. If fully funded and converted, the Preferred Shares would be the equivalent of 1,777,778 common shares.
We can make no assurances that required financings will be available for the amounts needed, or on terms commercially acceptable to us, if at all. If one or all of these events does not occur or subsequent capital raises are insufficient to bridge financial and liquidity shortfall, there would likely be a material adverse effect on us and would materially adversely affect our ability to continue as a going concern.
The unaudited condensed consolidated financial statements have been prepared assuming that we will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty.
52
Cash Flows
The following tables set forth our selected consolidated cash flow data for the periods indicated:
| For the Nine Months Ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| US$ | US$ | |||||||
| Net cash used in operating activities | (1,805,482 | ) | (3,170,717 | ) | ||||
| Net cash used in investing activities | (863,359 | ) | (40,000 | ) | ||||
| Net cash provided by financing activities | 2,309,845 | 3,029,142 | ||||||
| Effect of exchange rate changes | 315 | (71 | ) | |||||
| Net change in cash | (358,681 | ) | (181,646 | ) | ||||
| Cash and cash equivalents, at the beginning of period | 420,131 | 221,760 | ||||||
| Cash and cash equivalents, at the end of period | 61,450 | 40,114 | ||||||
Operating Activities
Net cash used in operating activities was approximately $1.8 million for the nine months ended September 30, 2025, which was mainly due to our net loss of approximately $6.0 million with non-cash items, including depreciation expense, provision for credit losses, amortization of debt issuance cost, stock compensation expense, non cash finance expense and amortization of operating right-of-use asset of approximately $1.4 million. Our cash outflow is mainly due to decrease in accounts payable of approximately $1.2 million due to decrease in our purchase from vendor. Our cash outflow is offset by cash inflow of approximately $1.1 million of inventory due to sold more on hand inventory, increase from other payable and accrued liabilities of approximately $1.9 million mainly consists of accrued professional fees and accrued interest on short term loans, long term loans and convertible notes. Additionally, approximately $0.8 million decreased in accounts receivable as our sales decreased.
Net cash used in operating activities was approximately $3.2 million for the nine months ended September 30, 2024, which was mainly due to our net loss of approximately $4.0 million after adjustment of non-cash items and increased accounts receivable of approximately $2.7 million due to increased revenue offset by cash inflow of approximately $1.3 million increased from accounts payable as we increased our purchase from vendors and approximately $1.7 million decreased in inventory as we used more on hand inventory.
Investing Activities
For the nine months ended September 30, 2025, net cash used in investing activities amount to approximately $900,000 which was primarily for deposit from investment of Future Tech of $721,000 and deposit from licensing fee of Datavault AI of $200,000.
For the nine months ended September 30, 2024, net cash used in investing activities amount to approximately $40,000 which was primarily for loan to Lakeshore of $40,000 prior to the Merger, offset by net proceed from reverse recapitalization of $197.
Financing Activities
Net cash provided by financing activities was approximately $2.3 million for the nine months ended September 30, 2025. The increase in net cash provided was primarily a result of proceeds from issuance of Series A and D preferred stock of approximately $0.7 million, 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 $2.0 million offset by repayments on short-term loan from third parties of approximately $0.8 million, repayments on convertible notes of approximately $0.7 million, repayments on short-term loan from related parties of approximately $0.2 million.
Net cash provided by financing activities was approximately $3.0 million for the nine months ended September 30, 2024. The main reason for the increase in net cash provided was primarily a result of net proceeds from short-term loan from third parties of $3.0 million, shares and warrants issued through July public offering of approximately $1.0 million, and convertible notes borrowing of approximately $0.8 million, offset by payments of deferred offering costs of approximately $0.3 million, repayments on long term loans which are mainly our car and mortgage loan of approximately $0.2 million, repayments on short-term loan from third parties of approximately $1.1 million, repayments on convertible notes of approximately $0.2 million.
Non-cash transactions
Non-cash transactions primarily consisted of asset acquisition via preferred stock issuance of approximately $9.4 million and asset acquisition via convertible note issuance of $3.0 million pursuant to the asset acquisition of Zak Properties, LLC, with preferred stock and a convertible note issued as consideration for the membership interests.
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.
53
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 4 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.
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.
54
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.
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 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.
55
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 September 30, 2025 and 2024, 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 December 2023, the FASB issued Accounting Standards Update No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”), which modifies the rules on income tax disclosures to require entities to disclose (1) specific categories in the rate reconciliation, (2) the income or loss from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (3) income tax expense or benefit from continuing operations (separated by federal, state and foreign). ASU 2023-09 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. ASU 2023-09 should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our consolidated financial statements and related disclosures.
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.
In November 2024, the FASB issued ASU 2024-04, Debt–Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversion of Convertible Debt Instruments (“ASU 2024–04”), which clarifies the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU 2024-04 is effective for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06, which includes the Company. Adoption can be on a prospective or retrospective basis. The Company adopted ASU 2024-04 effective January 1, 2025 on a prospective basis.
In July 2025, the FASB issued ASU 2025-05 Financial Instruments – Credit Losses (Subtopic 326) (“ASU 2025-05”), simplifies the Current Expected Credit Loss (CECL) model for receivables and contract assets by offering a practical expedient to use current conditions for forecasts and an accounting policy election to consider post-balance sheet collections, allowing for early adoption for financial statements not yet issued. The guidance is effective for annual reporting periods beginning after December 15, 2025, but early adoption is permitted. The Company plans to adopt the ASU prospectively for the year ended December 31, 2025.
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.
56
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 September 30, 2025. 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 September 30, 2025, 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; (viii) a lack of controls over income tax and (ix) lack of controls for performing due diligence on new acquisitions. 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.
57
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
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. There were no reportable litigation events and there have been no material developments to litigation events previously disclosed in our SEC filings during the quarter ended September 30, 2025.
ITEM 1A. RISK FACTORS
As a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934, as amended, 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. In any event, there have been no material changes in our risk factors as previously disclosed in our final prospectus, dated July 15, 2025, filed with the SEC on July 17, 2025.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
(A) Unregistered Sales of Equity Securities
On July 24, 2025, the Company entered into debt-to-equity conversion agreements (the “Agreements”) with Tie (James) Li (“Mr. Li”), Zhiyi Zhang (“Mr. Zhiyi Zhang”), George Yutuc (“Mr. Yutuc”), and Peng Zhang (“Mr. Peng Zhang”). Pursuant to the Agreements, wages and salaries owed and unpaid to Mr. Li, Mr. Zhiyi Zhang, and Mr. Yutuc were converted into shares of common stock of the Company based on the trading price of $0.1305, the price at the end of the signing date of the Agreements. Pursuant to the Agreement with Mr. Li, the parties agreed that his unpaid wages and salaries through July 23, 2025, or $673,476, be converted into 5,160,739 shares of common stock of the Company. Pursuant to the Agreement with Mr. Zhiyi Zhang, the parties agreed that his unpaid wages and salaries through July 23, 2025, or $406,691, be converted into 3,111,408 shares of common stock of the Company. Pursuant to the Agreement with Mr. Yutuc, the parties agreed that 50% of his wages and salaries from February 2025 to June 30, 2025, or $52,083, be converted into 399,106 shares of common stock of the Company. Mr. Li is the Company’s chief executive officer, Mr. Zhang is the Company’s president, and Mr. Yutuc is the Company’s chief financial officer. Pursuant to the Agreement with Mr. Peng Zhang, debt owed on a note issued to Mr. Peng Zhang by the Company in an outstanding amount of $560,000 was converted into 4,291,188 shares of common stock of the Company based on the trading price of $0.1305, the price at the end of the signing date of the Agreement.
On August 5, 2025, the Company entered into a securities purchase agreement (the “SPA”) with Firstfire Global Opportunities Fund, LLC, a Delaware limited liability company (“FirstFire”), pursuant to which the Company sold, and FirstFire purchased, (i) a convertible promissory note in the principal amount of $172,500 (the “Note”), and (ii) 200,000 shares of Class A common stock, par value $0.0001, of the Company (the “Commitment Shares”), for an aggregate purchase price of $150,000 (the “Transaction”). The Note matures 12 months following the issue date, accrues interest of 10% per annum (with the first 12 months of interest guaranteed and earned in full as of issuance of the Note), and is unsecured. The Note is convertible into shares of the Company’s common stock at the election of the holder at a conversion price equal to 75% of the lowest traded price during the 10 trading days prior to the conversion date, subject to adjustment as set forth in the Note, including upon the Company failing to make amortization payments or upon an event of default; provided, however, that the holder may not convert the Note to the extent that such conversion would result in the holder’s beneficial ownership of the Company’s common stock being in excess of 4.99% of the Company’s issued and outstanding common stock.
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 401-405 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 (the “Purchase Price”) was $17,500,000, and was paid by the Company as follows: (i) on October 16, 2025, the Company issued 5,000 shares of Series B Preferred Stock (valued at $5,000,000) of the Company which (a) can be converted into Common Stock, par value $0.0001 per share, of the Company (“Common Stock”) at $0.1180 per share and (b) have certain voting rights equal to twenty (20) votes per one (1) share of Series B Preferred Stock; (ii) on October 16, 2025, the Company issued 9,500 shares of Series C Preferred Stock (valued at $9,500,000) of the Company which are convertible into shares of Common Stock at $0.1180 per share; and (iii) on September 18, 2025, the Company issued a convertible promissory note (the “Note”) in the principal amount of $3,000,000 in favor of Big Lake with a term of two years from the date of issuance and interest in the amount of 10% per annum.
58
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 2,000 shares of Series D preferred stock, $0.0001 par value per share (the “Series D Shares”), at a purchase price of $1,000 per Series D Share. On the initial closing date of October 16, 2025, the Series D Investor purchased five hundred (500) Series D Shares for a purchase price of $500,000. The second closing will be for the purchase of five hundred (500) Series D Shares for the aggregate purchase price of $500,000 before October 30, 2025 and the third and final closing will be for the purchase of one thousand (1,000) Series D Shares for the aggregate purchase price of $1,000,000 prior to the Company’s application for uplisting to the NYSE or Nasdaq. The Series D Shares have a stated value of $1,000 per share (the “Stated Value”), and shall bear dividends at the rate of 8% per annum, for so long as the Series D Shares have not been redeemed or converted. The Series D Shares are convertible into shares of Common Stock of the Company at a conversion price of $0.1180 as set forth in in the Certificate of Designations previously filed with the State of Delaware.
On October 10, 2025, the Company entered into a Securities Purchase Agreement (the “SPA”) with GHS Investments, LLC, a Nevada limited liability company (the “Series A Investor”) (the “Investor”), whereby the Investor agreed to purchase 50 shares of the Company’s existing Series A preferred stock, $0.0001 par value per share (the “Series A Shares”), in consideration of the Series A Investor’s consent for the Company to enter into previously disclosed transactions including: (A) creating the Series B Convertible Preferred Stock, Series C Convertible Preferred Stock and Series D Convertible Preferred Stock, (B) issuing 5,000 shares of the Series B Stock (which contain 20-1 super voting rights), 9,500 shares of the Series C Stock in a transaction pursuant to which the Company will acquire certain assets owned by James Li, the Company’s Chief Executive Officer, and (C) issuing a promissory note in favor of an affiliate of James Li in the aggregate principal amount of $3,000,000. The Series A Shares were issued on October 16, 2025 and have a stated value of $1,200 per share (the “Stated Value”), and bear dividends at the rate of 12% per annum, for so long as the Series A Shares have not been redeemed or converted. The Series A Shares are convertible into shares of Common Stock of the Company at a conversion price of $0.112.
In connection with the foregoing, the Company relied on the exemption from the registration requirements provided by Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. No underwriters were used in the transactions above.
(B) Use of Proceeds
Not applicable.
(C) Issuer Purchases of Equity Securities
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not Applicable.
ITEM 5. OTHER INFORMATION
59
ITEM 6. EXHIBITS
EXHIBIT INDEX
| ** | Filed herewith. |
| ** | Exhibits 31.1, 31.2 and 32.1 are 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 exhibits 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. |
60
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: April 14, 2026 | /s/ Tie (James) Li |
| Tie (James) Li | |
| Chief Executive Officer (Principal Executive Officer) | |
| Dated: April 14, 2026 | /s/ George Yutuc |
| George Yutuc | |
| Chief Financial Officer (Principal Financial and Accounting Officer) |
61