SCHEDULE: Nature's Miracle CEO and Affiliate Boost Stake Through Debt-to-Equity Conversions

Nature's Miracle Holding Inc.'s CEO, Tie (James) Li, and his affiliate, Big Lake Capital LLC, significantly increased their beneficial ownership through the conversion of unpaid wages and a convertible promissory note into common stock.

Summary

• Tie (James) Li, CEO and Chairman of Nature's Miracle Holding Inc., and Big Lake Capital LLC, an entity he manages, have increased their combined beneficial ownership to 9,018,286 shares, representing 36.5% of the company's common stock.
• Mr. Li converted $673,476 of unpaid wages and salaries into 5,160,739 shares of common stock at a conversion price of $0.1305 per share on July 24, 2025.
• Big Lake Capital LLC converted $678,290 of principal from a convertible promissory note, plus $20,718 in accrued interest, into 3,425,706 shares of common stock at a conversion price of $0.1980 per share on July 25, 2025.
• The convertible promissory note, entered into on April 11, 2025, allows Big Lake Capital to lend up to $2,000,000 to the company at a 10% monthly interest rate, expiring on April 11, 2026.
• Big Lake Capital is also entitled to receive warrants to purchase up to 10,010,101 shares of common stock at an exercise price of $0.198, assuming the full $2 million is funded.
• All share numbers reflect a 1-for-30 reverse stock split effected on November 21, 2024.
• The total number of common shares issued and outstanding as of July 25, 2025, is 23,520,742.

Sentiment

Score: 4

Explanation: The sentiment is mixed to slightly negative. While debt reduction through equity conversion is positive for the balance sheet, the very low conversion prices and the reliance on insider funding (unpaid wages, related-party loans) suggest underlying financial strain and significant dilution for existing shareholders. The potential for further dilution from warrants and future conversions also weighs on sentiment.

Positives

• The conversion of debt (unpaid wages and a promissory note) into equity reduces the company's liabilities and improves its balance sheet liquidity.
• Increased insider ownership by the CEO and a related entity demonstrates a commitment to the company's future and aligns management's interests with shareholders.

Negatives

• The debt-to-equity conversions result in significant dilution for existing shareholders, as new shares are issued at relatively low conversion prices ($0.1305 and $0.1980 per share).
• The need to convert unpaid wages and rely on insider loans suggests potential ongoing financial challenges or limited access to external capital for the company.

Risks

• Future dilution risk exists from the remaining unfunded portion of the $2,000,000 convertible promissory note and the associated warrants, which could lead to the issuance of up to 10,010,101 additional shares.
• The company's reliance on related-party financing and debt-to-equity conversions indicates potential financial distress or difficulty securing traditional funding.
• Mr. Li, as CEO and Chairman, has significant influence over corporate activities, including potential future extraordinary corporate transactions such as mergers, reorganizations, or take-private transactions, which could impact minority shareholders.

Future Outlook

Mr. Li, as CEO and Chairman, may acquire additional securities or sell existing holdings. He may also engage in discussions with management, the Board, and other securityholders to explore extraordinary corporate transactions, including mergers, reorganizations, take-private transactions, asset sales, changes to capitalization or dividend policy, or changes in management or Board composition. No present plans for these actions are stated, but the reporting persons retain the right to change their investment intent.

Industry Context

This filing primarily details changes in insider ownership and financing arrangements, which are internal corporate actions. It does not provide specific information to analyze broader industry trends or competitive positioning. However, debt-to-equity conversions and reliance on insider funding can be a common strategy for smaller companies or those facing financial constraints within any industry, particularly in challenging economic environments, to manage liquidity and reduce debt burden.

Related Party Transactions

• Tie (James) Li, the CEO and Chairman, converted $673,476 of his unpaid wages and salaries into 5,160,739 shares of common stock.
• Big Lake Capital LLC, managed by Tie (James) Li, entered into a Convertible Promissory Note with the company and subsequently converted $678,290 of principal plus accrued interest into 3,425,706 shares of common stock. This also includes the potential for warrants to purchase additional shares.

Stakeholder Impact

• Shareholders: Experience significant dilution due to the issuance of new shares at low conversion prices. However, the reduction of company debt may be viewed positively.
• Creditors: The conversion of debt to equity reduces the company's liabilities, potentially improving its credit profile.
• Employees (specifically Mr. Li): Mr. Li's unpaid wages were converted into equity, indicating a willingness to support the company's financial health through personal investment.

Next Steps

• Big Lake Capital LLC may fund additional tranches of the Convertible Promissory Note up to the $2,000,000 maximum.
• Big Lake Capital LLC may convert additional amounts funded under the Convertible Promissory Note into common stock.
• Big Lake Capital LLC may exercise warrants to purchase up to 10,010,101 shares of common stock.
• Mr. Li may acquire additional securities or sell existing holdings in the open market or privately negotiated transactions.
• Mr. Li may engage in discussions regarding potential extraordinary corporate transactions, including mergers, reorganizations, or changes to the company's structure or management.

Key Dates

Recommendation

The filing indicates a company undergoing significant financial restructuring, relying on insider funding and debt-to-equity conversions at low prices. While debt reduction is positive, the substantial dilution and the underlying need for such financing suggest ongoing challenges. The increased insider ownership provides some stability but also concentrates control. A 'hold' recommendation is appropriate as the situation presents both potential for stabilization (debt reduction) and significant risks (dilution, financial distress). Investors should monitor future financial performance and strategic developments closely before making further commitments.

Keywords

Nature's Miracle Holding Inc., NMHI, Schedule 13D, beneficial ownership, debt-to-equity conversion, convertible promissory note, insider ownership, Tie (James) Li, Big Lake Capital LLC, reverse stock split, corporate finance, dilution, SEC filing