10-K: Natures Miracle Holding Inc. Reports Significant Revenue Drop

Natures Miracle Holding Inc. experienced an 81.2% decrease in revenue for the fiscal year ended December 31, 2025, primarily due to inventory constraints.

Summary

• Natures Miracle Holding Inc. reported an 81.2% decrease in revenue for the fiscal year ended December 31, 2025, with revenues falling to $1.74 million from $9.26 million in the prior year.
• This significant decline was attributed to cash constraints that limited inventory purchases, forcing the company to sell from existing stock.
• The company also reported a gross loss of $451,038 for 2025, an improvement from the $2.8 million gross loss in 2024, attributed to reduced inventory write-offs.
• Selling, general, and administrative expenses decreased by 31.6% due to lower stock compensation, professional fees, and payroll expenses.
• However, the provision for credit losses increased substantially by 345.0%.
• The company ended the year with a net loss of $11.99 million, a slight improvement from the $13.65 million net loss in 2024.
• Natures Miracle Holding Inc. continues to face substantial doubt about its ability to continue as a going concern due to recurring operating losses and negative cash flows.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to the substantial revenue decline, ongoing net losses, and the explicit statement of substantial doubt regarding the company's ability to continue as a going concern.

Positives

• Gross loss decreased to $451,038 in 2025 from $2,805,195 in 2024, with the gross loss as a percentage of revenue improving from -30.3% to -25.9%.
• Selling, general, and administrative expenses were reduced by 31.6% to $4.88 million in 2025, driven by decreased stock compensation, professional fees, and payroll expenses.
• The company has a $20 million equity financing program (ELOC) with GHS Investment that was declared effective by the SEC, providing potential access to working capital.
• The acquisition of Zak Properties LLC in September 2025 is expected to strengthen the balance sheet, generate rental income, and provide a steadier cash flow stream.

Negatives

• Revenue for the year ended December 31, 2025, decreased by 81.2% to $1,742,360 compared to $9,261,583 in 2024, primarily due to cash constraints limiting inventory purchases.
• Cost of revenue decreased by 81.8% to $2,193,398, but still resulted in a gross loss.
• The company wrote off $544,469 of inventory in 2025 due to obsolescence.
• Provision for credit losses increased by 345.0% to $1,818,151, largely due to the full write-off of the balance due from Iluminar.
• Interest expense increased significantly to $3,375,272 in 2025 from $2,301,600 in 2024 due to multiple convertible notes and high-interest loans.
• The company has a working capital deficit of $22,299,535 as of December 31, 2025.
• The company's common stock is trading on the OTC Markets Group, Inc. (OTC) Pink Market after being delisted from Nasdaq.
• The company received a notice from OTC Markets that it is in violation of the minimum trading price of $0.01 for 30 consecutive days and has 90 days to cure this deficiency.

Risks

• Substantial doubt exists about the company's ability to continue as a going concern due to recurring operating losses and negative cash flows.
• The company faces liquidity constraints and an ongoing need to raise additional cash to fund its expansion plans and operations.
• Competitors may develop more effective or commercially attractive products, and the company may not successfully develop or improve its own products.
• Negative economic conditions in the United States and Canada could adversely affect the company's business, leading to declining revenues and profitability.
• The company sources 100% of its products from suppliers, many of whom are located internationally, exposing it to risks associated with currency fluctuations, local regulations, and potential supply chain disruptions.
• The company's reliance on a limited base of suppliers poses a risk of business disruptions and adverse financial results.
• Failure to comply with cybersecurity measures, as the company currently lacks formalized measures, could leave it vulnerable to cyberattacks and data breaches.
• The company's stock is trading on the OTC Markets Group, Inc. (OTC) Pink Market, which could reduce liquidity and market price, and limit its ability to raise equity financing.
• The company is subject to litigation, including a lawsuit from Megaphoton and Growterra, which could result in significant costs and divert management's attention.

Future Outlook

The company expects revenue to improve once inventory levels are restored, supported by ongoing financing efforts. Management is focused on product development and expanding supplier relationships. The company is also exploring joint ventures in other industry verticals.

Management Comments

• Management expects the revenue situation to improve once inventory levels are restored.
• The company is seeking additional financing in the fourth quarter to replenish inventory.
• Management has determined that conditions raise substantial doubt about the company's ability to continue as a going concern within one year.
• The company is in the process of evaluating its cybersecurity needs and developing appropriate measures to enhance its cybersecurity posture.

Industry Context

StockSavvy.ai notes that Natures Miracle Holding Inc. operates in the Controlled Environment Agriculture (CEA) sector, which is experiencing growth driven by demand for year-round crop supply and increased efficiency. However, the company's significant revenue decline and ongoing financial challenges highlight the competitive and capital-intensive nature of this industry.

Management Changes

Legal Proceedings

• Megaphoton filed lawsuits alleging breach of contract/guarantee agreement for failure to pay $6,857,167; Natures Miracle filed a counter-suit.
• Vien Le filed a lawsuit claiming wrongful discharge, untimely payment of wages, and other related items.
• Growterra, LLC filed a complaint alleging breach of contract, fraud, and misappropriation of trade secrets.
• Visiontech filed a cross-complaint against Beverly Hills View, Inc. (BHV) in response to BHV's claim for $2,500,000 in damages due to unsuitable lighting products.

Related Party Transactions

• Purchases from Iluminar Lighting LLC: $58,030 in 2025 and $56,671 in 2024.
• Accounts payable to Iluminar Lighting LLC: $366,437 as of December 31, 2025.
• Revenue from Iluminar Lighting LLC: $76,038 in 2025 and $1,593,926 in 2024.
• Accounts receivable from Iluminar Lighting LLC: nil as of December 31, 2025, compared to $976,449 in 2024.
• Loan receivable from Big Lake Capital LLC: $605,000 as of December 31, 2025.
• Deferred income - contract liabilities from Iluminar: $86,468 as of December 31, 2025.
• Other payables to NMCayman: $170,000 as of December 31, 2025.
• Other payables to Zhiyi (Jonathan) Zhang: $26,533 as of December 31, 2025.
• Short-term loans from Tie (James) Li: $0 as of December 31, 2025, compared to $60,000 in 2024.
• Convertible promissory note with Big Lake Capital LLC for up to $2,000,000, with $64,414 outstanding as of December 31, 2025.
• Convertible promissory note with Big Lake Capital LLC for $3,000,000 related to the Zak Properties acquisition, with $3,000,000 outstanding as of December 31, 2025.

Stakeholder Impact

• Shareholders may experience dilution due to ongoing equity and debt financing activities.
• The company's delisting from Nasdaq and trading on OTC Markets could negatively impact investor confidence and stock liquidity.
• The company's financial condition and going concern issues may impact the ability to meet obligations to creditors and suppliers.
• Employees may be affected by cost-cutting measures, such as reduced headcount, and the overall financial instability of the company.

Next Steps

• Replenish inventory to improve revenue.
• Seek additional financing to fund expansion plans and operations.
• Develop new products and expand product offerings.
• Evaluate and potentially engage external cybersecurity experts.
• Implement remedial measures to address material weaknesses in internal controls.

Key Dates

Recommendation

The company's significant revenue decline, substantial net losses, and explicit statement of doubt regarding its ability to continue as a going concern, coupled with its delisting from Nasdaq and trading on OTC, present a high-risk investment profile. While there are efforts to secure financing and improve operations, the current financial health and operational challenges suggest a sell recommendation.

Keywords

Natures Miracle Holding Inc., Form 10-K, Annual Report, Controlled Environment Agriculture, CEA, Indoor Farming, Grow Lights, LED Fixtures, Hydroman, Visiontech, Zak Properties, Financial Results, Revenue Decline, Gross Loss, Operating Expenses, Net Loss, Going Concern, Liquidity, Convertible Notes, Related Party Transactions, Stock Compensation, Nasdaq Delisting, OTC Markets