Nature's Miracle Holding Inc. (NASDAQ:NMHI), a farm machinery and equipment company facing significant financial challenges with a negative EBITDA of $8.1 million in the last twelve months, has entered into a high-interest loan agreement as per a recent 8-K filing with the Securities and Exchange Commission.
According to InvestingPro data, the company's stock has declined by 99% over the past year, reflecting ongoing operational difficulties. On Monday, the company disclosed the details of a $311,000 loan agreement with Maximcash Solutions LLC, which includes a notable $11,000 origination fee.
The loan, dated December 30, 2024, bears a steep interest rate of 51.64% with an annual percentage rate of 59.40%, and is set to mature on January 14, 2026. Nature's Miracle has committed to biweekly payments of $15,430.38 over a 12-month term, totaling a repayment amount of $401,190.
The agreement allows for a 5% interest reduction on any prepayment of the loan, although 95% of the remaining unpaid interest will still be due. If the loan is repaid in full within 90 days, the total repayment amount will be reduced to $349,875, provided no default has occurred.
As part of the security for the loan, Nature's Miracle has also issued 311,000 shares of its common stock to the lender. These "Pledge Shares" could be subject to a registration statement for resale by the lender in the event of a default.
The company is also restricted from entering into any cash advance agreements or loans with interest rates above 10% during the term of the agreement, with the exception of bank loans or arrangements that facilitate repayment to Maximcash Solutions.
This financial move comes as the company, previously known as LBBB Merger Corp. before a name change on September 22, 2022, navigates its business strategy. The terms of the loan, especially the high-interest rate and the collateral in company stock, highlight the aggressive financing measures taken by the company. With a high total debt to capital ratio of 0.67 and declining revenues (-3.43% year-over-year), the company's financial health score on InvestingPro remains weak at 0.42.
In other recent news, Nature's Miracle Holding Inc. has made several strategic moves to diversify its business and strengthen its financial position. The company has acquired a majority stake in Bitcoin mining company J&Y Marigold Ltd. and established a new subsidiary, NM Data Inc., to develop Bitcoin mining facilities. Additionally, Nature's Miracle entered into a significant investment agreement with Future Tech Incorporated to construct a new data center and vertical farming facility.
The company has also made changes to its leadership, appointing Daphne Y. Huang as Chief Financial Officer and George Yutuc as Chief Operating Officer. These appointments are expected to bolster the company's long-term growth and operational efficiency.
Furthermore, Nature's Miracle converted $2 million of its debt into equity and implemented a 1-for-30 reverse stock split in response to a Nasdaq delisting notice due to non-compliance with minimum bid price requirements. The company also outlined terms for a public offering aiming to raise approximately $3 million, managed by D. Boral (OTC:BOALY) Capital LLC.
On the strategic front, the company rebranded its subsidiary, Hydroman Inc., to Hydroman Electric Corporation, signaling a shift towards the electric vehicle sector. Nature's Miracle also secured a $5.1 million sales agreement with What Rebates LLC and a $2.4 million purchase order from a major indoor grower in California for its Efinity brand grow lights. However, plans for a merger with Agrify Corporation have been mutually terminated.
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