Nature's Miracle Holding, Inc. Announces Up to $29.7 Million Financing

Rhea-AI Summary

Nature's Miracle Holding (Nasdaq: NMHI) has entered into a Securities Purchase Agreement (SPA) with an institutional investor on January 10, 2025, enabling the company to sell up to $29.7 million in convertible preferred stock.

The funding will be available in tranches, with an initial tranche of $2.7 million split into two parts: $1.8 million funded within one business day after closing and $900,000 following registration statement effectiveness. Subsequent tranches of up to $27 million may be funded in $2.7 million increments, subject to specific conditions including minimum trading volume of $500,000, daily VWAP above $1.50, and a 60-day waiting period between tranches.

The investor will receive warrants to purchase common stock with each tranche funding. The agreement includes requirements for effective registration of convertible shares and limitations on outstanding preferred stock value.

Positive

• Access to significant funding of up to $29.7 million to support growth
• Structured tranche system provides financial flexibility
• Initial funding of $2.7 million available in near term

Negative

• Potential dilution for existing shareholders due to convertible preferred stock and warrants
• Strict conditions for subsequent tranches including stock price and volume requirements
• Future funding dependent on maintaining $1.50 stock price minimum

Insights

Financial Analyst

The announced $29.7 million financing deal through convertible preferred stock represents a significant capital injection mechanism for Nature's Miracle, though structured with careful investor protections. The initial tranche of $2.7 million is split into two parts, with $1.8 million available immediately and $900,000 contingent on registration effectiveness.

The subsequent tranches' conditions are notably stringent, requiring:

• Daily trading volume exceeding $500,000
• VWAP above $1.50
• Maximum $1 million outstanding convertible preferred stock

These requirements effectively create a performance-based funding structure that protects the investor while incentivizing strong market performance.

With a current market cap of approximately $5 million, this financing could theoretically represent a 594% capital increase if fully utilized. However, the 60-day spacing requirement between tranches means full utilization would take at least 600 trading days, assuming all conditions are met. The warrant component adds potential dilution but also provides additional upside participation for the investor.

Market Structure Specialist

This financing structure employs a sophisticated PIPE (Private Investment in Public Equity) mechanism with built-in market stability safeguards. The $500,000 daily volume requirement and $1.50 VWAP threshold create a natural ceiling on dilution rate while ensuring market liquidity. The 20-day measurement period for these metrics reduces manipulation risk.

The $1 million cap on outstanding convertible preferred stock is particularly noteworthy - it forces conversion before additional tranches can be drawn, preventing accumulation of conversion rights. This structure suggests the deal is designed for gradual, market-driven capital deployment rather than aggressive short-term funding.

ONTARIO, Calif., Jan. 13, 2025 /PRNewswire/ -- Nature's Miracle Holding, Inc. (Nasdaq: NMHI) ("Nature's Miracle"), a growing agriculture technology company providing equipment and services to growers,  announced that it entered into a Securities Purchase Agreement ("SPA") with a single institutional investor ("Investor") on January 10, 2025. The SPA allows Nature's Miracle, subject to customary conditions, to sell up to $29.7 million in the aggregate of a newly-designated class of convertible preferred stock to the Investor. 

The Investor agreed to provide Nature's Miracle up to $29.7 million available in tranches. The initial tranche in the amount of $2,700,000 will be funded with $1,800,000 funded within one business day following Closing and the remaining $900,000 funded within one business day following the date on which the shares of common stock into which the shares of convertible preferred stock are convertible are registered for resale pursuant to an effective registration statement. Subsequent tranches of up to $27,000,000 may be funded in increments of up to $2,700,000 per tranche subject to certain conditions. The Investor will also receive certain warrants to purchase shares of common stock upon the funding of each tranche.

The funding of each subsequent tranche are not expected to occur earlier than 60 trading days after the funding of the prior tranche (except that the first subsequent tranche may be funded 30 trading days following the date on which the shares of common stock into which the shares of convertible preferred stock are convertible are registered for resale pursuant to an effective registration statement), in each case, subject to certain conditions including: (i) for each day of the Measurement Period, the average daily volume is greater than $500,000, (ii) for each day of the Measurement Period, the daily volume weighted average price of the Nature's Miracle's common stock is greater than $1.50, (iii) the aggregate stated value of the outstanding shares of convertible preferred stock held by the Investor is no greater than $1,000,000 (iv) the shares of common stock underlying the applicable shares of convertible preferred stock held by the Investor are registered pursuant to an effective registration statement, and (v) certain other conditions customary for a transaction of this nature. "Measurement Period" means the 20 trading days immediately preceding the applicable funding date.

For more information, please visit Nature's Miracle website: https://www.nature-miracle.com/ or email Nature's Miracle at: info@nature-miracle.com. For more information on the SPA, including important terms and conditions, please see Nature's Miracle's filings with the Securities and Exchange Commission, including its Current Reports on Form 8-K filed with the Securities and Exchange Commission from time to time.

This communication shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the securities discussed herein, in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction.

About Nature's Miracle Holding Inc.

Nature's Miracle (www.Nature-Miracle.com) is a growing agriculture technology company providing equipment and services to growers in the Controlled Environment Agriculture ("CEA") industry which also includes vertical farming in North America. Nature's Miracle offers hardware to design, build and operate various indoor growing settings including greenhouse and indoor-growing spaces. Nature's Miracle, through its two wholly-owned subsidiaries (Visiontech Group, Inc. and Hydroman, Inc.), provides grow lights as well as other hydroponic products to hundreds of indoor growers in North America. Nature's Miracle has also developed a robust pipeline to build commercial-scale greenhouse in the U.S. and Canada to meet the growing needs of fresh and local vegetable products. Nature's Miracle has established its first manufacturing footprint in North America with its grow-light assembly plant in Manitoba, Canada and is expected to set up additional manufacturing/assembly facilities in North America.

Forward-Looking Statements

The information in this press release includes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include, but are not limited to, statements regarding expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words "anticipate," "believe," "contemplate," "continue," "could," "estimate," "expect," "forecast," "intends," "may," "will," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this press release may include, for example: the closing of the offering, intended use of proceeds from the offering; successful launch and implementation of NMHI's joint projects with manufacturers and other supply chain participants of steel, rubber and other materials; changes in NMHI's strategy, future operations, financial position, estimated revenues and losses, projected costs, prospects and plans; NMHI's ability to develop and launch new products and services; NMHI's ability to successfully and efficiently integrate future expansion plans and opportunities; NMHI's ability to grow its business in a cost-effective manner; NMHI's product development timeline and estimated research and development costs; the implementation, market acceptance and success of NMHI's business model; developments and projections relating to NMHI's competitors and industry; and NMHI's approach and goals with respect to technology. These forward-looking statements are based on information available as of the date of this press release, and current expectations, forecasts and assumptions, and involve a number of judgments, risks and uncertainties. Accordingly, forward-looking statements should not be relied upon as representing views as of any subsequent date, and no obligation is undertaken to update forward-looking statements to reflect events or circumstances after the date they were made, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws. As a result of a number of known and unknown risks and uncertainties, actual results or performance may be materially different from those expressed or implied by these forward-looking statements. Some factors that could cause actual results to differ include: the ability to maintain the listing of the Company's shares on Nasdaq; changes in applicable laws or regulations; the effects of the COVID-19 pandemic on NMHI's business; the ability to implement business plans, forecasts, and other expectations, and identify and realize additional opportunities; the risk of downturns and the possibility of rapid change in the highly competitive industry in which NMHI operates; the risk that NMHI and its current and future collaborators are unable to successfully develop and commercialize NMHI's products or services, or experience significant delays in doing so; the risk that the Company may never achieve or sustain profitability; the risk that the Company will need to raise additional capital to execute its business plan, which may not be available on acceptable terms or at all; the risk that the Company experiences difficulties in managing its growth and expanding operations; the risk that third-party suppliers and manufacturers are not able to fully and timely meet their obligations; the risk that NMHI is unable to secure or protect its intellectual property; the possibility that NMHI may be adversely affected by other economic, business, and/or competitive factors; and other risks and uncertainties described in NMHI's filings from time to time with the Securities and Exchange Commission.

Contacts

Nature's Miracle Holding, Inc.
Investor Relations Department
ir@nature-miracle.com 

Ascent Investor Relations LLC
Tina Xiao
Phone: +1-646-932-7242
Email: investors@ascent-ir.com 

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SOURCE Nature's Miracle Holding Inc.

FAQ

What is the total value of Nature's Miracle (NMHI) new financing agreement?

Nature's Miracle has secured a financing agreement for up to $29.7 million through convertible preferred stock sales to an institutional investor.

How much is the initial funding tranche for NMHI's January 2025 financing?

The initial tranche is $2.7 million, with $1.8 million funded within one business day after closing and $900,000 following registration effectiveness.

What are the conditions for NMHI to receive subsequent funding tranches?

Subsequent tranches require average daily trading volume over $500,000, daily VWAP above $1.50, outstanding convertible preferred stock under $1 million, and effective registration of underlying shares.

What is the waiting period between funding tranches for NMHI's 2025 financing?

There is a 60-day waiting period between subsequent tranches, except for the first subsequent tranche which can be funded 30 days after registration effectiveness.

What additional securities will NMHI investors receive with the funding?

Investors will receive warrants to purchase common stock with each tranche funding under the agreement.