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Organization and Nature of Operations

6 Months Ended

Jun. 30, 2023

Organization and Nature of Operations [Abstarct]

Organization and nature of operations

1.

Organization and nature of operations

Nano Labs Ltd (“Nano Labs”), incorporated on January 8, 2021, is a holding company, as an exempted company with limited liability in the Cayman Islands. Nano Labs principally engages in fabless integrated circuit (“IC”) design and sale of product solutions by integrating its self-designed IC products in the People’s Republic of China (“PRC”) and other countries and regions. The Company utilizes third-party suppliers to fabricate, pack and test the IC products.

Prior to the incorporation of the Company, the Company’s business was carried out by Zhejiang Haowei Technology Co., Ltd. (“Zhejiang Haowei”) and its subsidiaries. Zhejiang Haowei was established by Mr. Jianping Kong, the principal shareholder, chairman and chief executive officer, in July 2019. Nano Labs underwent a series of onshore and offshore reorganizations, which were completed in September 2021 (the “Reorganization”).

Immediately before and after the Reorganization, the controlling shareholders of Zhejiang Haowei controlled Zhejiang Haowei and Nano Labs; therefore, for accounting purposes, the Reorganization is accounted for as a transaction of entities under common control. Accordingly, the accompanying unaudited consolidated financial statements have been prepared as if the current corporate structure had been in existence throughout the periods presented. The number of outstanding shares in the unaudited consolidated balance sheets, the unaudited consolidated statements of changes in shareholders’ equity (deficit), and per share information including the net income (loss) per ordinary share have been presented retrospectively as of the beginning of the earliest period presented on the unaudited consolidated financial statements to reflect the final shares issued in the Reorganization.

The Company does not conduct any substantive operations on its own but instead conducts its business operations through its subsidiaries. The Company’s major subsidiaries are as follows:

Name of subsidiaries		Date of incorporation		Place of incorporation		Ownership percentage		Principal activities
Zhejiang Haowei Technology Co., Ltd. (“Zhejiang Haowei”)		July 16, 2019		Hangzhou, China		100%		Research and development of ICs
Zhejiang Nanomicro Technology Co., Ltd. (“Zhejiang Nanomicro”)		July 16, 2019		Hangzhou, China		100%		Research and development of ICs
Zhejiang NanoBlock Technology Co., Ltd.		July 16, 2019		Hangzhou, China		100%		Research and development of ICs
Zhejiang Ipollo Technology Co., Ltd.		August 18, 2020		Hangzhou, China		100%		Distribution of products
Nano Labs HK Limited		September 8, 2020		Hong Kong		100%		Investment
Nano Labs Inc		December 22, 2020		BVI		100%		Investment
Zhejiang Weike Technology Co., Ltd.		June 2, 2021		Hangzhou, China		100%		Research and development of software
IPOLLO PTE. LTD. (formerly IPOLLO MINER PTE.LTD.)		June 9, 2021		Singapore		100%		Distribution of products
Ipollo Tech Inc		June 29, 2021		BVI		100%		Investment
Nano Tech Cayman Ltd		July 6, 2021		Cayman		100%		Investment
Nano Technology HK Limited		July 7, 2021		Hong Kong		100%		Investment
Ipollo HK Limited		July 7, 2021		Hong Kong		100%		Distribution of products
Zhejiang Metaverse Technology Co., Ltd.		August 12, 2021		Hangzhou, China		100%		Investment
Ipollo Tech Ltd		October 27, 2021		Cayman		100%		Investment
Haowei Technology (Shaoxing) Co., Ltd.		November 3, 2021		Shaoxing, China		100%		Investment
Shenzhen Matamata Technology Co., Ltd.		November 17, 2021		Shenzhen, China		100%		Distribution of products
Shenzhen Matavos Technology Co., Ltd.		December 21, 2021		Shenzhen, China		100%		Distribution of products
Tsuki Inc		January 7, 2022		United States		100%		Distribution of products
Metaski (Shaoxing) Technology Co., Ltd.		January 13, 2022		Shaoxing, China		100%		Distribution of products
Haoweiverse (Shaoxing) Technology Co., Ltd.		January 13, 2022		Shaoxing, China		65%		Plant and distribution of products
Metameta (Shaoxing) Technology Co., Ltd.		January 25, 2022		Shaoxing, China		100%		Distribution of products
Ipolloverse HK Limited		May 18, 2022		Hong Kong		70%		Research and development
Metaverse (Shaoxing) Technology Co., Ltd.		May 20, 2022		Shaoxing, China		100%		Distribution of products
Ipolloverse Cayman Ltd		May 27, 2022		Cayman		70%		Investment
Ipolloverse Tech Inc		May 30, 2022		BVI		70%		Investment
Hangzhou Meta Technology Co., Ltd.		October 21, 2022		Hangzhou, China		100%		Distribution of products

Nano Labs and its consolidated subsidiaries are collectively referred to herein as the “Company”, “we” and “us”, unless specific reference is made to an entity.

Liquidity

During the six months ended June 30, 2023, the Company incurred net loss of RMB134 million, and the net cash used in operating activities was RMB35 million. As of June 30, 2023, the Company had a working capital deficit of RMB59 million and accumulated deficit of RMB334 million. Historically, the Company has relied principally on both operational sources of cash and non-operational sources of financing from investors to fund its operations and business development. In July 2023, the Company entered into a total of US$10 million (approximately RMB72 million) promissory notes (the “Loans”) with two related parties. In September 2023, the loans were converted into an aggregate of 19,157,087 Class A ordinary shares of the Company for no additional consideration. The Company is also actively raising funds from outside investors. Moreover, the Company can adjust the pace of its operation expansion and control the operating expenses.

As a result, the Company’s cash flow projections for the period after one year the date that the unaudited consolidated financial statements are issued indicate that the Company’s existing cash and cash equivalents, together with the proceeds from Loans mentioned above, will be sufficient to cover the liquidity needs that become due within one year after the date that the unaudited financial statements are issued. The Company may need additional capital in the future to fund the continued operations of the Company. There can be no assurance that the Company will be successful in acquiring additional financing, that the Company’s projections of its future working capital needs will prove accurate, or that any additional financing would be sufficient to continue operations in future years.