Unrestricted Net Assets

12 Months Ended

Dec. 31, 2023

Restrictions for Consolidated and Unconsolidated Subsidiaries [Abstract]

19.	UNRESTRICTED NET ASSETS

The following presents condensed financial information of Northann Corp:

Condensed Financial Information on Financial Position

	As of December 31,
	202 3			202 2
Cash		370			224
Amounts due from subsidiaries		5,504,920			713,500
Total current assets		5,505,2 90			713,724
All other non-current assets		-			218,354
Interests in a subsidiary		9,948,890			13,477,384
Total Assets		15,454,180			14,409,462

Liabilities and Stockholders’ Deficit
All other current liabilities		599,664			-
Amounts due to subsidiaries		10,660,508			12,122,024
Total current liabilities		11,260,172			12,122,024

Non-current liabilities		1,950,000			313,699
Total Liabilities		13,210,172			12,435,723

Stockholders’ Equity (Deficit)
Preferred stock ,100,000,000 shares authorized – Series A, $0.001 par value, 20,000,000 shares designated , 5,000,000 shares issued and outstanding as of December 31, 202 3 and 202 2 *		5,000			5,000
Common stock, $0.001 par value, 400,000,000 shares authorized, 21,380,000 and 20,000,000 shares issued and outstanding as of December 31, 202 3 and 202 2 , respectively*		21,380			20,000
Subscription receivable		(25,000	)		(25,000	)
Additional Paid-in Capital		6,671,016			925,000
(Accumulated deficit) re tained earnings		(3,652,547	)		1,818,630
Accumulated other comprehensive loss		(775,841	)		(769,891	)
Total Stockholders’ Equity		2,244,008			1,973,739
Total Liabilities and Stockholders’ Deficit		15,454,180			14,409,462

Retrospectively restated for the effect of 2-for-1 reverse stock split.

(Note 18)

Condensed Financial Information on Results of Operations

	For the years ended December 31,
	202 3			202 2
Revenue		43,251			-
Cost or revenues		-			-
Operating expenses		3,381,482			313,699
Income taxes		12,919			-
L oss – Parent only		(3,351,150	)		(313,699	)
( Lo ss) income – Subsidiaries with unrestricted net assets		(2,117,498	)		1,471,361
(Loss) income – Subsidiaries with restricted net assets		(2,529	)		(228,603	)
Net (loss) income – Consolidated		(5,471,177	)		929,059

Condensed Financial Information on Cash Flows

	For the years ended December 31,
	202 3			202 2
Cash used in operating activities		(5,965,604	)		(5,026	)
Cash used in investing activities		-			(926,828	)
Cash provided by financing activities		5,965,750			932,078
Net cash flows		146			224
Beginning cash balance		224			-
Ending cash balance		370			224

(i)

Basis of presentation

The condensed financial information reflects the accounts of the Company. The condensed financial information should be read in connection with the consolidated financial statements and notes thereto. The condensed financial information is presented as if the incorporation of the Company were in effect since January 1, 2020, and throughout the

four

years ended December 31, 202

(ii)

Restricted Net Assets

Schedule I of Rule 5-04 of Regulation S-X requires the condensed financial information of registrant shall be filed when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of the end of the most recently completed fiscal year. For purposes of the above test, restricted net assets of consolidated subsidiaries shall mean that amount of the registrant’s proportionate share of net assets of consolidated subsidiaries (after intercompany eliminations) which as of the end of the most recent fiscal year may not be transferred to the parent company by subsidiaries in the form of loans, advances or cash dividends without the consent of a third party (i.e., lender, regulatory agency, foreign government, etc.). The Company’s only assets are its equity interests in its subsidiaries. Unrestricted net assets are held in the Company’s subsidiaries located in the US and Hong Kong. The Company does maintain substantial assets and operating subsidiaries in China; therefore, the ability for operating subsidiaries to pay dividends or transfer assets to the Company may be restricted due to the foreign exchange control policies and availability of cash balances of the Chinese operating subsidiaries.

As of December 31, 202

and 202

, there were no material contingencies, significant provisions of long-term obligations, mandatory dividend or redemption requirements of redeemable stocks or guarantees of the Company, except for those which have been separately disclosed in the Consolidated Financial Statements, if any.