Unrestricted Net Assets

6 Months Ended

Jun. 30, 2024

Restrictions for Consolidated and Unconsolidated Subsidiaries [Abstract]

UNRESTRICTED NET ASSETS

The following presents condensed financial information of Northann Corp:

Condensed Financial Information on Financial Position

	As of June 3 0 ,			As of December 31,
	2024			2023
	(Unaudited)
Cash		119			370
Amounts due from subsidiaries		4,577,188			5,504,920
Total current assets		4,577,307			5,505,290
Interests in a subsidiary		8,562,799			9,948,890
Total Assets		13,140,106			15,454,180

Liabilities and Stockholders’ Deficit
All other current liabilities		71,169			599,664
Amounts due to subsidiaries		10,149,940			10,660,508
Total current liabilities		10,221,109			11,260,172
Non-current liabilities		1,950,000			1,950,000
Total Liabilities		12,171,109			13,210,172

Stockholders’ Equity (Deficit)
Preferred stock – Series A, $0.001 par value, 100,000,000 shares authorized, 20,000,000 shares designated, 10,000,000 and 5,000,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023 *		10,000			5,000
Common stock, $0.001 par value, 400,000,000 shares authorized, 24,240,000 and 21,380,000 shares issued and outstanding as of June 30, 2024 and December 31, 2023 *		24,240			21,380
Subscription receivable		(30,000	)		(25,000	)
Additional Paid-in Capital		7,829,752			6,671,016
Acc umulated deficit		(6,251,405	)		(3,652,547	)
Accumulated other comprehensive income (loss)		(613,590	)		(775,841	)
Total Stockholders’ Equity (Deficit)		968,997			2,244,008
Total Liabilities and Stockholders’ Deficit		13,140,106			15,454,180

* Retrospectively restated for the effect of 2-for-1 reverse stock split. (Note 18)

Condensed Financial Information on Results of Operations

	For the six months ended June 3 0 ,			For the six months ended June 3 0 ,
	2024			2023
	(Unaudited)
Revenue		-			-
Cost or revenues		-			-
Operating expenses		1,598,981			934,973
Income taxes		933			-
L oss – Parent only		(1,599,915	)		(934,973	)
Income – Subsidiaries with unrestricted net assets		662,163			670,492
I ncome( l oss) – Subsidiaries with restricted net assets		290			(247,140	)
Net loss – Consolidated		(937,462	)		(511,621	)

Condensed Financial Information on Cash Flows

	For the six months ended June 3 0 ,			For the six months ended June 3 0 ,
	2024			2023
	(Unaudited)
Cash from operating activities		(251	)		291
Cash used in investing activities		-			-
Cash from financing activities		-			-
Effect of exchange rates on cash		-			-
Net cash flows		(251	)		290
Beginning cash balance		370			224
Ending cash balance		119			514

(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, 2023 and 2022, 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.