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First Half of 2024 Financial Results

Net Revenues

Net revenue was RMB24.7 million (US$3.5 million) for the first half of 2024, compared to RMB52.3 million for the same period of 2023. The decrease in net revenues was primarily due to the drop of sales volume of iPollo V1 Series. The revenues in 3D-printing products, our new products, was RMB459.2 thousand for the first half of 2024, compared to RMB22.0 thousand for the same period of 2023.

Cost of Revenues

Cost of revenues was RMB24.7 million (US$3.5 million) for the first half of 2024, compared to RMB115.2 million for the same period of 2023. The change was mainly due to the decrease in sales volume and less inventory write-down recorded.

The cost of 3D-printing products was RMB338.7 thousand for the first half of 2024, compared to RMB10.2 thousand for the same period of 2023.

Operating Expenses

Total operating expenses decreased by 20.1% to RMB58.7 million (US$8.2 million) for the first half of 2024, from RMB73.5 million for the same period of 2023.

• Selling and marketing expenses decreased by 54.4% to RMB4.3 million (US$0.6 million) for the first half of 2024, from RMB9.5 million for the same period of 2023. The decrease in selling and marketing expenses was primarily due to the decrease in sales commission and product shipping expenses.
  

• General and administrative expenses decreased by 18.0% to RMB25.5 million (US$3.6 million) for the first half of 2024, from RMB31.0 million for the same period of 2023. The decrease in general and administrative expenses was primarily due to (1) the decrease in office lease expenses mainly attributable to the relocation of the head office and (2) the decrease in employee salary expenses as the number and salaries of general and administrative staff decreased.
  

• Research and development expenses decreased by 12.2% to RMB28.9 million (US$4.1 million) for the first half of 2024, from RMB33.0 million for the same period of 2023. The decrease in research and development expenses was primarily due to the decrease in salary expenses.
  

Loss from Operations

As a result of the foregoing, loss from operations decreased by 57.0% to RMB58.7 million (US$8.2 million) for the first half of 2024 from RMB136.4 million for the same period of 2023.

Finance Expense (Income)

Finance income was RMB0.6 million (US$0.1 million) for the first half of 2024, compared with finance expense of RMB1.6 million for the same period of 2023.

Interest expense

Interest expense was RMB2.0 million (US$0.3 million) for the first half of 2024, compared to nil for the same period of 2023. The change was due to the completion of construction in progress and cease of interest capitalization during the first half of 2024.

Net Loss

Net loss was RMB59.1 million (US$8.3 million) for the first half of 2024, compared with RMB134.3 million in the same period of 2023.

Basic and Diluted Loss Per Ordinary Share attributable to Nano Labs Ltd

Basic and diluted loss per share was RMB0.85 (US$0.12) for the first half of 2024, compared with basic and diluted loss per share of RMB2.41 for the same period of 2023.

Financial Condition

As of June 30, 2024, the Company had cash and cash equivalents of RMB23.5 million (US$3.3 million), compared with RMB48.2 million as of December 31, 2023. As of June 30, 2024, the Company had total current assets of RMB110.8 million (US$15.5 million), compared with RMB125.5 million as of December 31, 2023.

As of June 30, 2024, the Company had short-term debts, current portion of long-term debts and accounts payable in total of RMB42.8 million (US$6.0 million), compared with RMB40.3 million as of December 31, 2023. As of June 30, 2024, the Company had total current liabilities excluding advance from customers of RMB130.8 million (US$18.4 million), compared with RMB134.7 million as of December 31, 2023.

In August and September, 2024, the Company entered into related party loan agreements with two shareholders to borrow interest-free loans in the total amount of US$8.5 million (RMB60.6 million) in cash (“the Loans”) to fund the Company’s working capital. The Loans are due on the one-year anniversary of the agreement dates. The proceeds have been fully received through September 5, 2024 to September 12, 2024.

Exchange Rate

This press release contains translations of certain Renminbi (RMB) amounts into U.S. dollars (US$) solely for the convenience of the reader. Unless otherwise specified, all translations of Renminbi amounts into U.S. dollar amounts in this press release are made at RMB7.1268 to US$1.00, the central parity rate on June 30, 2024 published by the People’s Bank of China.

Non-GAAP Financial Measures

In evaluating our business, we consider and use adjusted net income/(loss) as an additional non-GAAP measure to review and assess our operating performance. The presentation of the non-GAAP financial measure is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP. We define adjusted net income/(loss) as net income/(loss) excluding share-based compensation expense.

We present the non-GAAP financial measure because they are used by our management to evaluate our operating performance and formulate business plans. Non-GAAP financial measures enable our management to assess our operating results without considering the impact of non-cash charges and non-operating items. We also believe that the use of the non-GAAP measure facilitates investors’ assessment of our operating performance.

The non-GAAP financial measure is not defined under U.S. GAAP and is not presented in accordance with U.S. GAAP. The non-GAAP financial measure has limitations as analytical tools. One of the key limitations of using the non-GAAP financial measure is that they do not reflect all items of income and expense that affect our operations. Share-based compensation expenses have been and may continue to be incurred in our business and are not reflected in the presentation of adjusted net income/(loss). Further, the non-GAAP measure may differ from the non-GAAP information used by other companies, including peer companies, and therefore their comparability may be limited.

Conference Call

The Company will host an earnings conference call to discuss its financial results at 8:30 am U.S. Eastern Time (8:30 pm Beijing Time) on September 18, 2024.

For participants who wish to join the call, please access the link provided below to complete the online registration process.

Registration Link: https://s1.c-conf.com/diamondpass/10041922-qbgnye.html

Upon registration, participants will receive the dial-in number and unique PIN, which can be used to join the conference call. If participants register and forget their PIN or lose their registration confirmation email, they may simply re-register and receive a new PIN. All participants are encouraged to dial in 15 minutes prior to the start time.

A live and archived webcast of the conference call will be accessible on the Company's investor relations website at: https://ir.nano.cn/.

A telephone replay of the call will be available until September 25, 2024 via the following dial-in details:

Dial-in Numbers:

About Nano Labs Ltd

Nano Labs Ltd is a leading fabless integrated circuit (“IC”) design company and product solution provider in China. Nano Labs is committed to the development of high throughput computing (“HTC”) chips, high performance computing (“HPC”) chips, distributed computing and storage solutions, smart network interface cards (“NICs”) vision computing chips and distributed rendering. Nano Labs has built a comprehensive flow processing unit (“FPU”) architecture which offers solution that integrates the features of both HTC and HPC. Nano Lab’s Cuckoo series are one of the first near-memory HTC chips available in the market*. For more information, please visit the Company’s website at: ir.nano.cn.

*According to an industry report prepared by Frost & Sullivan.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, the Company’s plan to appeal the Staff’s determination, which can be identified by terminology such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likely to” or other similar expressions. Such statements are based upon management’s current expectations and current market and operating conditions, and relate to events that involve known or unknown risks, uncertainties and other factors, all of which are difficult to predict and many of which are beyond the Company’s control, which may cause the Company’s actual results, performance or achievements to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the Company’s filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update any forward-looking statement as a result of new information, future events or otherwise, except as required under law.

For investor and media inquiries, please contact:

Nano Labs Ltd
Email: ir@nano.cn

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

*After giving effect of the 2-for-1 reverse stock split effective on January 31, 2024.

*After giving effect of the 2-for-1 reverse stock split effective on January 31, 2024.