HANGZHOU, China, March 14, 2023 (GLOBE NEWSWIRE) -- Nano Labs Ltd (Nasdaq: NA) (“we,” the “Company” or “Nano Labs”), a leading fabless integrated circuit design company and product solution provider in China, today announced its unaudited financial results as of December 31, 2022 and for the three months ended December 31, 2022.

Fourth Quarter 2022 Financial Highlights

• Net revenue was RMB12.7 million (US$1.8 million) for the three months ended December 31, 2022, compared to a net revenue of RMB3.2 million in the same period of 2021.
• Gross loss was RMB76.6 million (US$11.0 million) for the three months ended December 31, 2022, compared to a gross loss of RMB23.8 million for the same period of 2021.
• Loss from operations was RMB136.9 million (US$19.7 million) for the three months ended December 31, 2022, compared to a loss from operations of RMB136.8 million in the same period of 2021.
• Net loss was RMB132.8 million (US$19.1 million) for the three months ended December 31, 2022, compared to a net loss of RMB135.5 million in the same period of 2021.
• Net loss per ordinary share (both basic and diluted) was approximately RMB1.19 (US$0.17) for the three months ended December 31, 2022, compared to a loss per ordinary share (both basic and diluted) of RMB1.32 in the same period of 2021.
  

Mr. Jianping Kong, Chairman and Chief Executive Officer of the Company, commented, “The management team went overseas and discussed the trends with industrial pioneers, and strive to find new market opportunities as well as expand overseas markets, aiming to mitigate the impact from the conversion of Ethereum mainnet from proof-of-work (“POW”) to proof-of-stake (“POS”) in mid-September. At the same time, our company is actively exploring and researching the fields of zero-knowledge (“ZK”) and AI-generated content (“AIGC”) computations, and had launched our newly self-developed A-series iPollo computing devices with ZK and AIGC computing capabilities embedded. The A-series iPollo computing devices adopt high-performance graphics cards with large memory and high-core central processing units (“CPUs”), ensuring low power consumption and easy management while maintaining stable operation in high computing power, which can more efficiently support ZK and AIGC computations.

In addition, our iPollo Metaverse, previously known as Ipolloverse, which the Company expects to launch to the market soon, has recently made substantial technological progress. It relies on decentralized technology and innovative consensus mechanisms with AIGC capabilities embedded as an important Layer 2 tool. iPollo Metaverse reduces the threshold for user creation and provides developers with lower-cost rendering solutions and more efficient developer tools. The elastic computing network underneath now supports the inference of stable diffusion machine learning models and can generate patterns from text and directly cast them into non-fungible tokens (“NFTs”). With AIGC as a Layer 2 tool, iPollo Metaverse enables developers to better leverage AIGC to create metaverses, offering extensive possibilities for creating unique and innovative metaverse experiences. At the same time, iPollo Metaverse is committed to achieving open social and immersive experiences in the 3D metaverse world, allowing tens of thousands of real users to interact in real-time at low cost in high-fidelity, zero-latency environments. This brings new Web 3.0 lifestyle options for users. Additionally, the Company also plans to provide 3D printing services for users' metaverses, thereby integrating the virtual and real world.

We expect to be able to create Metaverse through our leading technology and in-depth industry understanding.”

Mr. Bing Chen, Chief Financial Officer, commented, “In the last quarter this year, our net revenue is RMB12.7 million (US$1.8 million). In addition, the net loss was RMB132.8 million (US$19.1 million) for the three months ended December 31, 2022, compared to a net loss of RMB135.5 million in the same period of 2021. Leveraging our experience and expertise, we will continue developing and launching the cutting-edge products and executing our strategic development initiatives. Looking forward, we aim to grow our business and generate long-term value for our shareholders.”

Unaudited Fourth Quarter 2022 Financial Results

Net Revenues

Net revenues increased to RMB12.7 million (US$1.8 million) for the three months ended December 31, 2022, from RMB3.2 million for the same period of 2021. The increase in net revenues was primarily due to the increase in sales volume of iPollo V1 Series and B1 Series products.

Cost of Revenues

Cost of revenues increased significantly to RMB89.3 million (US$12.8 million) for the three months ended December 31, 2022, from RMB26.9 million for the same period of 2021, the change was mainly due to the increase in sales volume and an inventory write-down of RMB 47.9 million.

Operating Expenses

Total operating expenses decreased to RMB60.3 million (US$8.7 million) for the three months ended December 31, 2022, from RMB113.0 million for the same period of 2021.

• Selling and marketing expenses increased to RMB5.6 million (US$0.8 million) for the three months ended December 31, 2022 from RMB3.4 million for the same period of 2021. The increase in selling and marketing expenses was primarily due to the increase in advertising expenses to support marketing strategies, expand market share and improve brand visibility.
• General and administrative expenses increased to RMB15.5 million (US$2.2 million) for the three months ended December 31, 2022, from RMB10.0 million for the same period of 2021. The increase in general and administrative expenses was primarily due to the increase in employee salary expenses as the number and salaries of general and administrative staff increased and the increase in other miscellaneous expenses due to the development and expansion of its business.
• Research and development expenses decreased to RMB39.2 million (US$5.6 million) for the three months ended December 31, 2022, from RMB99.6 million for the same period of 2021. The decrease in research and development expenses was primarily because the direct materials related to research and development decreased in the current period.
  

Loss from Operations

Loss from operations was RMB136.9 million (US$19.7 million) for the three months ended December 31, 2022, compared with loss from operations of RMB136.8 million for the same period of 2021.

Finance Expense (Income)

Finance income was RMB1.3 million (US$0.2 million) for the three months ended December 31, 2022, compared with finance loss of RMB0.7 million for the same period of 2021 due to the increase of foreign currency exchange gains.

Net Loss

Net loss was RMB132.8 million (US$19.1 million) for the three months ended December 31, 2022, compared with net loss of RMB135.5 million for the same period of 2021.

Basic and Diluted Loss Per Ordinary Share

Basic and diluted loss per ordinary share was RMB1.19 (US$0.17) for the three months ended December 31, 2022, compared with basic and diluted loss per ordinary share of RMB1.32 for the same period of 2021. Each ADS represents 2 of the Company’s class A ordinary shares.

Cash and Cash Equivalents

As of December 31, 2022, the Company had cash and cash equivalents of RMB87.8 million (US$12.6 million), compared with RMB233.9 million as of December 31, 2021.

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 RMB 6.9646 to US$1.00, the central parity rate on December 31, 2022 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.