Nano(NA) - 2023 Q2 - Quarterly Report

Consolidated Financial Statements Consolidated Balance Sheets As of June 30, 2023, Nano Labs Ltd reported a decrease in total assets and a significant decline in shareholders' equity due to an accumulated deficit, while total liabilities increased Consolidated Balance Sheet Highlights (RMB) | Metric | Dec 31, 2022 | Jun 30, 2023 | | :--------------------- | :------------ | :------------ | | Total Assets | 367,242,664 | 296,755,249 | | Total Liabilities | 202,828,264 | 264,751,477 | | Total Shareholders' Equity | 164,414,400 | 32,003,772 | | Cash and Cash Equivalents | 87,811,272 | 16,839,750 | | Inventories, net | 102,201,746 | 41,934,840 | | Property, Plant and Equipment, net | 21,426,955 | 105,278,931 | | Accumulated Deficit | (199,207,921) | (333,527,402) | Consolidated Statements of Operations and Comprehensive Income (Loss) For H1 2023, Nano Labs Ltd reported a significant net loss, driven by substantially decreased net revenues and a negative gross profit, contrasting with net income in H1 2022 Consolidated Statements of Operations Highlights (RMB) | Metric | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :------------------------- | :-------------------------- | :-------------------------- | | Net Revenues | 380,138,767 | 52,268,716 | | Cost of Revenues | 203,767,419 | 115,167,091 | | Gross Profit (Loss) | 176,371,348 | (62,898,375) | | Total Operating Expenses | 68,743,207 | 73,496,209 | | Profit (Loss) from Operations | 107,628,141 | (136,394,584) | | Net Income (Loss) | 111,393,524 | (134,319,481) | | Basic EPS | 1.07 | (1.20) | | Diluted EPS | 1.07 | (1.20) | - Net revenues decreased significantly from RMB 380.14 million in H1 2022 to RMB 52.27 million in H1 2023, a decrease of approximately 86.2%[6] - The company shifted from a gross profit of RMB 176.37 million in H1 2022 to a gross loss of RMB 62.90 million in H1 2023[6] Consolidated Statements of Changes in Shareholders' Equity (Deficit) Total shareholders' equity substantially decreased from January 1 to June 30, 2023, primarily due to a significant net loss during the period Shareholders' Equity Changes (RMB) | Metric | Jan 1, 2023 | Jun 30, 2023 | | :----------------------------------- | :------------ | :------------ | | Total Shareholders' Equity (Deficit) | 164,414,400 | 32,003,772 | | Accumulated Deficit | (199,207,921) | (333,527,402) | | Additional Paid-in Capital | 354,803,564 | 354,941,162 | | Net Loss for the period | - | (134,319,481) | | Foreign Currency Translation Adjustment | 2,099,329 | 3,870,584 | Consolidated Statements of Cash Flows For H1 2023, Nano Labs Ltd experienced significant cash outflows from operating and investing activities, partially offset by financing, resulting in a net decrease in cash Consolidated Cash Flow Highlights (RMB) | Metric | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :----------------------------------- | :-------------------------- | :-------------------------- | | Net Cash Used in Operating Activities | (165,241,380) | (34,636,206) | | Net Cash Used in Investing Activities | (18,655,969) | (86,014,785) | | Net Cash Provided by Financing Activities | — | 50,346,549 | | Net Decrease in Cash, Cash Equivalents and Restricted Cash | (182,444,457) | (70,602,069) | | Cash, Cash Equivalents and Restricted Cash at End of Period | 51,409,197 | 17,257,315 | - Cash used in investing activities increased substantially from RMB 18.66 million in H1 2022 to RMB 86.01 million in H1 2023, primarily due to significant purchases of property, plant, and equipment[14] - Financing activities provided RMB 50.35 million in H1 2023, mainly from proceeds from long-term debts, compared to no financing cash flow in H1 2022[14] Notes to the Unaudited Consolidated Financial Statements 1. Organization, Nature of Operations and Liquidity Nano Labs Ltd, a fabless IC design holding company, faces significant liquidity challenges as of June 30, 2023, marked by a net loss, working capital deficit, and accumulated deficit - Nano Labs Ltd is a holding company incorporated in the Cayman Islands, primarily engaged in fabless integrated circuit (IC) design and sale of product solutions by integrating its self-designed IC products[16] - The company's business was carried out by Zhejiang Haowei Technology Co., Ltd. and its subsidiaries prior to Nano Labs' incorporation and a reorganization completed in September 2021[16][17] Liquidity Status (RMB) | Metric | 6 Months Ended Jun 30, 2023 | | :---------------------- | :-------------------------- | | Net Loss | (134,000,000) | | Net Cash Used in Operating Activities | (35,000,000) | | Working Capital Deficit | (59,000,000) | | Accumulated Deficit | (334,000,000) | - In July 2023, the Company entered into US$10 million (approximately RMB 72 million) promissory notes with two related parties, which were converted into 19,157,087 Class A ordinary shares in September 2023[22] Organization and Nature of Operations - Nano Labs Ltd, incorporated on January 8, 2021, is a holding company in the Cayman Islands, primarily engaged in fabless integrated circuit (IC) design and sale of product solutions by integrating its self-designed IC products in the PRC and other countries[16] - The company's business was previously conducted by Zhejiang Haowei Technology Co., Ltd. and its subsidiaries, established in July 2019, and underwent a reorganization completed in September 2021[16][17] - The company operates through numerous wholly-owned subsidiaries across various locations including China, Hong Kong, BVI, Singapore, Cayman, and the United States, with principal activities ranging from IC research and development to product distribution and investment[19][20] Liquidity Key Liquidity Indicators (RMB) | Metric | 6 Months Ended Jun 30, 2023 | | :----------------------------------- | :-------------------------- | | Net Loss | (134,000,000) | | Net Cash Used in Operating Activities | (35,000,000) | | Working Capital Deficit | (59,000,000) | | Accumulated Deficit | (334,000,000) | - The company historically relied on operational cash and non-operational financing from investors to fund operations[22] - In July 2023, the company secured US$10 million (approximately RMB 72 million) in promissory notes from related parties, which were converted into Class A ordinary shares in September 2023[22] 2. Summary of Significant Accounting Policies Nano Labs Ltd prepares its unaudited consolidated financial statements under U.S. GAAP, using RMB, with key policies covering consolidation, revenue recognition, and the adoption of ASU 2016-13 with no material impact - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and should be read in conjunction with the audited annual financial statements[24] - The Company uses Renminbi (RMB) as its reporting currency, while the functional currency of its PRC entities is RMB and non-PRC entities is US$[28] - Revenue is primarily generated from the sale of product solutions by integrating self-designed IC products, recognized at a point in time when control is transferred to customers[46][47] - The Company adopted ASU 2016-13, 'Measurement of Credit Losses on Financial Instruments (Topic 326)', on January 1, 2023, which did not have a material impact on its unaudited consolidated financial statements[67] Basis of Preparation and Use of Estimates - The unaudited consolidated financial statements are prepared in accordance with U.S. GAAP for interim financial information and include all necessary adjustments for fair statement[24] - Preparation requires management to make estimates and assumptions, including for inventory write-down, valuation allowance for deferred tax assets, and share-based compensation[25] Principles of Consolidation and Currency Translation - Consolidated financial statements include the Company and its subsidiaries, with all intercompany transactions and balances eliminated[27] - RMB is the reporting currency; functional currency is US$ for non-PRC entities and RMB for PRC entities. Assets and liabilities are translated at year-end rates, income and expenses at average rates[28][29] - US$ amounts are provided for convenience, translated at US$1.00 = RMB7.2258 as of June 30, 2023[30] Financial Instrument Fair Value and Credit Risk - The Company is exposed to credit risk primarily from cash and cash equivalents, which are placed with financial institutions with high credit ratings[31] - Fair value measurements follow ASC 820, classifying inputs into Level 1 (quoted prices), Level 2 (observable market-based inputs), and Level 3 (unobservable inputs)[32] - Financial instruments in current assets and liabilities are reported at face value or cost, approximating fair value due to short-term maturities[34] Related Party Transactions - Related parties are defined by control or significant influence. Transactions are not presumed to be at arm's-length[35][36] - There were no related party transactions incurred during the six months ended June 30, 2022 and 2023[36] Cash and Inventories - Cash and cash equivalents include cash in bank and time deposits with original maturities of three months or less[37] Cash and Cash Equivalents (RMB) | Metric | Dec 31, 2022 | Jun 30, 2023 | | :------------------------- | :----------- | :----------- | | Cash and Cash Equivalents | 87,811,272 | 16,839,750 | | Restricted Cash | 48,112 | 417,565 | - Inventories are stated at the lower of cost (weighted average method) and net realizable value, with adjustments for write-downs due to slow-moving and obsolete items[39] Property, Plant and Equipment & Intangible Assets - Property, plant and equipment are stated at historical cost less accumulated depreciation, calculated using the straight-line method over estimated useful lives (e.g., 2-3 years for computers, 5 years for office furniture)[41][42] - Intangible assets with definite useful lives, such as franchise rights (2 years) and land use rights (50 years), are amortized on a straight-line basis[43] - Long-lived assets are evaluated for impairment when triggering events indicate carrying amount may not be recoverable; no impairment was recognized for the six months ended June 30, 2022 and 2023[44] Revenue Recognition and Cost of Revenues - Revenue is recognized when control of promised goods or services is transferred to customers, reflecting the consideration expected to be received[45] - Product sales revenue, primarily from self-designed IC products, is recognized at the point of transfer of control (pickup or shipment). Service revenue is recognized when services are provided[46][47][48] Net Revenues by Stream (RMB) | Revenue Stream | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :---------------- | :-------------------------- | :-------------------------- | | Product Sales Revenue | 319,193,707 | 46,868,172 | | Service Revenue | 60,945,060 | 5,400,544 | | Net Revenues | 380,138,767 | 52,268,716 | - Cost of revenues includes product costs (raw materials, manufacturing, shipping, warehousing) and service costs (labor). An inventory write-down of RMB 73,273,361 was recorded in H1 2023[51] Operating Expenses and Leases - Selling and marketing expenses primarily consist of advertising, promotion, salaries, and shipping/handling costs, charged as incurred[52] - Research and development expenses, including salaries, raw materials, consulting, and testing, are recognized as incurred[54] - Right-of-use assets and lease liabilities for operating leases are recognized at commencement based on the present value of lease payments, using the incremental borrowing rate[55] Employee Benefits, Share-based Compensation and Income Taxes - PRC employees are entitled to government-mandated staff welfare benefits, with company obligations limited to contributions[57] - Share-based compensation for restricted shares and options is recognized based on grant date fair values over the requisite service periods[58] - Income taxes are accounted for under the asset and liability method, with deferred income tax assets and liabilities determined by temporary differences[60] Comprehensive Income, EPS and Segment Reporting - Comprehensive income (loss) includes net income (loss) and foreign currency translation adjustments[63] - Basic and diluted earnings (loss) per share are computed based on net income (loss) attributable to ordinary shareholders and weighted-average shares outstanding[64][65] - The Company uses the 'management approach' for segment reporting and has determined it has only one operating segment, as the chief operating decision maker reviews results by marketing channel only at the revenue level[66] Recently Adopted Accounting Pronouncements - The Company adopted ASU 2016-13, 'Measurement of Credit Losses on Financial Instruments (Topic 326)', on January 1, 2023[67] - The adoption of ASU 2016-13 did not have a material impact on the Company's unaudited consolidated financial statements[67] 3. Inventories, Net Net inventories significantly decreased as of June 30, 2023, primarily due to a substantial increase in inventory write-downs, despite increases in finished goods and work in process Inventories, Net (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :-------------------- | :------------ | :------------ | | Raw Materials | 69,914,306 | 61,466,397 | | Work in Process | 158,693,203 | 150,974,306 | | Finished Goods | 81,807,783 | 108,733,833 | | Less: Write-down of Inventories | (208,213,546) | (279,239,696) | | Inventories, Net | 102,201,746 | 41,934,840 | - The write-down of inventories increased by RMB 71.03 million (34.1%) from December 31, 2022, to June 30, 2023[70] 4. Prepayments Prepayments decreased as of June 30, 2023, primarily due to a reduction in prepayments for inventories and processing fees Prepayments (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :------------------------------------- | :----------- | :----------- | | Prepayments – Inventories and Processing Fee | 64,813,532 | 36,729,221 | | Prepayments – Others | 6,500,722 | 5,694,920 | | Total Prepayments | 71,314,254 | 42,424,141 | - Prepayments for inventories and processing fees decreased by approximately 43.3% from December 31, 2022, to June 30, 2023[71] 5. Other Current Assets Other current assets increased as of June 30, 2023, primarily driven by a rise in value-added tax recoverable Other Current Assets (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :------------------------ | :----------- | :----------- | | Value-added Tax Recoverable | 23,731,587 | 30,008,975 | | Deposits | 3,434,080 | 3,368,617 | | Others | 109,548 | 2,379,148 | | Total | 27,275,215 | 35,756,740 | - Value-added tax recoverable increased by approximately 26.4% from December 31, 2022, to June 30, 2023[72] 6. Property, Plant and Equipment, Net Net property, plant and equipment significantly increased as of June 30, 2023, primarily due to a substantial rise in construction in progress Property, Plant and Equipment, Net (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :------------------------ | :----------- | :----------- | | Computers and Electronic Equipment | 9,537,316 | 9,872,995 | | Leasehold Improvement | 1,550,648 | 3,612,337 | | Construction in Progress | 16,119,419 | 99,737,737 | | Less: Accumulated Depreciation | (6,087,694) | (8,251,404) | | Property, Plant and Equipment, Net | 21,426,955 | 105,278,931 | - Construction in progress increased by approximately 518.8% from December 31, 2022, to June 30, 2023[73] - Depreciation expenses increased from RMB 1,671,684 in H1 2022 to RMB 2,163,710 in H1 2023[74] 7. Intangible Asset, Net Net intangible assets slightly decreased as of June 30, 2023, due to amortization, with the majority, land use right, pledged as loan collateral Intangible Asset, Net (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :------------------------ | :----------- | :----------- | | Land Use Right | 49,292,208 | 49,292,208 | | Franchise Right | 334,865 | 334,865 | | Less: Accumulated Amortization | (909,941) | (1,402,863) | | Intangible Asset, Net | 48,717,132 | 48,224,210 | - Amortization expense increased from RMB 82,154 in H1 2022 to RMB 492,922 in H1 2023[76] - Land use right with a net book value of RMB 48,224,210 as of June 30, 2023, was pledged as collateral under a loan arrangement[77] 8. Operating Leases Total lease costs increased for H1 2023, with a weighted average remaining lease term of 1.17 years and total lease liabilities of RMB 4.56 million as of June 30, 2023 Lease Costs (RMB) | Category | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :------------------ | :-------------------------- | :-------------------------- | | Operating Lease Cost | 2,746,934 | 3,922,677 | | Short-term Lease Cost | 249,725 | 177,103 | | Total Lease Cost | 2,996,659 | 4,099,780 | Operating Lease Liabilities Maturity (RMB) | Period | As of Jun 30, 2023 | | :------------------ | :----------------- | | Remaining of 2023 | 2,305,112 | | 2024 | 2,403,077 | | Thereafter | - | | Total Lease Payments | 4,708,189 | | Less: Imputed Interest | (147,773) | | Total Lease Liabilities | 4,560,416 | - The weighted average remaining lease term for operating leases decreased from 1.65 years at December 31, 2022, to 1.17 years at June 30, 2023[82] 9. Other Current Liabilities Other current liabilities decreased as of June 30, 2023, primarily due to reductions in salary accrual, tax accrual, and other liabilities Other Current Liabilities (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :--------------- | :----------- | :----------- | | Salary Accrual | 8,536,985 | 5,064,078 | | Deposit | 10,000,000 | 10,050,000 | | Tax Accrual | 13,609,170 | 11,445,654 | | Others | 7,253,377 | 3,977,901 | | Total | 39,399,532 | 30,537,633 | - Salary accrual decreased by approximately 40.7% and tax accrual decreased by approximately 15.9% from December 31, 2022, to June 30, 2023[84] 10. Long-term Debts Total long-term debts amounted to RMB 67.30 million as of June 30, 2023, with new borrowings under a credit line collateralized by the company's land use right - On August 11, 2022, the Company entered into a line of credit agreement for up to RMB 100,000,000 with a due date on July 25, 2030[85] - During the six months ended June 30, 2023, the Company borrowed RMB 50,876,549 and repaid RMB 530,000 under the credit line, with outstanding loans bearing an annual interest rate of 5.4%[85] - The loans are pledged by the land use right of the Company[85] Future Maturities of Long-term Debts (RMB) | Period | As of Jun 30, 2023 | | :------------------ | :----------------- | | Remaining of 2023 | 650,000 | | 2024 | 1,870,000 | | 2025 | 2,490,000 | | 2026 | 3,110,000 | | 2027 | 3,730,000 | | Thereafter | 55,449,865 | | Total | 67,299,865 | 11. Shareholders' Equity (Deficit) Nano Labs Ltd adopted a dual-class share structure prior to its July 2022 IPO, completing subsequent offerings, with 111,496,668 ordinary shares outstanding as of June 30, 2023 - The Company adopted a dual-class share structure (Class A and Class B ordinary shares) prior to its IPO on July 12, 2022[87] - Class A ordinary shares are entitled to one vote per share, while Class B ordinary shares are entitled to 15 votes per share and are convertible into Class A shares[87] - The Company completed an IPO in July 2022, issuing 3,540,000 Class A ordinary shares for approximately US$16.6 million net proceeds, and a supplemental offering in September 2022, issuing 4,166,668 Class A ordinary shares for approximately US$4.5 million net proceeds[88] - As of December 31, 2022, and June 30, 2023, there were 111,496,668 ordinary shares issued and outstanding[89] 12. Share-based Compensation Nano Labs Ltd's 2022 Share Incentive Plan authorizes up to 10,379,000 Class A ordinary shares, with RMB 137,598 in share-based compensation recognized for H1 2023, including significant option grants in April - The 2022 Share Incentive Plan, adopted in June 2022 and effective upon IPO, authorizes the issuance of up to 10,379,000 Class A ordinary shares[90] Share-based Compensation Recognized (RMB) | Award Type | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :--------- | :-------------------------- | :-------------------------- | | RSUs | 8,445 | 4,397 | | Options | 4,665,228 | 133,201 | - As of June 30, 2023, unrecognized compensation cost for RSUs was RMB 9,895 (expected to be recognized through December 2024) and for options was RMB 1,843,709 (expected through April 2026)[91][97] - On April 27, 2023, the Company granted options to purchase a total of 1,697,746 ordinary shares, with some options fully vested and exercisable at the grant date[95][97] 13. Statutory Reserves PRC subsidiaries are required to appropriate at least 10% of after-tax profit to a statutory general reserve, which cannot be distributed as cash dividends, with no appropriations made in H1 2022 or H1 2023 - PRC subsidiaries are required to appropriate at least 10% of after-tax profit to a statutory general reserve until it equals 50% of registered capital[99] - The general reserve fund can be used for specific purposes such as offsetting accumulated losses, enterprise expansion, or increasing registered capital[99] - These balances are not allowed to be transferred to the Company in terms of cash dividends, loans, or advances[100] - The Company made nil appropriations to statutory reserve for the six months ended June 30, 2022 and 2023[100] 14. Earnings (Loss) Per Share For H1 2023, Nano Labs Ltd reported a basic and diluted loss per share of RMB (1.20), a significant decline from prior year earnings, with options excluded from diluted EPS due to net loss Earnings (Loss) Per Ordinary Share (RMB) | Metric | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :----------------------------------- | :-------------------------- | :-------------------------- | | Earnings (Loss) Attributable to Ordinary Shareholders | 111,393,524 | (134,319,481) | | Weighted Average Number of Ordinary Shares (Basic) | 103,790,000 | 111,496,668 | | Basic Earnings (Loss) Per Share | 1.07 | (1.20) | | Weighted Average Number of Shares (Diluted) | 103,902,581 | 111,496,668 | | Diluted Earnings (Loss) Per Share | 1.07 | (1.20) | - For the six months ended June 30, 2023, options to purchase 1,697,746 shares were anti-dilutive and excluded from diluted net loss per share calculation due to the net loss[101] 15. Income Taxes Nano Labs Ltd's subsidiaries are subject to varied income tax rates by jurisdiction, with no income tax provision for H1 2022 or H1 2023 due to a full valuation allowance against significantly increased deferred tax assets - PRC subsidiaries are subject to a 25% Enterprise Income Tax (EIT) rate, with Zhejiang Nanomicro enjoying a preferential 15% rate as a 'high-tech enterprise' until December 2024[110] - Other subsidiaries are subject to tax rates of 8.25%-16.5% in Hong Kong, 21% in USA, and 17% in Singapore, while entities in Cayman Islands and British Virgin Islands are not subject to income tax[106][107][108][109] Income Tax Provision (RMB) | Category | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :------------------- | :-------------------------- | :-------------------------- | | Current Income Tax Expense | — | — | | Deferred Tax Expense | — | — | | Income Tax Expense | — | — | Deferred Tax Assets and Valuation Allowance (RMB) | Category | Dec 31, 2022 | Jun 30, 2023 | | :------------------------ | :------------ | :------------ | | Net Operating Loss Carryforward | 63,038,127 | 100,099,836 | | Inventory Impairment | 47,198,866 | 59,136,517 | | Deferred Tax Assets | 80,901,620 | 159,236,353 | | Less: Valuation Allowance | (80,901,620) | (159,236,353) | | Deferred Tax Assets (Net) | — | — | 16. Concentrations For H1 2023, Nano Labs Ltd experienced significant customer concentrations, with Customer B and C contributing 22.7% and 13.6% of revenues respectively, alongside notable supplier concentrations Customer Concentration (Revenue %) | Customer | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :--------- | :-------------------------- | :-------------------------- | | Customer A | 15.7% | — | | Customer B | — | 22.7% | | Customer C | — | 13.6% | Supplier Concentration (Purchase %) | Supplier | 6 Months Ended Jun 30, 2022 | 6 Months Ended Jun 30, 2023 | | :--------- | :-------------------------- | :-------------------------- | | Supplier A | — | 40.3% | | Supplier B | 37.3% | — | | Supplier C | 13.8% | 10.2% | | Supplier D | 12.4% | — | 17. Commitments and Contingencies Nano Labs Ltd is involved in ongoing litigation, including a sales contract dispute and a new civil action, with no material liabilities recorded due to estimation uncertainties, and some bank accounts judicially frozen - The Company is subject to litigation matters in the normal course of business, with accruals recorded when a loss is probable and estimable[121] - A customer filed a civil action in 2022 for a sales contract dispute, claiming RMB 44,941,000 payment return and RMB 1,680,527 indemnity. In July 2023, the court ordered the Company to return RMB 130,000, but the customer has appealed[122] - On September 8, 2023, another customer filed a civil action claiming breach of implied condition, demanding US$300,000 payment return and indemnification[123] - Two bank accounts of the Company were judicially frozen, with an amount of RMB 417,565 as of June 30, 2023[123] 18. Subsequent Events Subsequent to June 30, 2023, Nano Labs Ltd secured additional borrowings, granted new employee options, and converted US$10 million in related-party loans into 19,157,087 Class A ordinary shares - From July to September 2023, the Company borrowed approximately RMB 34.4 million under its existing credit line, bearing an annual interest rate of 5.4%[124] - On August 16, 2023, the Company granted an employee option to purchase 25,974 ordinary shares under the 2022 share incentive plan[125] - In August and September 2023, employees exercised vested options to purchase a total of 1,009,114 ordinary shares[125] - On September 5, 2023, US$10 million in interest-free loans from related parties were converted into 19,157,087 Class A ordinary shares, with the issuance completed on September 13, 2023[126]