NCL 10-K & 10-Q changes, risk factors and insider trading
Northann Corp. · Plastics Products, Nec · CIK 1923780 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
Largest changes
The availability and cost of direct materials, including raw materials, packaging materials, energy and sourced products are critical to our operations. For example, we use substantial quantities of petrochemical-based raw materials in our manufacturing operations. The cost of some of these items has been volatile in recent years and availability has been limited at times. Ringold sources some materials from a limited number of suppliers, which, among other things, increases the risk of unavailability. In the fiscal years ended December 31,see in full comparison20242025 and2023,2024,8.7%10.65% and12.8%8.7% of the cost of revenue were for purchasing raw materials sourced from within China;81.2%82.8% and86%81.2% of the cost of revenue were for purchasing other supplies from suppliers in China that processed raw materials from out of China; and10.1%6.55% and1.2%10.1% of the cost of revenue were for purchasing raw materials sourced directly from Germany, the U.S., Japan, South Korea and othercountries.countries, respectively. The prices of raw materials sourced from outside China may be affected by international trade costs such as tariffs, transportation and foreign exchange rates, or international pandemics including but not limited to the COVID-19 pandemic, as well as geopolitical issues and the war in Ukraine. As part of our ongoing supply chain diversification strategy, we have expanded our sourcing to include suppliers in Vietnam, Thailand, Malaysia and Indonesia. This geographic diversification reduces our concentration risk on Chinese suppliers and mitigates the impact of tariffs on our cost structure. Looking ahead, we believe 3D printing technology will fundamentally reduce the industry’s reliance on raw material imports from Southeast Asia. By leveraging advanced manufacturing technology domestically and partnering with local suppliers in the United States, we aim to build a supply chain that is both shorter and more responsive to market demand.
“Additionally, any failure to obtain or a delay in obtaining the necessary permissions from or completing the necessary filing procedures with the PRC governmental authorities to conduct offerings outside of Hong Kong or mainland China, which could cause the value of our shares of common stock to significantly decline or be worthless.”see in full comparison
Since these statements and regulatory actions are new, it is also highly uncertain in the interpretation and the enforcement of the above cybersecurity and overseas listing laws and regulation. There is no assurance that the relevant PRC governmental authorities would reach the same conclusion as us. If we and/or our subsidiaries are required to obtain approval or fillings from any governmental authorities, including the CSRC, in connection with the listing or continued listing of our securities on a stock exchange outside of Hong Kong or mainland China, it is uncertain how long it will take for us and/or our subsidiaries to obtain such approval or complete such filing, and, even if we and our subsidiaries obtain such approval or complete such filing, the approval or filing could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from or complete the necessary filing procedure with the PRC governmental authorities to conduct offerings or list outside of Hong Kong or mainland China may subject us and/or our subsidiaries to sanctions imposed by the PRC governmental authorities, which could include fines and penalties, suspension of business, proceedings against us and/or our subsidiaries, and even fines on the controlling shareholder and other responsible persons, and our subsidiaries’ ability to conduct our business, our ability to invest into mainland China as foreign investments or accept foreign investments, or our ability to list on a U.S. or other overseas exchange may be restricted, and our subsidiaries’ business, and our reputation, financial condition, and results of operations may be materially and adversely affected. Additionally, any failure to obtain or a delay in obtaining the necessary permissions from or completing the necessary filing procedures with the PRC governmental authorities to conduct offerings outside of Hong Kong or mainland China, which could cause the value of our shares of common stock to significantly decline or be worthless.see in full comparison
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. Our common stock closed as high assee in full comparison$1.64$10.96 and as low as$0.15$0.1713 per share between January 1,20242025 and December 31,20242025 on NYSE American. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business.
see in full comparison%A significant amount of our sales is generated through a few key customers, including large-sized wholesale distributors. We consider major customers to be those that accounted for more than 10% of sales revenues. For the fiscal year ended December 31, 2025, two major customers accounted for 69.7% of our total revenues. For the fiscal year ended December 31,2023,2024, two majorcustomercustomers accounted for91%a total of 77.0% of our total revenues. A change in strategy by these customers to emphasize products at a lower price point than we currently offer will limit future sales opportunities with these customers. The reductions of sales through this channel could adversely affect our business if we are not able to replace the volume through other sales outlets and product offerings.
On May 30, 2023, the Company adopted the 2023 Equity Incentive Plan, or the 2023 Plan, for the purpose of granting share based compensation awards to current or prospective employees, directors, officers, advisors or consultants of the Company or its affiliates and align their interests with ours. The maximum aggregate number of shares of common stock we are authorized to issue pursuant to all awards under the 2023 Plan wassee in full comparison4,000,000.500,000. On December 31, 2024, the Company authorized an additional8,000,0001,000,000 shares of common stock under the 2023 Plan, bringing the total number of shares authorized under the 2023 Plan to12,000,000.1,500,000. On December 31, 2025, the Company authorized an additional 2,000,000 shares of common stock under the 2023 Plan, bringing the total number of shares authorized under the 2023 Plan to 3,500,000 As of the date of this Annual Report,4,000,0001,500,000 shares of common stock were granted under the 2023 Plan. We may adopt other share incentive plans in the future that permits granting of share-based compensation awards to employees and directors, which will result in significant share-based compensation expenses to us.
Full comparison: every changed paragraph (12)
Since these statements and regulatory actions are new, it is also highly uncertain in the interpretation and the enforcement of the above cybersecurity and overseas listing laws and regulation. There is no assurance that the relevant PRC governmental authorities would reach the same conclusion as us. If we and/or our subsidiaries are required to obtain approval or fillings from any governmental authorities, including the CSRC, in connection with the listing or continued listing of our securities on a stock exchange outside of Hong Kong or mainland China, it is uncertain how long it will take for us and/or our subsidiaries to obtain such approval or complete such filing, and, even if we and our subsidiaries obtain such approval or complete such filing, the approval or filing could be rescinded. Any failure to obtain or a delay in obtaining the necessary permissions from or complete the necessary filing procedure with the PRC governmental authorities to conduct offerings or list outside of Hong Kong or mainland China may subject us and/or our subsidiaries to sanctions imposed by the PRC governmental authorities, which could include fines and penalties, suspension of business, proceedings against us and/or our subsidiaries, and even fines on the controlling shareholder and other responsible persons, and our subsidiaries’ ability to conduct our business, our ability to invest into mainland China as foreign investments or accept foreign investments, or our ability to list on a U.S. or other overseas exchange may be restricted, and our subsidiaries’ business, and our reputation, financial condition, and results of operations may be materially and adversely affected. Additionally, any failure to obtain or a delay in obtaining the necessary permissions from or completing the necessary filing procedures with the PRC governmental authorities to conduct offerings outside of Hong Kong or mainland China, which could cause the value of our shares of common stock to significantly decline or be worthless.
Additionally, any failure to obtain or a delay in obtaining the necessary permissions from or completing the necessary filing procedures with the PRC governmental authorities to conduct offerings outside of Hong Kong or mainland China, which could cause the value of our shares of common stock to significantly decline or be worthless.
On April 2, 2025, President Trump signed an executive order imposing reciprocal tariffs on most of the United States’ trading partners under the International Emergency Economic Powers Act of 1977, including a baseline tariff of 10% and, in the case of certain trading partners with large trade surpluses, higher rates that became effective on April 9, 2025. As a result, beginning April 9, 2025, the applicable reciprocal tariff rate on imports from China is 34%, plus the existing 25% tariff and 6% import tax, which total 65%. President Donald Trump’s order also imposes 49%, 46% and 32% reciprocal tariffs on imports from Cambodia, VietnamCambodia,Vietnam and Indonesia, respectively, from which we import products for sale in the United States from time to time. Previously U.S. did not impose tariffs on imports from these countries, besides the 6% import tax.
The availability and cost of direct materials, including raw materials, packaging materials, energy and sourced products are critical to our operations. For example, we use substantial quantities of petrochemical-based raw materials in our manufacturing operations. The cost of some of these items has been volatile in recent years and availability has been limited at times. Ringold sources some materials from a limited number of suppliers, which, among other things, increases the risk of unavailability. In the fiscal years ended December 31, 20242025 and 2023,2024, 8.7%10.65% and 12.8%8.7% of the cost of revenue were for purchasing raw materials sourced from within China; 81.2%82.8% and 86%81.2% of the cost of revenue were for purchasing other supplies from suppliers in China that processed raw materials from out of China; and 10.1%6.55% and 1.2%10.1% of the cost of revenue were for purchasing raw materials sourced directly from Germany, the U.S., Japan, South Korea and other countries.countries, respectively. The prices of raw materials sourced from outside China may be affected by international trade costs such as tariffs, transportation and foreign exchange rates, or international pandemics including but not limited to the COVID-19 pandemic, as well as geopolitical issues and the war in Ukraine. As part of our ongoing supply chain diversification strategy, we have expanded our sourcing to include suppliers in Vietnam, Thailand, Malaysia and Indonesia. This geographic diversification reduces our concentration risk on Chinese suppliers and mitigates the impact of tariffs on our cost structure. Looking ahead, we believe 3D printing technology will fundamentally reduce the industry’s reliance on raw material imports from Southeast Asia. By leveraging advanced manufacturing technology domestically and partnering with local suppliers in the United States, we aim to build a supply chain that is both shorter and more responsive to market demand.
This dependency and any limited availability could cause us to reformulate products or limit our productionproduction. Decreased access to direct materials and energy or significant increased cost to purchase these items, as well as increased transportation and trade costs, delays due to government-mandated initiatives in response to COVID-19 and any corresponding inability to pass along such costs through price increases or meet demand requirements, as applicable, have had and could continue to have a material adverse effect on our financial condition, liquidity or results of operations.
Ink, coating, resin, sound padding, and glue are the principal raw materials used in our floorcovering products. We consider major suppliers to be those that accounted for more than 10% of the cost of revenues. During the fiscal year ended December 31, 2024,2025, we had threetwo suppliers who collectively accounted for 8.58 %44% of the total cost. During the fiscal year ended December 31, 2023,2024, we had three suppliers who collectively accounted for 32%39% of the total cost. An interruption in the supply of these or other raw materials or sourced products used in our business or in the supply of suitable substitute materials or products would disrupt our operations, which could have a material adverse effect on our business. We continually evaluate sources of our principal raw materials for competitive costs, performance characteristics, brand value, and diversity of supply.
A significant amount of our sales is generated through a few key customers, including large-sized wholesale distributors. We consider major customers to be those that accounted for more than 10% of sales revenues. For the fiscal year ended December 31, 2024, two major customers accounted for a total of 76.
%A significant amount of our sales is generated through a few key customers, including large-sized wholesale distributors. We consider major customers to be those that accounted for more than 10% of sales revenues. For the fiscal year ended December 31, 2025, two major customers accounted for 69.7% of our total revenues. For the fiscal year ended December 31, 2023,2024, two major customercustomers accounted for 91%a total of 77.0% of our total revenues. A change in strategy by these customers to emphasize products at a lower price point than we currently offer will limit future sales opportunities with these customers. The reductions of sales through this channel could adversely affect our business if we are not able to replace the volume through other sales outlets and product offerings.
Our audited financial statements for the fiscal year ended December 31, 2024 contain an explanatory paragraph regarding substantial doubt that the Company would continue as a going concern. As of and for the fiscal year ended December 31, 2024,2025, the Company had a working capital deficit of $ 5,781,202$4,965,652 and net cash providedused byin operating activities of only 243,506 .$5,681,238. As of and for the fiscal year ended December 31, 2023,2024, the Company had a working capital deficit of $ 6,231$5,781,202 and net cash usedprovided inby operating activities of $4,6only .$243,506. The Company may not have adequate liquidity to remain solvent and settle its obligations when payment become due. This going concern opinion could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. Future financial statements may include an explanatory paragraph with respect to our ability to continue as a going concern. Until we generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financing. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate our development plans. This may raise substantial doubts about our ability to continue as a going concern.
On May 30, 2023, the Company adopted the 2023 Equity Incentive Plan, or the 2023 Plan, for the purpose of granting share based compensation awards to current or prospective employees, directors, officers, advisors or consultants of the Company or its affiliates and align their interests with ours. The maximum aggregate number of shares of common stock we are authorized to issue pursuant to all awards under the 2023 Plan was 4,000,000.500,000. On December 31, 2024, the Company authorized an additional 8,000,0001,000,000 shares of common stock under the 2023 Plan, bringing the total number of shares authorized under the 2023 Plan to 12,000,000.1,500,000. On December 31, 2025, the Company authorized an additional 2,000,000 shares of common stock under the 2023 Plan, bringing the total number of shares authorized under the 2023 Plan to 3,500,000 As of the date of this Annual Report, 4,000,0001,500,000 shares of common stock were granted under the 2023 Plan. We may adopt other share incentive plans in the future that permits granting of share-based compensation awards to employees and directors, which will result in significant share-based compensation expenses to us.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and continue to affect the market prices of equity securities of many companies. Stock prices of many companies have fluctuated in a manner unrelated or disproportionate to the operating performance of those companies. Our common stock closed as high as $1.64$10.96 and as low as $0.15$0.1713 per share between January 1, 20242025 and December 31, 20242025 on NYSE American. In the past, stockholders have filed securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and the attention of management from our business and adversely affect our business.
Management's Discussion & Analysis (MD&A)
New heading “Cost of Revenue.”
New heading “Selling expenses.”
New heading “General and administrative expenses.”
New heading “Research and development expenses.”
New heading “Net (loss) income.”
New heading “Liquidity and Capital Resources”
Largest changes
“As a result of the cumulative effect of the factors described above, our net loss was $11,673,981 for the year ended December 31, 2025 and $4,379,875 for the same period in 2024. The increase in net loss was primarily due to the decrease in gross profit and increase in operating expenses, partly offset by the lack of impairment in goodwill.”see in full comparison
see in full comparisonCost of Revenue.Our cost of revenues was$11,351$10,024,453 for the year ended December 31,2024,2025, compared to$12,744,474$11,370,028 for the same period in2023.2024. Cost of revenues refers to the cost of material and labor cost. The percentage of direct material was over 90% of the total cost of revenues. The decrease of cost of revenues compared to the year ended December 31,20232024 was primarily due to thedecreaseddecreasepurchaseinpricesalesof material.volume. We paid tariffs of$184,645$847,953 for the year ended December 31,2024,2025, and$210,962$290,424 for the year ended December 31,2023.2024. The increase in tariff was mainly due to the new higher US tariff against goods imported from China.
see in full comparisonGeneral and administrative expenses.As shown below, our general and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional fees and other expenses incurred in connection with general operations. Our general and administrative expensesincreaseddecreased by$ 878,474$731,559 to$$3,067,218 for the year ended December 31,2024,2025, from$ 2,920,303$3,798,777 for theyearsameendedperiodDecemberin31, 2023.2024. Theincreasedecrease was mainly caused byshare-basedacompensationdecrease of$1,702,355 newly incurred$1,279,532 in2024,share-based compensation, a lack of $380,457 in impairment loss of equipment, a decrease of $111,661 in salary and social insurance, and partially offset bydecreasean increase in service fees of$$586,786,1,331,122.an increase in office expense of $106,562, and other items with minor changes.
Full comparison: every changed paragraph (36)
In April 2014, MARCO was established in China. All the import/export of our products areis conducted through MARCO.
The Company typically enters into agreements with its customers where itsit’s set forth the product to be sold, the price, payment terms, and any antecedent terms such as shipping and delivery specifications; these terms and conditions are most typically specified in purchase order issued by its customers to the Company. The Company typically recognizes revenue at point in time, which is when physical possession and legal title are transferred to the customer, this may be a shipping port or a specified destination; at this point the Company reasonably expect to be paid for the product, or in the event where it was paid advance, the Company’s performance obligations have been satisfied and those funds are considered earned by the Company. If the Company sells products on account to customers, they are typically paid within 90 days. Any funds received in advance for the products yet to be transferred to its customer are contract liabilities that are recorded as unearned revenue on the Company’s consolidated balance sheets. Nil$1,349,672 and $1,084,484nil were recognized as revenue from unearned revenue during the years ended December 31, 20242025 and 2023.2024, respectively.
Comparison of Years Ended December 31, 202 ,2025, and 2022024
The following table sets forth key components of our results of operations during the years ended December 31, 2022025 3,and 2024, both in dollars and as a percentage of our revenues.
Revenues.
Revenues. Our revenues were $1$13,601,451 for the year ended December 31, 2024,2025, representing ana increasedecrease of $ 1,378,125$1,748,403 or 1 %11.4% from $13,971,729$15,349,854 for the year ended December 31, 2023.2024. The increasedecrease was mainly due to ana increasedecrease in customer demand and sales volume for the year ended December 31, 20242025 as compared to the same period of 2023.2024 as a result of the new US tariff.
Cost of Revenue.
Cost of Revenue. Our cost of revenues was $11,351$10,024,453 for the year ended December 31, 2024,2025, compared to $12,744,474$11,370,028 for the same period in 2023.2024. Cost of revenues refers to the cost of material and labor cost. The percentage of direct material was over 90% of the total cost of revenues. The decrease of cost of revenues compared to the year ended December 31, 20232024 was primarily due to the decreaseddecrease purchasein pricesales of material.volume. We paid tariffs of $184,645$847,953 for the year ended December 31, 2024,2025, and $210,962$290,424 for the year ended December 31, 2023.2024. The increase in tariff was mainly due to the new higher US tariff against goods imported from China.
Gross profit and gross margin. Our gross profit was $
3,979,826Our gross profit was $3,576,998 for the year ended December 31, 2024,2025, compared with a gross profit of $1,214,364$3,979,826 for the same period in 2023.2024. Gross margin inwas creasedlargely from 8.7% in 2023 to 25.9 % in 2024 due to creased purchase price of material and goods for sale.flat.
Selling expenses.
Selling expenses. As shown below, our selling expenses consist primarily of compensation and benefits to our selling department and other expenses incurred in connection with generalsales operations. Our selling expenses creasedincreased by $ 86,834$8,802,650 to $1, 071,633$9,874,283 for year ended December 31, 2024,2025, from $1,158,467$1,071,633 for the year ended December 31, 2023.2024, Thewhich crease iswas mainly duecaused toby decreasean increase of $8,065,592 in freightshare-based expensecompensation, an increase of $$505,194 313,496in resultedrent from decreasethe new US warehouse, an increase of $143,218 in revenuesalaries ,and whichsocial isinsurance, partiallyand offsetan by share-based compensationincrease of $236,250 newly incurred$82,058 in 2024.freight.
General and administrative expenses.
General and administrative expenses. As shown below, our general and administrative expenses consist primarily of compensation and benefits to our general management, finance and administrative staff, professional fees and other expenses incurred in connection with general operations. Our general and administrative expenses increaseddecreased by $ 878,474$731,559 to $$3,067,218 for the year ended December 31, 2024,2025, from $ 2,920,303$3,798,777 for the yearsame endedperiod Decemberin 31, 2023.2024. The increasedecrease was mainly caused by share-baseda compensationdecrease of $1,702,355 newly incurred$1,279,532 in 2024,share-based compensation, a lack of $380,457 in impairment loss of equipment, a decrease of $111,661 in salary and social insurance, and partially offset by decreasean increase in service fees of $$586,786, 1,331,122.an increase in office expense of $106,562, and other items with minor changes.
Research and development expenses.
Research and development expenses. Our research and development expenses were $ $ 783,356$2,090,835 for the year ended December 31, 2024,2025, compared to $1,899,299$783,356 for the same period in 2023. In 2024, The R&D expenses creased in 2024 mainly due to less R &D projects conducted in 2024.
Impairment in goodwill.goodwill
. In the year ended December 31, 2024, we recognized an impairment charge of $2,$2,507,455 507,455 onin goodwill resulted from the acquisitions of Cedar Modern Limited and Raleigh Industries Limited in 2024 Liquidity and Capital Resources As of December 31, 2024 and 2023, we had cash of $ 5,164 and $1,101,443. respectively.2024.
Net (loss) income.
As a result of the cumulative effect of the factors described above, our net loss was $11,673,981 for the year ended December 31, 2025 and $4,379,875 for the same period in 2024. The increase in net loss was primarily due to the decrease in gross profit and increase in operating expenses, partly offset by the lack of impairment in goodwill.
Liquidity and Capital Resources
As of December 31, 2025 and 2024, we had cash of $1,030,612 and $245,164, respectively. To date, we have financed our operations primarily through our business operations, borrowings from our stockholders, related and unrelated parties, and proceeds from IPO.
Net cash used in operating activities was $1,233,491$5,681,239 for the year ended December 31, 2024, as compared to $4,678,716 net cash used in operating activities for the year ended December 31, 2023.2025.
The net cash used in operating activities for the year ended December 31, 20242025 was mainly due to our net loss of $4,379,875$11,673,981 adjusted for (i) a net increase of non-cash items of $4,945,053$9,674,865 which consisted primarily of share-based compensation, depreciation and amortization, and incomea fromtax settlementpayable of convertible notes,write-off, and (ii) a net decrease of $1,798,669$3,682,123 in changes in operating assets and liabilities. The net decrease in changes in operating assets and liabilities was attributable primarily to decreasean increase of $1,084,484$4,122,229 in unearnedinventory, revenue anda decrease of $711,533$2,128,954 in due to related party, and an increase of $520,042 in accounts receivable, partially offset by an increase of $1,469,948 in accruals and other payablespayables, froman Decemberincrease 31,of 2023$1,471,485 toin Decemberunearned 31,revenue, 2024.and a decrease of $274,182 in prepayments.
Net cash used in operating activities was $1,233,491 for the year ended December 31, 2024. The net cash used in operating activities for the year ended December 31, 20232024 was mainly includeddue to our net loss of $7,132,573,$4,379,875 adjusted for (i) a net increase of non-cash items of $694,057,$4,945,053 which consisted primarily of share-based compensation, depreciation and amortizationamortization, and allowanceincome forfrom badsettlement debt,of convertible notes, and (ii) a net increasedecrease of $1,759,800$1,798,669 in changes in operating assets and liabilities. The net increasedecrease in changes in operating assets and liabilities was attributable primarily to thea decrease in inventory of $1,916,878, increase in accrued expenses and other payables for $1,827,143, and increase$1,084,484 in unearned revenue and a decrease of $1,084,197,$711,533 in accruals and partiallyother offset by the increase in account receivables of $1,186,720 and decrease in account payables of 2,381,174.payables.
Net cash used in investing activities was $296,363$891,768 for the year ended December 31, 2024, as compared to nil for the year ended December 31, 2023.2025. The net cash used in investing activities for the year ended December 31, 2024 was2025 mainly attributableincluded tothe paymentpayments offor construction in process.progress and purchasing equipment.
Net cash used in investing activities was $
296,363 for the year ended December 31, 2024. The net cash used in investing activities for the year ended December 31, 2024 was mainly attributable to payment for construction in progress.
Net cash provided by financing activities for the year ended December 31, 2025 was $7,455,6 . The net cash provided by financing activities was mainly from the net proceeds of $8,228,59 from issuance of common stock, partly offset by net repayment for loan payable of $772,928.
Net cash used in financing activities for the year ended December 31, 2024 was $1,186,585 as compared to net cash provided by financing activities of $5,376,489 for the year ended December 31, 2023.$1,186,585. Net cash used in 2024 was mainly due to net paymentrepayment for bank borrowings and loans forof $2,549,597,$1,823,498, settlement of convertible notes forof $50,000, and$500,000, partially offset by the receiptproceeds from related party forof $1,136,913. Net cash provided by financing activities for the year ended December 31, 2023 was mainly attributable to the net proceeds from IPO of $5,965,750.
The
The Company’s subsidiary NDC has antwo operating lease primarilyleases for its corporate office and equipment.warehouse. The lease contractcontracts waswere within three years and the renewal was at landlord’s discretion.
Operating lease expenses were $438,854 and $168,331 for the years ended December 31, 2025 and 2024, respectively.
Operating lease expenses were $438,854 and $30,274 for the years ended December 31, 2024 and 2023, respectively Off-Balance Sheet Transactions We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that is material to investors.
JOBS Act
On April 5, 2012, the JOBS Act was signed into law. The JOBS Act contains provisions that, among other things, eases certain reporting requirements for qualifying public companies. We will qualify as an “emerging growth company” and under the JOBS Act will be allowed to comply with new or revised accounting pronouncements based on the effective date for private (not publicly traded) companies. We are electing to delay the adoption of new or revised accounting standards, and as a result, we may not comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. As a result, our financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
What changed in the latest 10-Q
Risk Factors
As a smaller reporting company, we are not required to make disclosures under this item.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this prospectus.”
New heading “US Dollars are denoted herein by “USD”, “$” and “dollars””
New heading “Key Factors that Affect Results of Operations”
New heading “Critical Accounting Policies and Estimates”
New heading “Use of Estimates”
New heading “Revenue Recognition”
New heading “Fair Value of Financial Instruments”
New heading “Recent Accounting Pronouncements”
New heading “Selling Expenses.”
New heading “Development Expenses.”
Removed heading “Research and development expenses.”
Removed heading “Net (loss) income.”
Removed heading “Comparison for the Nine Months Ended September 30, 2025 and 2024”
Removed heading “Cost of revenues.”
Removed heading “Gross profit and gross margin.”
Removed heading “General and administrative expenses.”
Removed heading “Net (loss) income.”
Largest changes
“The information set forth in this section contains certain “forward-looking statements”, including, among others (i) expected changes in our revenue and profitability, (ii) prospective business opportunities and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. …”see in full comparison
“Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical merits of that position. …”see in full comparison
“Our cost of revenues was $4,986,401 for the three months ended September 30, 2025, compared to $929,002 for the same period in 2024. Cost of revenues refers to the cost of material and labor cost; the percentage of direct material was over 90% of the total cost of revenues. We paid tariffs of $251,728 during the three months ended September 30, 2025, and $57,613 during the three months ended September 30, 2024. The increase in tariff was mainly due to the new higher US tariff against goods imported from China.”see in full comparison
“Our cost of revenues was $10,653,499 for the nine months ended September 30, 2025, compared to $6,968,809 for the same period in 2024. Cost of revenues refers to the cost of material and labor cost; the percentage of direct material was over 90% of the total cost of revenues. We paid tariffs of $572,649 during the nine months ended September 30, 2025, and $197,060 during the nine months ended September 30, 2024. The increase in tariff was mainly due to the new higher US tariff against goods imported from China..”see in full comparison
“494,653 for the three months ended March 31, 2026, compared to $390,658 for the 2025. Gross margin was ( 10.0 %), compared to 11.4%. The decrease in gross margin reflects three principally transitional factors associated with the launch phase the Company's SuperOak brand into several major U.S. …”see in full comparison
“You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this prospectus.”see in full comparison
Full comparison: every changed paragraph (100)
The following discussion should be read in conjunction with our unaudited condensed consolidated financial statements and Annual Report on Form 10-K for the year ended December 31, 2025.
The information set forth in this section contains certain “forward-looking statements”, including, among others (i) expected changes in our revenue and profitability, (ii) prospective business opportunities and (iii) our strategy for financing our business. Forward-looking statements are statements other than historical information or statements of current condition. Some forward-looking statements may be identified by use of terms such as “believes”, “anticipates”, “intends” or “expects”. These forward-looking statements relate to our plans, liquidity, ability to complete financing and purchase capital expenditures, growth of our business including entering into future agreements with companies, and plans to successfully develop and obtain approval to market our product. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. Although we believe that our expectations with respect to the forward-looking statements are based upon reasonable assumptions within the bounds of our knowledge of our business and operations, in light of the risks and uncertainties inherent in all future projections, the inclusion of forward-looking statements in this prospectus should not be regarded as a representation by us or any other person that our objectives or plans will be achieved. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements. Our revenues and results of operations could differ materially from those projected in the forward-looking statements as a result of numerous factors, including, but not limited to, the following: the risk of significant natural disaster, the inability of our company to insure against certain risks, inflationary and deflationary conditions and cycles, currency exchange rates, and changing government regulations domestically and internationally affecting our products and businesses.
You should read the following discussion and analysis in conjunction with the Financial Statements and Notes attached hereto, and the other financial data appearing elsewhere in this prospectus.
US Dollars are denoted herein by “USD”, “$” and “dollars”
Overview
We commenced operations in August 2013 with the establishment of NBS in Delaware.
In December 2013, NCP was established in China. Most of our products are manufactured through NCP.
In March 2014, Benchwick was established in Hong Kong. All the wholesale and distribution operations are conducted through Benchwick.
In April 2014, MARCO was established in China. All the import/export of our products is conducted through MARCO.
In February 2016, NDC was established in California. NDC is a distribution center in the United States and maintains a small inventory for retail sales.
In September 2017, Ringold was established in China. All of the raw materials are procured from third parties through Ringold.
In September 2018, Crazy Industry was established in China. Crazy Industry is the research and development hub.
In March 2022, Northann, our current ultimate holding company, was incorporated in Nevada as part of the restructuring transactions in contemplation of our initial public offering. In connection with its incorporation, in April 2022, we completed a share swap transaction and issued common stock and Series A Preferred Stock of Northann to the then existing shareholders of NBS, based on their then respective equity interests held in NBS. NBS then became our wholly owned subsidiary.
In October 2023, the Company consummated the initial public offering of 1,380,000 shares of common stock (including over allotment to underwriters), par value $0.001 per share, at an offering price of $5.00 per share.
Our revenue mainly consists of wholesale and retail of the vinyl flooring products, which are primarily marketed and sold in the United States and Canada.
Our cost refers to the cost of material and labor cost. The percentage of direct material was over 90% of the total cost of revenue. If the availability of direct materials (raw materials, packaging, sourced products, energy) decreases, or these costs increase, and we are unable to either offset or pass along increased costs to our customers, our financial condition, liquidity or results of operations could be adversely affected.
Key Factors that Affect Results of Operations
The Company believes the key factors affecting its financial condition and results of operations include the following:
Critical Accounting Policies and Estimates
Use of Estimates
The preparation of these consolidated financial statements requires management of the Company to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues, costs and expenses, and related disclosures. On an on-going basis, the Company evaluates its estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. Identified below are the accounting policies that reflect the Company’s most significant estimates and judgments, and those that the Company believes are the most critical to fully understanding and evaluating its consolidated financial statements.
Revenue Recognition
The Company recognizes revenues when its customer obtains control of promised goods or services, in an amount that reflects the consideration which the Company expects to receive in exchange for those goods or services. The Company recognizes revenues following the five-step model prescribed under ASU No. 2014-09: (i) identify contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenues when (or as) the Company satisfies the performance obligation.
Revenue for sales of products which are primarily comprised of hardwood floors and three-dimensional printed flooring are recognized at the time of delivery of the products set forth in contracts with customers. At the time of delivery, physical and legal control of the asset is passed from the Company to its customer, at which time the Company believes it has satisfied the single performance obligation to complete a sales transaction in order to recognize revenue. The Company’s contracts do not allow for returns, refunds, or warranties; however, it is customary in the industry to manufacturers to ship a small portion of extra product to allow for product quality issues. Also, as matter of good business practice, under very specific situations, the Company has historically agreed to provide minor discounts to customers who made complaints on products purchased. The Company has recorded these costs as period expenses when incurred as the Company is not able to reliably estimate such future expenses.
Revenues are recognized when control of the promised goods or services is transferred to our customers, which may occur at a point in time or over time depending on the terms and conditions of the agreement, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
Practical expedients and exemption
The Company has not incurred any costs to obtain contracts and does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.
The Company typically enters into agreements with its customers where it’s set forth the product to be sold, the price, payment terms, and any antecedent terms such as shipping and delivery specifications; these terms and conditions are most typically specified in purchase order issued by its customers to the Company. The Company typically recognizes revenue at point in time, which is when physical possession and legal title are transferred to the customer, this may be a shipping port or a specified destination; at this point the Company reasonably expect to be paid for the product, or in the event where it was paid advance, the Company’s performance obligations have been satisfied and those funds are considered earned by the Company. If the Company sells products on account to customers, they are typically paid within 90 days. Any funds received in advance for the products yet to be transferred to its customer are contract liabilities that are recorded as unearned revenue on the Company’s consolidated balance sheets. $674,690 and nil were recognized as unearned revenue during the three months ended March 31, 2026 and 2025, respectively.
Fair Value of Financial Instruments
U.S. GAAP establishes a three-tier hierarchy to prioritize the inputs used in the valuation methodologies in measuring the fair value of financial instruments. This hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three-tier fair value hierarchy is:
Level 1 – observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 – include other inputs that are directly or indirectly observable in the marketplace.
Level 3 – unobservable inputs which are supported by little or no market activity.
The carrying value of the Company’s financial instruments, including cash, accounts receivable, other current assets, accounts payable, and accruals and other payable approximate their fair value due to their short maturities.
In accordance with ASC 825, for investments in financial instruments with a variable interest rate indexed to performance of underlying assets, the Company elected the fair value method at the date of initial recognition and carried these investments at fair value. Changes in the fair value are reflected in the accompanying consolidated statements of operations and comprehensive loss as other income (expense). To estimate fair value, the Company refers to the quoted rate of return provided by banks at the end of each period using the discounted cash flow method. The Company classifies the valuation techniques that use these inputs as Level 2 of fair value measurements.
As of March 31, 2026 and December 31, 2025, the Company had no investments in financial instruments.
Income tax
The Company accounts for income taxes using an asset and liability approach which allows for the recognition and measurement of deferred tax assets based upon the likelihood of realization of tax benefits in future years. Under the asset and liability approach, deferred taxes are provided for the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. A valuation allowance is provided for deferred tax assets if it is more likely than not that these items will either expire before the Company is able to realize their benefits, or that future deductibility is uncertain.
Under ASC 740, a tax position is recognized as a benefit only if it is “more likely than not” that the tax position would be sustained in a tax examination, with a tax examination being presumed to occur. The evaluation of a tax position is a two-step process. The first step is to determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including the resolution of any related appeals or litigations based on the technical merits of that position. The second step is to measure a tax position that meets the more-likely-than-not threshold to determine the amount of benefit to be recognized in the financial statements. A tax position is measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent period in which the threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not criteria should be de-recognized in the first subsequent financial reporting period in which the threshold is no longer met. Penalties and interest incurred related to underpayment of income tax are classified as income tax expense in the year incurred. GAAP also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosures and transition.
The Company accounts for an unrecognized tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained upon examination by the tax authorities. The Company considers and estimates interest and penalties related to the gross unrecognized tax benefits and includes as part of its income tax provision based on the applicable income tax regulations.
The Company did not accrue any liability, interest or penalties related to uncertain tax positions in the provision for income taxes line of the consolidated statements of operations for the three months ended March 31, 2026. The Company had no uncertain tax position for the three months ended March 31, 2026 and 2025.
Recent Accounting Pronouncements
See the discussion of the recent accounting pronouncements contained in Note 2 to the consolidated financial statements, “Summary of Significant Accounting Policies”.
Comparison for theof Three Months Ended SeptemberMarch 30,31, 20252026, and 20242025
The following table sets forth key components of our results of operations forduring the three months ended SeptemberMarch 30,31, 20252026 and 2024,2025, both in dollars and as a percentage of our revenues.
Revenues were $4,961,778 for the three months ended March 31, 2026, an increase of $1,524,051, or 44.3%, from $3,437,727 for the comparable period of 2025. The increase was primarily driven by the onboarding of the Company's SuperOak brand of 3D-printed hybrid wood flooring products by several major U.S. national retail chains during the quarter, alongside continued sales of the Company's Benchwick branded products. In February 2026, the Company received a $2.0 million purchase order from a leading Midwest U.S. home-improvement retail chain for the SuperOak product line, which the Company began to fulfill during the quarter; the Company also commenced initial shipments of SuperOak products to additional major U.S. retail accounts. The quarter represented the strongest year-over-year revenue growth since the Company's IPO and, in management's view, demonstrates the growing acceptance of the Company's branded products by the major U.S. retail-chain channel
Our revenues were $3,545,412 for the three months ended September 30, 2025, representing an increase of 987,827 or 38.6% from $2,557,585 for the three months ended September 30, 2024. The increase was mainly due to increase in customer demand and our sales volume in the three months ended September 30, 2025 as compared to the same period in 2024.
Cost of revenues.Revenue.
Cost of revenues was $5,456,431 for the three months ended March 31, 2026, compared to $3,047,069 for the 2025.
The increase was primarily due to
(i) higher sales volume associated with the initial roll-out of SuperOak products to several major U.S. national retail chains; (ii) one-time vendor-setup, listing, compliance and inbound-freight costs to retailer distribution centers; and (iii) higher U.S.
tariffs on goods imported from China — tariffs paid were $358,901 for Q1 2026, compared to $104,928 for Q1 2025. Direct materials represented over 90% of cost of revenues
Gross
Profit
Our cost of revenues was $4,986,401 for the three months ended September 30, 2025, compared to $929,002 for the same period in 2024. Cost of revenues refers to the cost of material and labor cost; the percentage of direct material was over 90% of the total cost of revenues. We paid tariffs of $251,728 during the three months ended September 30, 2025, and $57,613 during the three months ended September 30, 2024. The increase in tariff was mainly due to the new higher US tariff against goods imported from China.
Gross profit and gross margin.Margin.
Gross profit was
$(
494,653 for the three months ended March 31, 2026, compared to $390,658 for the 2025. Gross margin was ( 10.0 %), compared to 11.4%. The decrease in gross margin reflects three principally transitional factors associated with the launch phase the Company's SuperOak brand into several major U.S. national retail chains: (i) vendor-setup, listing inbound-freight costs to retailer distribution centers absorbed in cost of revenues ahead of full-volume run-rate; (ii) initial introductory pricing extended to these retail partners to support placement sell-through during the launch phase; and (iii) higher U.S. tariffs on China-origin inputs. Management expects gross margin to recover as these new retail relationships transition to steady-state run-rate over the balance of 2026.
Selling Expenses.
NCL insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
No Form 4 stock transactions in this period.
Well-known investors holding NCL (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 100,592 | $16.0K | 0.0% | New position |