Northann Corp.
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ITEM 1. | BUSINESS |
Overview
Overview
Our vision is to become a world class one-stop decorating solutions provider.
Our mission is to timely deliver high-quality and affordable products and to continue to actively participate in the further development of the additive manufacturing industry.
We
bring additive manufacturing, commonly known as 3D printing, and the volume production of innovative building solutions, to your home or business. Our robust portfolio of manufacturing solutions relies upon the use of ink, coating, resin, sound padding, glue and other raw materials to create a wide variety of flooring, decking and other products for customers throughout North America, Europe and other regions under the brand name “Benchwick.” We believe that additive manufacturing is one of the most exciting and eco-friendly technologies in the market today. Additive manufacturing contributes to greenhouse gas reduction through several interrelated mechanisms. Material efficiency is realised through additive manufacturing’s ability to reduce material waste by up to 40% and lower production energy consumption by more than 50% compared to traditional manufacturing methods.
1
According to the recently published Wohlers Report 2024, additive manufacturing of metal components recorded growth of 24.4% in 2023.2
An estimated 3,793 metal systems were shipped in total, compared to 3,049 units in 2022. 3
Innovation has always been our core value. Our commitment to new approaches in designing and manufacturing drives us to create new ways to improve how our core customers live and work. Crazy Industry invests substantial resources in research and product development and is committed to rapidly building new products and customizable and functional solutions to delight our customers. Crazy Industry’s product development team is committed to product design and development, and they focus their efforts on enhancing function, use, performance and flexibility of our products. Our subsidiaries, NBS, NCP and Crazy Industry, own a portfolio of
84
granted, pending or published patents. The products reflect the evolving needs of the core customer’s home and business needs. We strive to make the products customizable, functional and affordable. Presently, NCP manufactures four proprietary solutions in vinyl flooring using innovative 3D printing technology: Infinite Glass, DSE, TruBevel and MattMaster. Each solution offers distinct functionalities and aesthetic finishes. In addition, the Company has developed and launched its SuperOak product line, which leverages 3D printing technology to produce premium flooring products. SuperOak has gained significant traction in the U.S. market and is now carried by major retail supermarkets, reflecting growing consumer demand for differentiated, high-quality flooring alternatives amid the commoditization of conventional vinyl flooring. With the establishment of our South Carolina manufacturing facility, we have transitioned from an OEM-dependent model to a fully integrated, end-to-end operation encompassing product design, manufacturing, and distribution. This vertical integration significantly accelerates our innovation-to-customer cycle, reduces costs, and enables us to bring more innovative products and greater value to our customers and consumers. In addition, we are actively integrating artificial intelligence into our operations, including product design, production optimization, quality control, supply chain management and administrative functions. We believe the broad adoption of AI across our business will have a profound impact on our industry and has the potential to significantly reduce our operating and management costs over time, further strengthening our competitive position. Traditionally, flooring customers have faced a complex selection process that often requires the assistance of professional designers to match products to their specific needs and preferences. As AI technology rapidly matures, we plan to leverage advanced AI-driven tools to simplify and personalize the customer experience, enabling consumers to effortlessly discover and customize products that best suit their spaces and lifestyles, ultimately delivering a more satisfying and seamless end-to-end experience from product selection to installation.
Our revenue mainly consists of wholesale and retail of vinyl flooring and 3D printed flooring products, including our flagship SuperOak line, which are primarily marketed and sold in the United States and Canada. Our customer base has expanded to include major retail supermarkets and local building contractors in addition to large-sized wholesale distributors. During the fiscal year ended December 31, 2025, approximately 38% of our revenue came from vinyl flooring products, 40% from decorative boards, and 22% from our premium SuperOak product line.
Our products are distributed through multiple channels. During the fiscal year ended December 31, 2025, we generated 92.91% of our revenue from wholesale distribution and 7.09% from retail sales, compared to 98.79% and 0.19%, respectively, for the fiscal year 2024. The significant increase in retail revenue reflects our expanding presence through major retail partners. We sell our products primarily under the brand name Benchwick and the premium brand SuperOak. Our sales are made through purchase orders from distributors and retailers. We have recently expanded our retail distribution footprint by entering vendor agreements with several of the largest home improvement retail chains in North America, which we expect to significantly increase our retail channel revenue beginning in fiscal year 2026.
NBS has also licensed some of its patents to i4F Licensing N.V. (“i4F”) with the goal to promote the technologies covered by those patents in the flooring industry. We believe that a wider market acceptance of 3D printed flooring will help to establish the “Benchwick” brand further and penetrate the markets and encourages innovation and changes to an already developed and static industry.
We serve customers in North America (mainly the United States and Canada), Europe and other regions. During the fiscal year ended December 31, 2025, 99.22% of our revenue came from customers in the United States and 0.78% came from customers in Canada. During the fiscal year ended December 31, 2024, 94.8% of our revenue came from customers in the United States and 5.0% came from customers in Canada. During the fiscal years ended December 31, 2025 and 2024, less than 1% of the revenue came from customers in Europe.
1
Additive Manufacturing as a Catalyst for Low-Carbon Production and the Renewable Energy Transition in Electric Vehicles, https://www.mdpi.com/2227-7080/13/10/428#B49-technologies-13-00428
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2
https://www.3printr.com/wohlers-report-2024-3d-printing-market-grew-by-11-1-percent-in-2023-1470305/
3
https://www.3printr.com/wohlers-report-2024-3d-printing-market-grew-by-11-1-percent-in-2023-1470305/
Recent Developments
New Factory and Financing
On July 26, 2024, the Company entered into a lease agreement (as amended on August 5, 2024, the “Lease Agreement”) with SKY SC LLC (the “Landlord”), with a commencement date of August 20, 2024 (the “Commencement Date”). The Lease Agreement premises (the “Premises”) includes approximately 106,610 square feet that is a portion of a 221,000 square feet building located at 2251 Catawba River Rd., Fort Lawn, South Carolina, USA. The Premises includes 4,560 square feet of office space and 98,400 square feet of industrial space. The Lease Agreement has a term of five years. The rent of the Lease Agreement will increase annually, from $33,315.63 per month in the first year to $37,497.03 per month in the fifth year. The Company is obligated to pay a security deposit of $97,370.47 in the form of immediately available funds. The Company has a first right of refusal to purchase the entire property for $12,000,000 in the first year of the term. The decision to purchase must be exercised with 10 days of notice from the Landlord and the closing must occur within 90 days.
On November 19, 2024, the Company entered into a First Amendment of Lease with the Landlord (the “Amendment”). Under the Amendment, the Commencement Date has been amended from August 20, 2024 to November 1, 2024. Under the Amendment, the Landlord acknowledges that the Company has paid the first full month’s installment of the Base Rent (as defined in the Lease Agreement), and the Company shall pay the first full month’s estimated cost of the Company’s pro rata share of Taxes, Insurance, and Common Area Maintenance charges (all as defined under the Lease Agreement). The Landlord and Company acknowledges that each other party is not in default of the Lease Agreement, and that there are no conditions that, with the passage of time or giving of notice, would be deemed to be a default on the part of either the Company or the Landlord. The Landlord also acknowledges and agrees that 3D Printing Dev, LLC, a wholly owned subsidiary of the Company, subject to a separate assignment and assumption agreement, assumes the Lease Agreement starting from the execution of the Amendment.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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ITEM 7. |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
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 June 2020, Dotfloor was established in California. Dotfloor operates dotfloor.com, our online store that offers our vinyl flooring products to retail customers in the United States.
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:
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We may fail to innovate or offer new products which align with changing market and customer demand. |
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Our business may face risks of clients’ default on payment. |
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We may not manage our growth effectively, and our profitability may suffer. |
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Our reputation and brand recognition is crucial to our business. Any harm to our reputation or failure to enhance our brand recognition may materially and adversely affect our business, financial condition and results of operations. |
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Increases in labor costs and market price of raw materials may adversely affect our gross margin and results of operations. |
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Certain of our products have historically faced significant competition both in the United States and Canada markets, and we have successfully competed against our competitors with our customer service, quality products and rapid fulfilment of customer orders. However, our business could be adversely affected by competitors who reduce prices, improve quality of the products they offer or take other competitive actions, which may reduce our customers’ purchases of products from us. |
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Rising inflation rate may adversely affect our results of operation. Recently, inflation has trended significantly higher than in prior periods, which may negatively impact our business. Ongoing labor shortages and surge of oil and gas price, driven in part by the COVID-19 pandemic, geopolitical issues and the war in Ukraine, continue to have adverse macroeconomics impact and may result in our cost overruns. In an effort to mitigate the impact, we have raised the price of products to cover increase in costs and slowed down investments on products with low profit-margins. |
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. $1,349,672 and nil were recognized as unearned revenue during the years ended December 31, 2025 and 2024, 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 December 31, 2025 and 2024, 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 year ended December 31, 2025. The Company had no uncertain tax position for the years ended December 31, 2025 and 2024.
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”.
Results of Operations
Comparison of Years Ended December 31, 2025, and 2024
The following table sets forth key components of our results of operations during the years ended December 31, 2025 and 2024, both in dollars and as a percentage of our revenues.
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December 31, |
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December 31, |
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2025 |
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2024 |
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Amount |
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% of Revenue |
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Amount |
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% of Revenue |
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Revenues |
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13,601,451 |
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100.0 |
% |
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15,349,854 |
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100.0 |
% |
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Cost of revenues |
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10,024,453 |
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73.7 |
% |
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11,370,028 |
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74.1 |
% |
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Gross profit |
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3,576,998 |
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26.3 |
% |
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3,979,826 |
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25.9 |
% |
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Operating expenses |
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Selling expenses |
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9,874,283 |
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72.6 |
% |
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1,071,633 |
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7.0 |
% |
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General and administrative expenses |
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3,067,218 |
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22.6 |
% |
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3,798,777 |
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24.7 |
% |
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Research and development expenses |
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2,090,835 |
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15.4 |
% |
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783,356 |
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5.1 |
% |
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Loss from operations |
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(11,455,338 | ||||||||||||
Recent SEC filings
- 2026-10-07 8-K Officer/Director Change; Other Events; Financial Statements and Exhibits
- 2026-10-01 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-08-31 8-K Delisting Notice; Changes in Auditor
- 2026-08-24 8-K Delisting Notice; Financial Statements and Exhibits
- 2026-08-24 8-K/A Changes in Auditor; Financial Statements No Longer Reliable; Financial Statements and Exhibits
- 2026-08-21 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-08-10 8-K Delisting Notice; Changes in Auditor; Financial Statements No Longer Reliable; Officer/Director Change; Financial Statements and Exhibits
- 2026-05-29 S-8 Employee Benefit Plan Registration
- 2026-05-19 10-Q Quarterly Report
- 2026-04-14 10-K Annual Report
- 2026-03-02 8-K Delisting Notice; Other Events; Financial Statements and Exhibits
- 2026-01-02 8-K Other Events; Financial Statements and Exhibits
- 2025-12-23 8-K Material Agreement Entered; Unregistered Equity Sale; Financial Statements and Exhibits
- 2025-12-11 8-K Delisting Notice; Other Events; Financial Statements and Exhibits
- 2025-11-24 8-K Material Agreement Entered; Unregistered Equity Sale; Financial Statements and Exhibits