Company: NCL
Filing Date: 2025-01-14
Form Type: S-1/A
Source: 0001575872-25-000059
Chunk: 31

Company: Northann Corp.
Filing Date: 2025-01-14
Form: S-1/A
Chunk 31
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 in the usual course of business; or |

| ● | the total assets of the Company would be less than the sum of the total liabilities of the Company plus the amount that would be needed to satisfy the rights of stockholders who have preferential rights superior to those receiving the distribution, unless otherwise permitted under our Articles of Incorporation. |

According to the Limited Liability Company Act of
Delaware, in general, NBS may make a distribution to the Company to the extent, after giving effect to the distribution, all liabilities
of NBS, other than liabilities to the Company on account of the Company’s membership interests in NBS, do not exceed the fair value
of the assets of NBS.

According to the California General Corporation
Law, Dotfloor and NDC may make a distribution to their stockholders if the retained earnings of each of Dotfloor and NDC equal at least
the amount of the proposed distribution. The California General Corporation Law also provides that, in the event that sufficient
retained earnings are not available for the proposed distribution, a corporation may nevertheless make a distribution to its stockholders
if it meets two conditions, which generally stated are as follows: (i) the corporation’s assets equal at least 1 and 1/4 times its
liabilities, and (ii) the corporation’s current assets equal at least its current liabilities or, if the average of the corporation’s
earnings before taxes on income and before interest expenses for the two preceding fiscal years were less than the average of the corporation’s
interest expenses for such fiscal years, then the corporation’s current assets must equal at least 1 and 1/4 times its current liabilities.

Benchwick, Cedar Modern Limited, and Raleigh Industries
Limited, our Hong Kong subsidiaries, are permitted, under the laws of Hong Kong, to provide funding to the Company through dividend distribution
out of its profits. Under the current practices of the Hong Kong Inland Revenue Department, no tax is payable in Hong Kong in respect
of dividends paid to the Company as a Nevada corporation.

According to the PRC Company Law and the Foreign Investment
Law, each of Crazy Industry, Marco, Ringold and NCP, as a foreign invested enterprise, or FIE, is required to draw 10% of its after-tax
profits each year, if any, to fund a common reserve, which may stop drawing its after-tax profits if the aggregate balance of the common
reserve has already accounted for over 50% of its registered capital. These