Company: NCL
Filing Date: 2025-12-04
Form Type: DEF 14A
Source: 0001575872-25-000744
Chunk: 43

Company: Northann Corp.
Filing Date: 2025-12-04
Form: DEF 14A
Chunk 43
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 federal income
tax consequences of a Reverse Split will vary among stockholders depending upon whether they receive solely a reduced number of shares
of common stock in exchange for their old shares of common stock or a full share in lieu of a fractional share. We believe that because
the Reverse Split is not part of a plan to increase periodically a stockholder’s proportionate interest in our assets or earnings
and profits, the Reverse Split should have the following federal income tax effects. The Reverse Split is expected to constitute a “recapitalization”
for U.S. federal income tax purposes pursuant to Section 368(a)(1)(E) of the Code. A stockholder who receives solely a reduced number
of shares of common stock will not recognize gain or loss. In the aggregate, such a stockholder’s basis in the reduced number of
shares of common stock will equal the stockholder’s basis in its old shares of common stock and such stockholder’s holding
period in the reduced number of shares will include the holding period in its old shares exchanged. The Treasury Regulations provide
detailed rules for allocating the tax basis and holding period of shares of common stock surrendered in a recapitalization to shares
received in the recapitalization. Stockholders of our common stock acquired on different dates and at different prices should consult
their tax advisors regarding the allocation of the tax basis and holding period of such shares.

A stockholder who holds a
number of shares of common stock not evenly divisible by the Approved Split Ratio will automatically be entitled to receive an additional
fraction of a share of common stock to round up to the next whole share of common stock. The U.S. federal income tax consequences of
the receipt of such an additional fraction of a share are not clear. A stockholder that receives a full share in lieu of a fractional
share may be treated as though it received a distribution from us to the extent that the value of the full share exceeds the value of
the fractional share the stockholder otherwise would have received. Such distribution would generally be a dividend to the extent of
our current or accumulated earnings and profits. Any amount in excess of earnings and profits would generally reduce the stockholder’s
basis in their shares of common stock by the amount of such excess. The portion of the full share in excess of the fractional share would
generally have a tax basis equal to the amount recognized as a dividend and the holding period for such share would begin on the date
of the deemed distribution. Stockholders are urged to consult their own