Company: NCL
Filing Date: 2025-11-18
Form Type: 424B3
Source: 0001575872-25-000699
Chunk: 11

Company: Northann Corp.
Filing Date: 2025-11-18
Form: 424B3
Chunk 11
---
 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 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. $1,594,981 and $nil were recognized as unearned revenue as of September 30, 2025 and December 31, 2024.

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