Company: NCL
Filing Date: 2025-11-18
Form Type: 424B3
Source: 0001575872-25-000699
Chunk: 12

Company: Northann Corp.
Filing Date: 2025-11-18
Form: 424B3
Chunk 12
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 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.

On December 22, 2017, the Tax Cuts and Jobs Act
(the “Tax Act”) was enacted by the U.S. government which included a wide range of tax reform affecting businesses including
the corporate tax rates, international tax provisions, tax credits and deduction with majority of the tax provision effective after December
31, 2017. Certain activities conducted in foreign jurisdictions may result in the imposition of U.S. corporate income taxes on the Company
when its subsidiaries, controlled foreign corporations (“CFCs”), generate income that is subject to Subpart F or GILTI under
the U.S. Internal Revenue Code beginning after December 31, 2017.

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 nine months ended September 30, 2025. The Company had no uncertain tax position for the nine months ended September 30, 2025 and 2024.

| F-7 |

Foreign Currency and Foreign Currency Translation

The functional currency of the Company is the
Chinese Yuan (“RMB”), as their functional currencies. An entity’s functional currency is the currency of the primary
economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and
expends cash. Management’s judgment is essential to determine the functional currency by assessing various indicators, such as cash
flows, sales price and market, expenses, financing and inter-company transactions and arrangements.

Foreign currency transactions denominated in currencies
other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the
transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are re-measured at the applicable
rates of exchange in effect at that date. Gains and losses resulting from foreign currency