Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 27

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 27
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 the
development of mobile deployment, peer-to-peer networking, and distributed storage. We also launched successive versions of our distributed
network configuration tool software, including a demo version, internal test version, and public test version. In September 2021, we
officially launched the Cloud Base Station Node Software, which marked a milestone in our business operations. Since 2021, we have begun
generating revenue from software products developed based on distributed networks. In 2022, we obtained the national high-tech enterprise
certification in China. In April 2023, we achieved the recognition as a specialized and sophisticated SME.

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The VIE Agreements

We are a holding company
incorporated in the Cayman Islands and not a Chinese operating company. As a holding company with no material operations of our own,
the majority of our operations are conducted through the VIE in China pursuant to the VIE Agreements. The VIE Agreements were entered
into by and among WFOE, the VIE, and the VIE’s Shareholders and include the Powers of Attorney, an Equity Interest Pledge Agreement,
an Exclusive Consulting and Services Agreement, an Exclusive Option Agreement, and Spousal Consent Letters. Due to PRC legal restrictions
on foreign ownership in certain internet-related businesses we may explore and operate in the future. We control and receive the economic
benefits of the VIE’s business operations through the VIE Agreements, and we consolidate the VIE for accounting purposes only because
we met the conditions under U.S. GAAP to consolidate the VIE. Pursuant to the VIE Agreements, the VIE shall pay service fees in an amount
equivalent to all of its net income to WFOE, while WFOE has the power to direct the activities of the VIE that can significantly impact
the VIE’s economic performance, has the obligation to absorb the expected losses of the VIE, and has the right to receive substantially
all of the economic benefits of the VIE. Such contractual arrangements are designed so that the operations of the VIE are solely for
the benefit of WFOE and ultimately, the Company. As such, under the U.S. GAAP, the Company is deemed to have a controlling financial
interest in, and be the primary beneficiary of, the VIE for accounting purposes and must consolidate the VIE. We are also subject to
the risk that the PRC government could disallow the VIE structure, which