Company: ZDAN
Filing Date: 2025-06-30
Form Type: F-1
Source: 0001683168-25-004840
Chunk: 157

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-06-30
Form: F-1
Chunk 157
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 estimates is an integral component of the financial reporting
process, actual results could differ from our expectations as a result of changes in our estimates.

We believe that the following
accounting policies involve a higher degree of judgment and complexity in their application and require us to make significant accounting
estimates. Accordingly, these are the policies we believe are the most critical to understanding and evaluating our consolidated financial
condition and results of operations.

Use of Estimates

The preparation of the consolidated
financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported
and disclosed in the consolidated financial statements and the accompanying notes. Such estimates include, but are not limited to, the
allowance for credit losses of accounts receivable, inventory valuation, useful lives of property, plant and equipment, intangible assets,
and income taxes related to realization of deferred tax assets and uncertain tax position. Actual results could differ from those estimates.

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Revenue Recognition

The Company adopted ASC
Topic 606, Revenue from Contracts with Customers, effective as of January 1, 2019. Accordingly, the consolidated financial statements
for the years ended September 30, 2024 and 2023 are presented under ASC 606. The core principle of the guidance is that an entity should
recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. Revenue is the transaction price the Company expects to be
entitled to in exchange for the promised services in a contract in the ordinary course of the Company’s activities and is recorded
net of value-added tax (“VAT”). To achieve that core principle, the Company applies the following steps:

Step 1: Identify the contract (s) with a customer

Step 2: Identify the performance obligations in the contract

Step 3: Determine the transaction price

Step 4: Allocate the transaction price to the performance
obligations in the contract

Step 5: Recognize revenue when (or as)
the entity satisfies a performance obligation

The Company generates revenues
from software licensing and providing related services through its distribution network. The distributors are considered as customers.

The Company typically enter
into purchase agreements with its distributors, which specify the cooperation scope, payment terms, rights and obligations of both parties,
restrictive covenants, delivery terms, refunds or replacements, breach and termination, and dispute resolutions. The distributors make
payment