Company: ZDAN
Filing Date: 2025-01-10
Form Type: DRS/A
Source: 0001683168-25-000168
Chunk: 294

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-01-10
Form: DRS/A
Chunk 294
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 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 to the Company
in accordance with the agreed-upon terms. After the payment has been received from the distributors, software products are delivered in
accordance with the contractual obligations in the purchase agreements to the distributors through an activation code.

Additionally, after delivery of the software product,
the Company works together with distributors to provide after-sales support and maintenance services. Revenue recognition policies for
each type of revenue stream are as follow:

Software Perpetual License

The Company derives its software perpetual license
revenue by selling software perpetual license and providing related services based on customers’ order. There are two performance
obligations. Software license and related pre-installation debugging service is considered one performance obligation. Usually the physical
possession of the software is transferred to the Customers immediately upon the delivery of software and the activation code. The activation
codes are matched to debugged software only, so the debugging is not separable from the fulfillment of software license. Post-contract
consulting (PCS), technical support and upgrade services are collectively considered as another performance obligation as these services
are provided to customers on within 1 year of the transfer of software licenses. The transaction price is predetermined according to the
contract price. Generally, the credit term is within three months. There is no other obligation in our contracts, such as return, refund
or warranties. Software perpetual license and pre-installation debugging service revenue is recognized when control of the software is
transferred to the distributors (i.e., when our performance obligation is satisfied at a point in time), which typically occurs immediately
after delivery and installation is completed. Revenue derived from PCS service,