Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 298

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 298
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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, technical support service and upgrade service are recognized
over the contract period as these services are provided over the contract period and the performance obligation are satisfied over the
contract period. Revenue derived from PCS service, technical support service and upgrade service are not material.

| F-14 |

Software Term License

The Company derives its software term license
revenue by authorizing software license and providing related technical support services within the contract period. For customer contracts
that contain license and technical support services that are not considered distinct, both the license and technical support services
are determined to be a single performance obligation and the revenue is recognized over time based upon the Company's efforts to satisfy
the performance obligation.

Standalone Selling Price Estimate

The company allocated the contract price to both
the software products and the service elements. The Company do not sell its installation service, post-contract consulting and training
service, technical support service and upgrade service separately from its software license contract, so the price is not readily available.
However, there are independent 3rd party engineers who provide similar services in the open market and the service prices are readily
available in the market. The company applies adjusted market assessment approach to estimate the standalone selling price for each service.
The price for software product is the total selling price deducted by the allocated amount to installation service, post