Company: ZDAN
Filing Date: 2025-07-28
Form Type: F-1/A
Source: 0001683168-25-005450
Chunk: 298

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-07-28
Form: F-1/A
Chunk 298
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 all the conditions for their receipt have been met with no restrictions.

Government subsidies as the compensation for expenses
or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related cost are recognized
in profit or loss in the period in which they become receivable.

For the years ended September 30, 2024 and
2023, the Company received government subsidies for value-added tax (“VAT”) credit refund of $450,450 and $534,410,
respectively. According to the Ministry of Finance and State Administration of Taxation Notice on Value-Added Tax Policy for
Software Products (Caishui [2011] No. 100), general VAT taxpayers who sell software products developed and produced by themselves
are subject to VAT at the current tax rate. After the VAT is levied, the portion of the VAT actual burden that exceeds 3% is
eligible for an immediate refund policy. The Company met the criteria of this VAT credit refund policy and was entitled to apply for
tax refund on a monthly basis. The grants were recorded as other income in the consolidated financial statements.

Research and Development Costs

Research and development activities are directed
toward the development of new software as well as improvements in existing software. These costs primarily include salaries, contract
services and supplies.

We follow Financial Accounting Standards Board
(FASB) ASC 985 to account for software development costs incurred for external use software. ASC985 requires all development costs to
establish the technological feasibility of external-use software to be expensed as incurred. Development costs incurred after establishing
technological feasibility to produce the “product master,” referred to as “production costs,” are capitalized
to the extent recoverable by the net realizable value of the software product until the product is available for general release.

We follow ASC985's requirements to expense all
software development costs before technological feasibility is established. Only software development costs after establishing technological
feasibility, which meet the software development costs capitalization criteria, are capitalized.

Value added tax (“VAT”)

Revenue represents the invoiced value of goods
and service, net of VAT. The VAT is based on gross sales price and VAT rates range up to 17%, depending on the type of products sold
or service provided. Entities that are VAT general taxpayers are allowed to offset qualified input VAT paid to suppliers against their
output VAT liabilities. Net VAT balance between input VAT and output VAT is recorded in taxes payable. All of the VAT returns filed by
the Company’s