Company: ZDAN
Filing Date: 2025-02-18
Form Type: DRS/A
Source: 0001683168-25-001085
Chunk: 61

Company: Zerolimit Technology Holding Co. Ltd.
Filing Date: 2025-02-18
Form: DRS/A
Chunk 61
---
 Web3;                                                                                                                    |
| · | decentralized distributed networks may become poorly received as companies                                               
 begin to make their debut, changing sentiment and demand for our software products; and                                  |
| · | the hardware that has been established as a node on a network fails                                                      
 for any reason and there aren’t enough other nodes on the network to allow applications to run successfully.             |

The success of a network
created using our proprietary technology depends on maintaining a minimum user base, which translates to a minimum number of nodes. If
the number of nodes on a network running one application decreases below three, application failure on the network is more likely. If
the number of nodes on the distributed network decreases below 160, To ensure that users continue to run decentralized applications on
network created using the VIE’s proprietary technology, the VIE must make sure its software packages can create and update nodes
so that they continue operating within the network, or it could have a material adverse effect on our business, results of operations
or financial condition.

The distributed network may face scalability challenges as it expands to a greater number of users.

Although the VIE has considered
scalability issues for its distributed network and generally the network is scalable and actually increases in efficacy with an increased
number of users, if the VIE has missed or failed to consider certain consequences that may arise as a result of scaling or usage by an
increasing number of users, such failure could lead to a failure in the distributed network or a reduction in the efficacy thereof and
could cause substantial reputational harm to the VIE and could damage relationships with existing users, reduced demand for the VIE’s
products and services, and consequently adversely affect the market price of our Ordinary Shares.

Issues with the VIE’s programming code and damage to nodes could hurt users’ ability to effectively establish and maintain networks resulting in an inability to provide applications on such networks, which could damage the VIE’s reputation and harm our results of operations.

The ability to establish
and maintain networks, as well as the applications that run on such networks depends on the VIE’s programming code. In addition,
although the benefit of a decentralized network is that redundancies and distribution of information is achieved over numerous devices
(nodes), if there is damage to enough of the nodes on a network, e.g. through wars, nuclear holocaust, or other globally destructive
catastrophes, widespread targeted node attacks at numerous locations throughout the globe, floods, fires, power loss, telecommunications
fail